Tag: Landlords

Posted on

Scrapping Section 21 could lead to ‘open-ended tenancies and rent controls’

The government’s plans to scrap Section 21 notices to evict tenants could potentially pave the way for the introduction of open-ended tenancies and rent controls, according to London Assembly member Tom Copley.

The Labour politician is urging the government to press on with plans to outlaw the use of Section 21 eviction notices. 

In a letter to the housing secretary, Robert Jenrick, Copley said that with more than a quarter of Londoners now renting, more stringent measures should be put in place to prevent tenants being forced to leave rented homes with two months’ notice, without having to provide a reason for the eviction. In July, the Ministry of Housing, Communities and Local Government (MHCLG) launched a public consultation on its proposals to scrap the use of section 21 notices.

The MHCLG expects any changes to come into force by late 2020 or early 2021 and have highlighted that this will also be dependent on where other government priorities may take precedence.

But in his letter to the housing secretary, Copley called upon the government to swiftly scrap section 21 now that the consultation has closed. He said this was a “vital first step” towards providing more robust protections for the growing number of private renters.

Copley also wants to see the government take a further step towards sparking wider reform in the PR by following the example of other European countries and introducing open-ended tenancies. Copley said: “The threat of no fault evictions can deter tenants from reporting problems with repairs to their landlords for fear of retaliatory eviction. Abolishing ‘no fault’ evictions is the vital first step in protecting tenants in an often unfair and unforgiving private rented sector.

“There were thousands of no-fault evictions in London last year, but this is likely to be the tip of the iceberg. So we need to get on with scrapping section 21 without dither or delay.

“We know that the end of a private tenancy is now the leading cause of homelessness in the capital. It is clear that the sector needs quite radical reform as a matter of urgency.

“Of course, after abolishing section 21, the government have a golden opportunity to go further and follow the lead of many other European countries by introducing open-ended tenancies and rent controls.”

Posted on

UK rental market looks more attractive for BTL landlords as rents rise further

Rents in the UK’s private rented sector continued to increase in September, the latest figures show. The data from HomeLet reveals that the average rent in the UK hit £697 per calendar month (pcm), up 2.2% on the same period last year.

When London is excluded, the average rent in the UK is now £797pcm, up 2.2% on last year. Average rents in London are now £1,694pcm, up by 3.3% on last year

All 12 of the regions monitored by HomeLet showed an increase in rental values between September 2018 and August 2019.  Five of the regions monitored by HomeLet showed an annual increase of over 3%, the North West, the East Midlands, the South West, Greater London and the North East

The region with the largest year-on-year increase was the North West, showing a 4.4% increase year-on-year.

screencapture landlordtoday co uk breaking news 2019 10 uk rental market looks more attractive for btl landlords as rents rise further 2019 10 14 12 19 26

Posted on

HMO landlord hit with £40k fine

City of Lincoln Council has taken action against a House in Multiple Occupation (HMO) landlord in Lincoln for failing to comply with a number of safety breaches under the Housing Act 2004.

Julie Churchill who was responsible for an unlicensed HMO at 135 Monks Road, LN2, has been fined £40,000 for letting out a dangerous HMO that was also unlicensed.

Lincoln Magistrates Court heard that the property had no fire doors to the bedrooms, ground floor lounge or kitchen, no working fire alarms on the ground floor, while one of the three bedrooms had a door with a large gap to the top which would allow smoke to escape in the event of a fire. In addition, all the bedroom doors could be locked by a padlock which if in use, would not allow for a swift escape in the event of a fire.

It also transpired that the stairs were painted gloss black and had no slip resistance, while the kitchen did not have adequate facilities for occupants.  The court was also told that the seven unrelated immigrants occupying the property were unaware of their rights.

They had no tenancy agreement, rent book or rent receipt during their tenancy. Cllr Donald Nannestad, portfolio holder for Quality Housing at City of Lincoln Council, commented: “We’re extremely pleased to bring another case to justice as part of our ongoing battle to crack down on rogue landlords in Lincoln.

“This property was dangerous and as a council, we will not allow landlords to ignore their legal responsibilities, even if they refuse to engage with us. “We have a statutory duty to ensure HMO properties are compliant with standards, and this is with good reason.

“Most landlords have proactively applied for HMO licences or responded to reminders when the regulations changed in October last year, so it’s not fair to those who comply with the law and pay their licence fees.

“A big thank you to the council’s private housing and legal teams for bringing this case to justice.

“We want to ensure Lincoln is a safe place for everyone to call home.”

Posted on

Vast majority of BTL landlords remain committed

An overwhelming majority of buy-to-let landlords are optimistic about their future in the private rental sector with 84% looking to maintain or expand their portfolio over the next 12 months, fresh research shows.  Just 16% of landlords are looking to reduce the number of properties they have over the next 12 months, according to the latest report published by The Mortgage Lender.

