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Em Morley

Cash Call Warning Issued to Landlords

Published On: February 25, 2015 at 3:36 pm

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Landlords have been issued a warning after a fall in interest rates caused more calls from investors to put up cash or security as part of swap deals.

The Homes and Communities Agency’s (HCA) quarterly survey of 255 large housing associations in England revealed that landlords’ mark-to-market exposure rose from £1.1 billion in September, to £1.9 billion in December.1

Cash Call Warning Issued to Landlords

Cash Call Warning Issued to Landlords

The excess collateral is the amount held as collateral over and above the exposed, and for landlords, this almost halved from £992m in September, to £520m in December, causing concern about landlords’ ability to cover cash calls.1

Currently, a total of 47 housing associations in England use derivatives to swap variable interest rates for less unstable, fixed rates. Under these mark-to-market deals, landlords must put up cash or security at short notice if rates fall.

The HCA says: “This quarter’s increase in exposure has significantly eroded the excess collateral and providers must continue to monitor their position with regard to potential calls for increased collateral.”

The HCA is now seeking reassurance that the 47 associations can meet cash calls in the future, and is also “monitoring a small number of providers” more carefully as a result.1

Asra Housing Group, who control 14,000 homes, struggled to meet a multi-million pound margin call related to derivatives, although it has now resolved the problem. The HCA is considering if Asra is non-compliant with their regulations as a consequence.

The HCA did say, however, that the £520m of excess collateral reported by 33 providers, “does provide some assurance that these providers are able to withstand a degree of future interest fluctuations.”1

1 http://www.insidehousing.co.uk/hca-issues-cash-call-warning-to-landlords/7008443.article

 

Housing Associations Downgraded over Gas Safety

Published On: February 25, 2015 at 2:21 pm

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Three housing associations have been given regulatory downgrades due to missing gas safety checks, but they still comply with the Homes and Communities Agency’s (HCA) governance standard.

Housing Associations Downgraded over Gas Safety

Housing Associations Downgraded over Gas Safety

The three house providers, Yorkshire Housing, Merlin Housing Society, and First Wessex, have all failed to meet the regulator’s home standard after not observing gas safety regulations. All three had some properties that had not had an annual gas safety check, which is required by law.

Today, their governance rating was downgraded to G2; the second highest. This means that they fulfil governance standards, but they need to make improvements.

A spokesperson for Merlin Housing Society says that each of their properties that had an out-of-date certificate was serviced immediately. Chief Executive of First Wessex, Peter Walters, claims that the organisation has changed its system, and now has a 100% gas safety check record.1

The complete list of today’s judgements is as follows1:

Housing association Governance Viability
Accord Housing Association G1 V1
Anchor Trust G1 V1
Arcon Housing Association G1 V1
BPHA G1 V1
Chapter 1 Charity G3 V2
Chelmer Housing Partnership G1 V1
Community Gateway Association G1 V1
First Wessex Group G2 V1
Incommunities Group G1 V1
Industrial Dwellings Society (1885) G1 V1
Johnnie Johnson Housing Trust G3 V2
Merlin Housing Society G2 V1
Midland Heart G1 V1
Moat Homes G1 V1
Newlon Housing Trust G1 V1
Swan Housing Association G1 V1
Yorkshire Coast Homes G1 V1
Yorkshire Housing G2 V1

The HCA downgraded the governance rating of Chapter 1 Charity to a non-compliant G3. The association covers 1,381 homes. The HCA said the landlord’s board had “failed to manage risk of its objectives”, after a “period of growth.” The HCA claim that they received inaccurate financial information, and later they discovered weaknesses in the organisations’ approach to risk management.1

The viability rating of Johnnie Johnson Housing Trust was upgraded to V2, meaning that the organisation is now compliant.

However, the Trust is still non-compliant on governance. With 4,960 homes, the organisation received a governance downgrade after having “an overly complex structure [that] had weakened governance arrangements.”1

They have since improved, by strengthening its board, steadying its business, and conducting a stock condition survey. The HCA have said that the Trust is working towards full compliance overall.

