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Em Morley

Government policy for rented housing is failing

Published On: February 14, 2020 at 9:10 am

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Government policy for rented housing is failing

Data released yesterday has demonstrated the failure of government policy for the private rental sector (PRS), landlords have claimed.

The Royal Institution of Chartered Surveyors (RICS) is warning that private sector rents are set to increase by 2% over the next year. This will be a result of the demand for such housing exceeding supply, as landlords start to leave the sector.

Recent tax increases, the restriction of mortgage interest relief to the basic rate of income tax, and the 3% Stamp Duty levy on the purchase of extra houses have already put pressure on many landlords.

Alongside this, the database of rogue landlords is being massively underused, with only 18 individual landlords and property agents and five companies being registered for offences committed since April 2018.

The Residential Landlords Association (RLA) points out that this means either the number of problem landlords is not as high as many have argued or local authorities are focussing too much time on licensing good landlords instead of rooting out the criminals.

On top of this, statistics published yesterday show that it now takes an average of almost six months for courts to process claims for repossession of a property.

The RLA argues that during this time tenants could be refusing to pay rent, behaving anti-socially or causing damage to the property.

John Stewart, Policy Manager for the RLA, said: “This series of statistics clearly show the negative impact of government policies. At the end of the day, it is tenants who are suffering. 

“The drop off in supply caused by good landlords who find operating in the market more difficult means it is increasingly difficult for tenants to secure somewhere to live and they are then faced with higher rents.

“Ministers need to change course and instead of attacking the private rented sector, there should be policies and taxation to encourage growth in the supply of rental accommodation to meet the ever-increasing demand.”

Letting Agent Banned for Failing to Protect Deposits

Published On: February 13, 2020 at 10:15 am

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Letting Agent Banned for Failing to Protect Deposits

A letting agent who failed to protect £28,000 worth of deposits and rent has been banned from the business for five years after her lettings agency went into liquidation.

Jane Hipkin Russell, the sole director of Jonathan Waters Estate Agents was first investigated in August 2018 after the business went into liquidation. The investigation found that Russell had contributed to the business’ collapse by failing to comply with legislation requiring tenancy deposits to be placed in a recognised scheme.

It was revealed that there was no record of 11 tenants’ deposits, totalling around £12,000 and a further £20,000 worth had not been paid into a government-backed deposit scheme.

In addition, the business had failed to transfer a further £7,000 worth of rent payments to their respective landlords and had instead used the cash to fund the running of the business. 

Effective as of Friday 14th February, Russell will be disqualified from acting as a director or directly, or indirectly being involved in the promotion, formation or management of a company.

Rob Sheils, senior investigator for the Insolvency Service, commented: 

“A fundamental part of Jane Russell’s role was being responsible for safeguarding money on behalf of her tenants and landlords, something she failed to do prior to the company falling into liquidation.

“This disqualification should serve as a deterrent to other directors who safeguard money from doing likewise.”

The features most wanted by UK renters looking for a new home

Published On: February 13, 2020 at 9:21 am

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features most wanted

Results from yieldit’s latest survey have revealed what UK tenants look for when searching for a new home to rent.

This survey sought out the responses of 500 renters in a bid to understand the changing demands of the market and to help educate the investors that yieldit works with.

According to the data they received, the top three features most wanted by UK renters are:

  • An outdoor space, such as a garden, terrace or balcony – 43%
  • Space for parking – 34%
  • Modern interiors – 28%

The features that are of least importance to renters in the UK have been revealed as:

  • A concierge service – 2%
  • An on-site gym – 3%
  • The latest technology – 5%

Bizaarely, a quarter of respondents (25%) stated that there were no particular features they looked for when searching for a new rental home.

21% specified features that were not on the list. This includes local schools, the energy efficiency of the property, local pubs, and pets being allowed.

Ryan Hughes, head of sales at yieldit, said: “Unsurprisingly, factors like affordability and location remain the key drivers for someone choosing a property, but features are becoming increasingly important to tenants.