The report, ‘The Mortgage Lender, Buy-to-let: The Landlord Experience’, reveals that the most common number of properties for landlords is between two and four – 45% – while 11% of property investors are now using a limited company structure for their investments.

The report also shows that around half of all landlords agree that tax changes have led to a reduction in the number of private landlords, but just 1% think that has led to a rise in the quality of rental properties. Meanwhile, just 15% of landlords are seeking out specialist tax advice about their rental properties, while only four in 10 – 42% – are using a specialist buy-to-let mortgage broker when organising their borrowing.

Peter Beaumont, The Mortgage Lender’s deputy chief executive, commented:

“Our special report provides an in-depth guide to the buy-to-let market, including landlord obligations and yields around the country.” 

The report also reveals that property maintenance, care of property and tenant behaviour are the top three concerns keeping landlords awake at night.  Beaumont added: “Our panel of landlords have shared their worries and opinions with us and we’ve included landlord case studies to demonstrate the depth of borrower circumstances we are dealing with on a regular basis.”

Posted on

Barclays introduces fresh rate cuts

Barclays has introduced a new set of rate reductions to its buy-to-let and residential ranges. In total, there have been 19 changes, with cuts of up to 0.13%.

In Barclay’s BTL section for purchase and remortgage, the 60% loan-to-value (LTV) two-year fix with £1,795 product fee has had its rate cut from 1.42% to 1.37%. 

Barclays recently launched a new five-year fixed rate buy-to-let product at 75% LTV. The purchase only deal is available at 2.19% and is subject to a £1,295 product fee. Last month, the lender cut its 75% LTV two-year fixed rate deal from 1.68% to 1.65%. This deal is subject to a £1,795 fee and a maximum loan value of £1m.

Craig Calder, director of mortgages at Barclays, said: “The new reductions we have announced will ensure we continue to offer a highly competitive fixed rate range that provides certainty of payments.”

Posted on

Labour to allow private tenants to buy their rented homes!

The Labour Party could bring in a radical “right to buy” scheme if it gains power at the next general election which could help millions of private tenants in the UK to buy their rented homes at a reasonable price, the shadow chancellor has suggested.

John McDonnell is promoting the idea as a way to make it easier for workers to buy the homes they live in, while also tackling what he calls the “burgeoning buy-to-let market” and the problem of landlords who do not maintain their properties.

John McDonnell wants to see tenants have a better chance of buying their homes from landlords (Kirsty O’Connor/PA)

In what would be a day of reckoning for many of Britain’s 2.6 million landlords, the mooted right-to-buy scheme in the private housing market would echo Margaret Thatcher’s policy of the 1980s relating to government housing, under which millions of council tenants bought the property in which they lived. Mr McDonnell set out some loose guidelines for the Labour idea – first suggested by Jeremy Corbyn during his 2015 bid for leadership of the party – based on the premise that the sum paid by tenants wishing to buy their dwelling would not necessarily be the market price.

“You’d want to establish what is a reasonable price, you can establish that and then that becomes the right to buy,” he told the Financial Times. “You (the government) set the criteria. I don’t think it’s complicated.”

Mr McDonnell suggested the plan would be a way of redressing problems such as landlords refusing to invest in their properties while making a “fast buck” at the cost of their tenants and the community.

“We’ve got a large number of landlords who are not maintaining these properties and are causing overcrowding and these problems,” he said.

Mr McDonnell also detailed a bold share transferal proposal, under which a Labour government would confiscate some £300 billion of shares in 7,000 large companies and hand them to workers, in what would be one of the largest ever raids by a government on the private sector seen in a western democracy. Under that plan, every company with more than 250 workers would have to gradually transfer 10 per cent of their shares to their employees, the paper said.

Posted on

25% of private landlords do not meet safety standards

A quarter – 25% – of homes rented from private landlords fail to meet the national Decent Homes Standard when taking into account hazards, costs and other characteristics, analysis of the English Housing Survey reveals.  Households containing several million people are currently living in unsafe or unsuitable rented accommodation, according to the research by VeriSmart.  The study by the independent property inspectors details how 19.5% of homes in the country, which works out at about 4.5 million properties, failed to meet the government’s Decent Homes Standard, when taking into account hazards, costs and other characteristics.

The assessment of the English Housing Survey, which dates back to 1967, shows that the social sector had the lowest proportion of non-decent homes at 13%. 

The most common Category 1 hazards – the most dangerous type of hazard – were falls and fires. Falls on stairs, on a level and between levels accounted for the three most common types of hazard, with fires in fourth place. Converted flats were deemed the most hazardous property type, with 21% of such homes likely to contain hazards, while private homes were the next most dangerous by this measure (14%).

