Tag: Tenants

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The UK’s next prime minister needs to take housing seriously

The UK’s next prime minister needs to take housing seriously Thursday’s general election presents the main political parties with an opportunity to address voters’ concerns about housing, and not just focus on attempts to leave the EU.

With UK house prices and rents continuing to rise, owed largely to the imbalance between property supply and demand, housing needs to be top of the agenda for the incoming prime minister, according to Apropos by DJ Alexander.

Whichever party wins office, the property management firm believes that they need to immediately respond to the UK’s growing housing problem and develop a coordinated response which involves building more social housing, maintaining and developing a better private rented sector (PRS), and encouraging affordable home ownership.

David Alexander, managing director of Apropos by DJ Alexander Ltd, said: “Housing has become one of the key issues in the UK as the population increases, the number of smaller households rises, and the number of older people increases all of which has ensured that demand far outstrips supply.

“There needs to be a coordinated and unified approach to resolving this issue which involves the three main pillars of the housing market: home-owners; the private rented sector; and social housing.

“With the UK population set to increase by over 300,000 people a year for the next 25 years demand will continue to be strong and rather than set one group against the other the market needs to respond as a whole.”

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Average rental deposit hits almost £1,300

Average rental deposit hits almost £1,300The cost of the average deposit paid by renters has dropped to £1,299, new figures show.

The latest research from Hamilton Fraser’s deposit replacement scheme, Ome, reveals that in 2019 to date, existing tenants have collectively paid deposits worth £1.9bn.

But the amount paid for the average deposit is due to drop for the first time in five years, already down 3% from last year’s average of £1,336, although it is still 7% higher than in 2015.

So far in 2019, the number of new deposits being taken has dropped by 17% when compared to last year, while the total value of these deposits is also down 19% from some £611m to £496m.

Looking over the last five years, the number of new deposits being taken has fallen by 22%, while the total value is down 17% when compared to last year.

Matthew Hooker, co-founder of Ome, said: “We’ve seen a decline in the number and value of new deposits being taken over the last few years and a driving factor behind this is a change in our lifestyle choices to rent for longer, which reduces the number of deposits being taken and the total value as tenants opt to stay put in the same property.

“Although the average cost for the individual tenant has continued to climb due to increasing rents which form the basis of the deposit calculation, this year looks to be the first in a long time that we might actually see this cost drop.

“This has largely been driven by new legislation that has reduced the number of weeks rent an agent or landlord can charge for both a holding and tenancy deposit.”

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Top tips for landlords on how to manage a Section 21 notice

Top tips for landlords on how to manage a Section 21 notice Proposals by the main political parties, including the Tory government, to scrap Section 21 notices to evict tenants could potentially pave the way for the mass exodus of landlords from the private rented sector in the coming years.

According to the National Landlords Association (NLA), abolishing Section 21 evictions could lead to the private renting section shrinking by as much as 20%, with up to 960,000 fewer homes available to renters if landlords pull out of the market.

But while the legislation still exists, landlords still need to be aware of how to manage the section 21 process and ensure rules are being followed.

To help landlords, Paula Haverkemp, a paralegal at East Midlands-based law firm Nelsons’ property disputes team, shares her advice and tips for landlords on how to manage a section 21 process.

What is a section 21?

“A section 21 notice/form 6A is a no-fault notice that enables landlords to evict tenants who have entered into an assured shorthold tenancy (AST) agreement without a reason. Before issuing a section 21 notice, a landlord must ensure they have complied with the requirements as defined in the Deregulation Act 2015.”

When would a section 21 notice be used?

“If a tenant does not vacate the property at the end of the fixed-term, the only way a landlord can evict a tenant lawfully is to serve a section 21 notice upon them.

“This also applies if the tenant remains in occupation at the end of the fixed-term and the AST becomes a statutory periodic tenancy (SPT). This means the tenancy runs on exactly the same terms as defined in the expired AST on a month by month basis.

“The section 21 notice can be served during the fixed-term but only once the tenant has been in occupation of the property for four months. However, as section 21 notices now have a shelf life of six months from the date the notice is signed, a landlord will need to pay particular attention to the date they serve the notice – especially if the AST is for a fixed-term of 12 months.

“If a tenant is not in breach of their AST or SPT, the only way a landlord can evict them lawfully is to serve a section 21 notice upon them.”

How long will the process take?

“The section 21 notice is a two-month notice. If the tenant does not vacate in accordance with the notice, the only way a landlord can obtain vacant possession of their property lawfully is to obtain an order for possession through the court. This process usually takes approximately two to three months to obtain, depending on how busy the court is.”

What changes are the government planning to make?

“The government is proposing to remove the AST from the Housing Act 1988 meaning that these types of tenancies would only be available to private landlords. We may also see the government introduce fixed-term assured tenancies, which would commit the tenant and landlord to a specific time period. This would mean a fixed-term tenancy could be renewed or become an assured periodic tenancy if not ended by tenant or landlord.”

What happens if the law changes?

“The proposed changes to legislation are currently being consulted on and will then need to be progressed through parliament before they come into play. However, it is unlikely any changes will take place before late 2020.

“Regarding ASTs, the government has also confirmed the changes will not affect any pre-existing tenancy agreements. The landlord will still need to go through a section 21 process when the tenancy ends.”

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Two in five renters fear they will never afford to own a home

A significant number of people renting in the UK say they will never be able to afford a home, according to new research by Halifax and YouGov.