“As the quality of rental properties coming to market improves, renters are becoming more discerning. Luxuries like integrated smart technology and amenities such as concierge and on-site gyms are becoming more commonplace and expectations are rising.

“If landlords want to achieve high yields, they need to sit up and take notice of what tenants want – it’s that simple.”

Landlords and Letting Agents Must Work With Tenants to Simplify Fees Ban

Published On: February 12, 2020 at 10:03 am

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Landlords and Letting Agents Must Work With Tenants to Simplify Fees Ban

Landlords and letting agents that wait until the last minute to update their tenancy fees policies could cause confusion for their tenants, leading to needless complaints, warns PayProp.

The automated transaction and reconciliation platform has warned that by June 1st 2020, all tenancies will be covered by last year’s tenant fees ban, regardless of when they began. This means that deposits that exceed the limit, checkout fees and cleaning fees will all be illegal, in all circumstances.

However, due to a clause in the Tenant Fees Act, agents will not have to refund the difference between old deposit and new deposit limit unless the tenancy is renewed. Landlords and agents that continue to hold on to larger deposits, whilst not breaking the law, will be causing confusion for their tenants, who may choose to raise a complaint and subsequent investigation.

“There is likely to be confusion among tenants over the next few months. Until June 1, active tenancies are still subject to the old rules until their tenancy renews or the legislation is extended,” says Neil Cobbold, Chief Sales Officer of PayProp.

“This confusion could lead to consumers wrongly complaining to the redress schemes about agencies which are, in fact, acting lawfully.”

“However, now is the right time for landlords and letting agencies to make sure they have all their processes in place to ensure they are not overcharging renters and that they remain compliant with the Act,” he says.

A report recently published in the Times claimed that the two redress schemes – The Property Redress Scheme (PRS) and The Property Ombudsman (TPO) had received well over 200 complaints from consumers alleging that letting agents had tried to charge them illegal fees.

Cobbold says that some of these complaints could have come from tenants who didn’t understand why their deposit was still above the deposit cap or why they were still being charged certain fees.

“There is no indication of how many of these complaints were upheld by the redress schemes, so it’s hard to get a grasp on just how many agents have broken the law since the introduction of the fees ban,” he explains. 

Landlords and agents that cling to the old rules risk wasting resources when they are investigated and may also damage relationships with tenants. Letting agents and landlords must clearly explain to their tenants how much their deposit is and how it is compliant with the law. 

Cobbold continues: “By communicating to renters about deposits and fees going forward, agencies can reduce the chances of unnecessary complaints being made against them or their landlords,” he says.

“This could save time, protect relationships and allow agencies to focus on other important parts of their business.”

“As we move towards June, there is no excuse for agencies or landlords to be charging illegal fees or holding deposits on new and renewed tenancies that are above the cap, leaving themselves open to reputational damage or potential fines,” Cobbold concludes.

12-month contracts for tenants made mandatory by Welsh Government

Published On: February 12, 2020 at 9:35 am

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12-month contracts

It has been announced that 12-month contracts will become mandatory in Wales’ private rental sector (PRS), under the new Renting Homes (Amendment) (Wales) Bill.

This will mean that Welsh landlords can’t serve notice during the first six months of a new tenancy. The subsequent notice period will be extended from two months to six.

In the situation that a landlord wished to repossess their property, it will now take at least a year.

This new rule will only apply to ‘no-fault’ repossessions. Shorter notice periods will still be allowed for possession notices issued when a contract has been breached under current Section 8 rules.

RLA warning

The Residential Landlords Association (RLA) has warned that many landlords use the ‘no-fault’ repossession route when tenants are not paying rent, are making neighbours’ lives a misery or are wilfully damaging the property because the alternative is not fit for purpose.

Douglas Haig, RLA vice chair and director for Wales said: “While we acknowledge the minister has recognised the complete removal of Section 21 would be bad for the sector, we are disappointed with today’s proposals.