Houses were close behind (12%), with flats proving safer (8%), though social rented homes were least likely to play host to a hazard at just 6%. Some 1.1 million homes had a serious fire hazard – for example no smoke alarms, old or faulty electrical systems, missing fire doors – and other hazards included damp and mould, electrical safety faults and hot surfaces. Jonathan Senior, chairman of VeriSmart, commented: “The figures are worrying when one considers that one in five homes is sub-standard as far as safety, costs and other measures are concerned.

“Some may fret at the average cost to fix a property so that it meets the required standard, but when these properties are falling below expectations in part due to hazards, safety surely has to take priority.

“We recently looked at the tragic number of home accidents – many involving children and many leading to fatalities – and it’s clear that chances can’t be taken in this area.”

Posted on

Are you entitled to a stamp duty rebate

signboards

Primas Law is urging landlords and property developers to seek legal advice about potential stamp duty rebates on ‘uninhabitable’ second properties after a landmark tribunal case. A recent ground-breaking case, between P N Bewley Ltd and HMRC, held that properties that are not immediately habitable at the time of completion do not constitute as a “dwelling” for the purpose of the Finance Act 2003.

This finding could have major implications for the UK housing market, according to Primas Law, as the decision meant that P N Bewley was not liable to pay the additional 3% stamp duty surcharge applicable to second homes. It could mean that those who have paid stamp duty on similar uninhabitable properties – including potentially thousands of landlords and developers – may have paid an inappropriate level of tax and could seek to reclaim them.
Consequently, Primas Law is being instructed to act for a large and growing number of landlords and developers seeking to recover stamp duty paid for properties that, potentially, should not have attracted the additional tax.

Daniel Thomas, Head of Litigation at Primas Law, said: “To provide more context to this particular case, the property that P N Bewley purchased was a bungalow and a plot of land in Western-super-Mare.

“The company’s intention was to demolish the bungalow and build a new dwelling on the land with planning permission already being granted. The bungalow was essentially a derelict building that had been unoccupied for around three years.

“The tribunal was provided with photographs of the derelict building and these demonstrated the heating system, radiators, floorboards and pipework had been removed, and that the property – both internally and externally – was in a very poor condition.

“It was also provided with reports from surveyors that concluded asbestos was present in the property and urgently needed removing.”

COMMENT

If you are a developer and are buying property unfit for habitation, then this law could definitely apply, but you may need to use a solicitor who is up to date with property law, as most who simply deal with run of the mill conveyancing may not be aware of this law, or not familiar with the process of appeal, meaning that you could potentially pay out many thousands that you need not pay.

Posted on

Rental rate freeze could sink UK property market

terraced street.preview

Germany’s rent controls place strong restrictions on in-tenancy rent increases, while the ‘rent brake’ introduced a couple of year ago makes it harder for landlords to charge higher rents when re-letting a property. But would a similar system work as far as the UK’s rent control system is concerned?

Last week the German finance minister Olaf Scholz voiced his support of a controversial five-year rent freeze to tackle the increasing cost of living in the city.

The aim, according to Scholz, is to ensure that Berlin does not ‘end up like London’.

In the last five years, London rents have increased from an average of £1,530 a month to £1,679 – an increase of 2.44% annually.Should this growth trend persist for a further five years, it would push the average rent in the capital to £1,894 a month.

However, the implementation of a five-year rental rate freeze would see London tenants save a total of £7,620 in rental costs, according to the research. Tenants in Newham stand to save the most, with rents increasing by 6.95% on average in the borough over the last five years, an increase of £329 in the monthly rent. If this continues, the average rental price could hit £1,977 a month in five years, but a freeze would see tenants save a notable £19,413 as a result.

A five-year rental rate freeze would also see a five-figure saving for tenants in Barking and Dagenham, Hackney, Waltham Forest, Tower Hamlets, Redbridge, Kensington and Chelsea, the City of London, Havering, Lewisham, Southwark, Enfield and Ealing.

Oxford tenants would benefit with a rental freeze saving totalling £17,746 over the next five-years. The average rent in Oxford over the last five years has increased at an average of 7.3% a month, second only to Manchester at 8%, which could see Oxford’s rental costs hit £1,741 a month.

Bristol has also seen a sharp increase in rental prices, up 6.75% annually over the last five years. A similar growth trend would see the average monthly rent hit £1,489 however, a five-year rental freeze would save tenants a total of £14,294. Tenants in Manchester, Oxford, and Newcastle would also enjoy a five-figure saving.

