Tag: Rental

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Rogue landlord ordered to pay almost £3,000 for unlicensed HMO

A buy-to-let landlord in Worcester has been ordered to pay almost £3,000 for operating an unlicensed House of Multiple Occupation (HMO) on Canterbury Road, WR5.

Worcester Magistrates Court heard that Mohammed Rafiq operated a premises illegally, leaving the council with little option but to take legal action against the landlord.

Rafiq was charged with three offences for breaches of the management of HMO regulations, including failing to supply firefighting equipment and having insufficient fire alarms, failing to install emergency lighting and the failure to display his name, address and contact details at the house.

Cllr James Stanley, chair of Worcester City Council’s communities committee, commented: “The majority of landlords in Worcester abide by the law but as this case demonstrates, the City Council won’t hesitate to act in cases where landlords exploit tenants, provide dangerous or substandard accommodation or flout their legal obligations,” said.

“I would urge any Worcester residents who are facing difficulties with their tenancy or have concerns about an HMO to contact the City Council’s housing team for advice and support.”

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Property expert urges BTL landlords to ride out recession

With Britain edging closer to its first recession since the financial crisis, a leading property auctioneer is urging property investors, including buy-to-let landlords, to hold their nerve against the spectre of an economic downturn.

The country’s dominant service sector, which accounts for about 80% of the economy, unexpectedly plunged into contraction last month, in a sign of the increasing stress facing the economy as Brexit looms.

According to IHS Markit and the Chartered Institute of Procurement and Supply (Cips),

activity in the sector fell as companies reported a fall in sales, job losses, cancelled and postponed projects and weak investment levels.

There has been a recent rise in properties going into receivership, banks unwilling to lend for construction projects and a decline in tenants looking to rent business or residential properties, according to Mark Bailey, managing director of Landwood Group, who says that a rise in auction sales is also evident, largely down to an increase in repossessions.

He said: “Worryingly, at Landwood we are also receiving more instructions over the past few months than we have done for a year or more – instructions for properties that have sadly gone into receivership.

“It is harder for property owners to let business space and for domestic landlords to find tenants  – there’s no doubt that a squeeze is on.

“With each failed building project, banks become more nervous to lend, builders stop building… and we fall headlong into a dreaded recession. Once we do, it’s anyone’s guess how deep it is or how long it lasts.

“The blame for all of this cannot be put at the door of Brexit… well, not entirely. There is no arguing with the fact that this is a period of change – domestically and globally. People err to the negative whenever there is change on the horizon – until events transpire and the scales balance out. The big issue is uncertainty and property is key to all of this. Uncertainty causes negativity, while a solid market has the opposite effect.”

So, if the pointers are all correct and a recession is upon us, what is the advice?

“Sit tight,” said Bailey. “Whether you are a commercial property owner or a domestic landlord, try your best to ride it out, perhaps for six months, before making any business decisions. Look at your borrowings and don’t over-stretch yourself at this time.

“There are always people who benefit from downturns in the market and they tend to be cash buyers. So if you have cash to invest long-term, a ripe time to buy may be about to begin.

“For the rest of us, it’s time to batten down the hatches and ride out the storm – see you on the other side.”

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Rental rate freeze could sink UK property market

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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.