“It is absolutely essential that landlords with a legitimate reason to repossess their property are able to do so.

“If they do not many could opt to leave the market altogether – leaving renters with fewer options and potentially pushing rents up.

“The government says that those with grounds to repossess can still give the shorter notice period using Section 8.

“However, RLA research shows 83% of landlords who used Section 21 had done so because of rent arrears alone. Over half had experienced anti-social tenants. 

“This proves that despite having grounds to evict landlords are currently five times more likely to use the ‘no fault’ Section 21 notice, due to the lengthy court waiting times and expense associated with Section 8.

“Despite this, proposals do not include any plans to reform the grounds process, something we believe is vital before any change of this kind is made, to avoid a devastating cut to the supply of homes to rent in Wales at a time when demand continues to grow.”

When will the law change?

Following a consultation that took place last year, the new law has now been introduced before the Senedd by Minister for Housing and Local Government Julie James.

The Minister says this will provide greater security for tenants in the PRS, while still allowing landlords to take back their properties ‘in a timely manner’ where the tenant is at fault.

The Bill amends the Renting Homes (Wales) Act 2016. It is anticipated to come into force in the spring of 2021.

Announcing the change, the Housing Minister said: “The new Bill I am unveiling today will add further significant protections for those who rent their home in Wales to those already included in our landmark Renting Homes legislation.  

“These include, ensuring that a possession notice where there is no breach of contract cannot be served for the first six months of occupation, and where possession is sought, giving the contract holder six months’ notice. 

“This will provide valuable time for individuals and families faced with possession under section 173 and the organisations and agencies that support them, to find a new home that is right for them and make all necessary arrangements for a smooth transition to their new home.    

“I believe the Renting Homes (Wales) Act, as amended, will provide a sound basis for renting in Wales: balancing the needs and rights of both tenants and landlords and helping ensure our PRS is a well-managed option for households.” 

ARLA Propertymark comments

David Cox, Chief Executive of ARLA Propertymark, says: “Extending notice periods from two months to six months under the Renting Homes (Amendment) (Wales) Bill will cause further shockwaves for landlords and agents. The proposals will make it even more difficult for landlords to reclaim possession of their property and add further longevity to an already lengthy and expensive eviction process.

“We are concerned that landlords will have no viable option of evicting problem tenants quickly and efficiently due to current court procedures. If landlords sell up due to the perceived risk, this will shrink the sector and contribute to landlords being more selective about who they let their property to.

“The Welsh Assembly must reconsider extending the minimum notice period and take a long-term, holistic view that supports those who are providing professional and well-managed tenancies.”

Fastest Growing Rental Yields Found in the North

Published On: February 11, 2020 at 9:59 am

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Fastest Growing Rental Yields Found in the North

The North of England was the best region for rental yields in the final quarter of last year, as demand continued to outpace supply. 

According to data provided by Fleet Mortgages’ new buy-to-let index, rent as a percentage of property value rose by 2.6% in Q4 last year, rising to an average of 9.1% across the region. This is up from 6.5% in Q4 of 2018. 

In the south, Greater London yields edged up by 0.3% from 4.8% to 5.1%, whilst in the South West, yields held fast at 5.5%.

Across the country, average yields in England and Wales rose 0.7%. There was only one region to see a drop in rental yields compared to last year, and that was the North West, where they took a slight dip from 7.5% to 7.4%. 

Steve Cox,  distribution director at Fleet Mortgages, said: “Clearly, the market has shifted over the past 18-24 months as landlords get to grips with the increased costs that come with private rental sector activity, in particular the phased-in changes to mortgage interest tax relief for individual landlords.

Fastest Growing Rental Yields Found in the North“Landlords now tend to look differently at their properties, with many converting single-tenancy properties into multi-tenant ones in order to secure better yields. These higher yields are needed in order meet those growing tax liabilities, but to also offset the increased cost of acquiring tenants and regulation. Examples of these changes include more properties being converted into self-contained flats rather than keeping the property as a larger family home.”