Tom Gatzen, co-founder of ideal flatmate, said: “The figures suggest that should such a rental rate freeze be introduced in London and the wider country, the saving for tenants could be considerable. This saving could go some way towards a mortgage deposit and a foot on the ladder, while at the same time helping to alleviate some of the pressure on the rental sector.

“Any pro-tenant initiative can, of course, be viewed as a positive, but the mere suggestion of a rental rate freeze in Berlin seems to have sent the property market into meltdown. There is every chance that the same could happen here as a recent string of government changes to the buy-to-let sector have already diminished landlord confidence levels.

“This further dent on profitability could see more opt to invest elsewhere, however, the meteoric rise of the build-to-rent sector is providing a viable alternative to traditional stock supply and could therefore be the answer, stomaching a static rate of rental growth far better without any detriment to the tenant.”

COMMENT

The massive increase in the build to rent sector is beginning to filter through, but there needs to be more money made available for this. As it stands, there is not enough private funding of build to rent, but with amendments to tax rules, this could change rapidly. If legislation were introduces to allow people to plough their pension funds in to build to rent, but under strict return guidelines, to ensure affordability, this could not only give our ageing population a source of income, but it would also help to create more housing stock, thereby distributing demand and curbing spiralling rents. As build costs on a large scale are less than property on the open market, this would give the investors a fair return, without the need for excessive rent costs.

Posted on

Holiday rental market looks set to boom this summer

holiday lets

The holiday rental market in this country looks set for another busy summer as the weak pound persuades millions to opt for a staycation.

The fall in the UK pound since the Brexit vote three years also means Britons get less for their money abroad.

Meanwhile, more tourists than ever before are visiting the UK. VisitBritain figures show that 2018 was a good year for inbound tourism to the UK, with spending by overseas visitors to the UK reaching almost £27bn.

The strength of the UK tourist industry is paying dividends for holiday property owners, according to Bournemouth-based holiday letting agency, Bournecoast Holiday Agents, which reports that holiday lets are on the rise.

 It has been known for a long time that owning a holiday let can be very advantageous in the holiday letting industry. Not only can it provide a potentially lucrative additional income for buy-to-let landlords, but it also offers certain tax advantages to holiday let owners.

There are specific requirements a property needs to meet in order to be classed as a furnished holiday let, such as its availability, actual bookings and level of furnishings.

Capital allowances can be claimed on a furnished holiday let property. This means the cost of kitting out a holiday property to a luxury standard (and in return, increasing the potential rental income) can be deducted from pre-tax profits. This is not an option available for long-term rental properties.

Income generated from a furnished holiday let property is classed as ‘relevant earnings’ which means a landlord can also make tax-advantaged pension contributions.

If the landlord should come to sell the furnished holiday let property, they may be able to claim certain Capital Gains Tax reliefs. These are unavailable to long-term rental properties and include Entrepreneur’s Relief, Roll-over Relief and Hold-over relief.

With long-term rental properties, profits would be distributed according to the official ownership split (e.g. if they owned 50% of the property, they would share 50% of the profits). With a FHL property, they can portion the profit however they decide.

A self-catering property which is available for short-term lettings for more than 140 days in any given year, is subject to Business Rate property tax. Since all furnished holiday let properties must be available to let for a minimum of 210 days, they fall into this category. However, this isn’t necessarily bad news as the landlord can claim Small Business Rate Relief, which can be up to 100%, dependent on what area you are in.

Des Simmons, Bournecoast’s managing director, said: “The holiday let market has gained considerable momentum over the past year, as evidenced by the growing number of lenders now offering mortgages suitable for this type of investment.”

Phil Wadham, director of Elite Financial, added that “the range of products for holiday letting is improving and more borrowers are thinking it’s a market to look at.”

 

COMMENT

Personally speaking as a small private Landlord, after the difficulties I have faced with the last possession, which is still not finalised as I write this,  I can say that the days of my letting out on AST are over…..at least under the current  anti-landlord legislation. It appears that I am not alone, many landlords have sold up, are planning to sell up, or have decided to switch to other options, either rooms on a licence or short term holiday lets.

I am sure it is only a matter of time before they try to pull the rug from beneath the short term letting market, but it will be very difficult to enforce. I for one, believe that the measures taken over recent years to punish landlords is having a detrimental effect. In the first instance, those at the bottom end are now very unlikely to find a property to rent, certainly in the South East, where there is demand, because there is increased likelihood that they may have problems, the local authorities advise them to ignore notice to leave, because they will consider them to have made themselves homeless, this means that the landlord has no other option but to go through the courts, which is expensive, the tenant finds themselves with a CCJ against their name as well as the likelihood of them finding another property will then be zero, and then, the landlords may well decide not to re-rent on AST, as I have.