The study found that two in five renters cannot see how they will ever be in a position to buy a property, despite a desire to own a place of their own.

It was also revealed that around three in ten private renters in the UK think it is now normal for people to rent for life. However, just 14% of those aged between 18 and 24 share this view, with more than half of this group believing they will one day own their own property.

Renters aged between 35 and 44 are less optimistic about  being able to ever acquire a property, with a third considering it normal to rent for life and 28% believing that they will never buy somewhere.

Russell Galley, managing director at Halifax, commented: “Taking that first step onto the property ladder remains a rite of passage for many,” said Russell Galley, managing director at Halifax.

“Last year, first-time buyers accounted for the majority of the mortgage market for the first time in well over 20 years. This shows that with the right support and a few sacrifices, home ownership can remain an attainable goal.

“The financial hurdle of saving enough for a deposit might feel like a daunting or at times near-impossible task, but there are a number of options out there, including government schemes and family support mortgages, to help put first-time buyers on the right track.”

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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.”

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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.

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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.”

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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.

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Government attacking Landlords

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Earlier this month the Tenant Fee Ban was introduced, after much fanfare from the Government. However, it is not the only piece of regulation and policy change set to affect the landlord market this year. It joins what can only be described as a slew of restrictive government policies – including tax changes, tougher HMO requirements and the recent announcement / threat to ban ‘no fault’ evictions– which many would agree amount to an unfair and sustained attack on the landlord market.

It is clear the government seems to have forgotten landlords are often just ordinary, hardworking people and savvy investors,who have saved to buy an additional property as a nest egg or source of income. A report from the Institute of Economic Affairs (IEA) recently criticised the government’s approach, concluding landlords are unfairly being discriminated against and scapegoated for the rental housing crisis.

By squeezing profit margins and pushing landlords to exit the market, there is a very real danger that the recent government policies will start to undermine the UK rental sector altogether. The fact of the matter is, the rental market is growing, and landlords fulfil an incredibly important role in providing essential property stock. Instead of increasing red tape and making it harder for landlords to turn a profit, the government should be supporting and encouraging the sector.

Appropriate planning is now incredibly important to ensure you avoid any financial, practical or legal ramifications of new and upcoming legislation. So, as a landlord, what should you be doing to navigate this new regulatory landscape and make sure your assets are protected?

As most will know, the Tenant Fee Ban means the only payments that can now be levied at tenants by landlords or agents are rent, dilapidation deposits and default fees, with the deposit limit reduced from 6 weeks to 5.However, the biggest danger for landlords is the removal of an agent’s ability to charge for tasks like reference checks. Nightmare tenants can wipe out profit through property damage or failure to pay rent. It is therefore vital to commit to paying for reference checks and a rent guarantee to ensure all parties are fully protected. Alternatively, make sure you are using a reputable agent who will continue to carry out these tasks properly, potentially by using deposit replacement schemes that include these as standard.

Another significant change has been to HMO licenses, traditionally required in any property where five or more people live over three floors but are not part of the same family. Non-compliance can result in unlimited fines, a criminal record and a ban from acting as a landlord in the future. What many don’t realise is that HMO rules can be different for each borough, and numerous councils are getting much stricter about enforcement (encouraged by the fact they now profit from any fines!). For example, in Camden, London, HMOs are now required for any property with three unrelated persons, and also within properties on a single floor. Tenants are also being invited to report non-compliance, encouraged by the fact that landlords can be forced to repay all rent to tenants for the length of their contract. In just one of the London boroughs, there have been 1,200 prosecutions of landlords and agents for HMO breaches in the last five years, so ensuring you are HMO compliant by checking your borough’s specific rules is an absolute must.

On 20th March this year, the Homes Act 2018, or ‘Fitness for Human Habitation Act’, also came into effect. While not entirely new, rather a clarification and bringing into line of previous legislation, it is harsher in a number of ways. There are now 29 hazards that landlords are responsible for monitoring – including damp, mould, cold, asbestos, heat, and radiation to name a few. Tenants can take landlords to court and sue if it is found they have failed to maintain standards in one of these areas. The problem here is that it can be incredibly difficult, as an independent landlord, to both have the necessary knowledge on these matters and make sure you are compliant. This is where a knowledgeable and reliable agent or adviser is key.

Finally, the government have also announced that they intend to end ‘no fault evictions’, by removing the Section 21 notice. Although their proposals presently lack any real detail, this will make it even harder for landlords to get rid of disruptive tenants. Their current suggestion that Section 8 notices should be used instead, by which grounds such as failure to pay rent must be provided for eviction, are little comfort thanks to a backlogged court system thatwith three-to four-month delay in hearings can make this an incredibly lengthy and costly option. Given the lack of detail, there might still be opportunity to adjust this law, and so lobbying MP’s and Parliament members on this could provide some relief.

Rental yields are improving and buy-to-let can still prove to be a good investment for many, so you should not necessarily be put off. However, it is vital to remember the onus is now on you to put the necessary precautions in place to protect both your property and rental income.

COMMENT

Increased costs, devastating changes to Tax allowances, ridiculous legislation designed to create many ways for landlords to trip up and be unable to evict tenants. The end of the S21, it is time for Landlords to fight back. I am in favour of AST properties to be removed from the market EN MASS. It is not difficult to cover a long term rent with short term yields and it will finally turn the table on this spitefully draconian attitude towards Landlords.