However, Chapter 1 Charity, and Johnnie Johnson Housing Trust did not meet value for money rules. The number of landlords breaching these rules in 2013-14 reached ten.

Two organisations received governance rating upgrades, to the highest possible G1. Bedfordshire Pilgrims Housing Association’s was raised after they assured the HCA that its “processes governing board remuneration…are appropriate.”1 The Association caused concern previously due to its level of board pay.

Swan Housing Association received its second upgrade in four months after taking action against its 2012 downgrade, due to staff falsifying documents in order to claim grant early. Community Gateway Association were also awarded an upgrade in viability.

1 http://www.insidehousing.co.uk/regulation/landlords-downgraded-over-gas-safety/7008461.article

 

 

 

What to Include in a Tenancy Agreement

Published On: February 25, 2015 at 11:40 am

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my|deposits have put together some advice on what you should include in your tenancy agreement.

Head Adjudicator at the firm, Suzy Hershman explains that the agreement “outlines the contractual obligations between you and your tenant.” She says that it is “absolutely paramount that your tenants understand what you expect from them and what they can expect from you.”

What to Include in a Tenancy Agreement

What to Include in a Tenancy Agreement

She continues: “As with an inventory, your tenancy agreement can be used as a negotiation tool at the end of the tenancy, in order to avoid dispute over the deposit money and should always be submitted as evidence in the event of a formal dispute.”

On what should be in there, Suzy says: “It should include the basics, which may seem obvious, but just for clarity, it will include: rent payments, the amount that’s due, when that amount is due, so the payment dates; details on the deposit protection, this clause should set out the circumstances in which the landlord may make deductions from the deposit; any information on how and when the rent will be reviewed; landlord and tenant obligations, for example who is responsible for repairs; bills your tenants are responsible for; rules on sub-letting; and any end of tenancy requirements and notice periods.”

Suzy advises: “Consider a provision on whether the tenancy can be ended early and how this can be done. You may wish to include other clauses, which are essential if you want to rely on them.”

The agreement should also: “[Make] your tenant aware that smoking in the property is not permitted; the outcome of nuisance at the property; whether pets are allowed; any responsibility for garden maintenance, if there is a garden; and if a landlord or agent wishes to charge any administration fees.

“Be aware though, that administration fees must be reasonable and justified to be found fair. These are all often issues for deposit disputes, so don’t get caught out.

“Of course any clause in your tenancy agreement has to be deemed to be fair to the tenant. The Office of Fair Trading [OFT] guidance on unfair terms state that a clause that is inserted into a contract will not automatically be deemed to be fair, just because it is present. It must be construed with regard to the facts of each case and how reasonable it is.”

For more advice, download my|deposits’ free guide at www.mydeposits.co.uk/tenancy-agreements.

Landlords Discuss Eviction Rate

Published On: February 24, 2015 at 3:59 pm

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Recently, we revealed that landlords in England and Wales repossessed 42,000 properties last year, which equates to 115 per day. This is an 11% increase on 2013.

Members of Landlord Referencing have taken to the forum to discuss the issue, after one landlord stated: “Despite the fact that the data shows that the increase is in the social sector, the private rental sector continues to get the blame.”

Landlords Discuss Eviction Rate

Landlords Discuss Eviction Rate

Indeed, it was found that social landlords made 62% of possession claims.

The landlord explains why they believe this to be: “The reality is that people are not paying their rent, and are being evicted from social housing for rent arrears, because social housing providers cannot balance their books and are preparing for the national roll out of Universal Credit, which their colleagues in the pilot areas have seen increase their arrears and cost of collection.”1

Another landlord, calling themselves girltalk, took to the forum to defend landlords, stating: “No good landlord evicts a good tenant. That is so obvious, why do people not understand it?”1

Another landlord, Paul Barrett, blames the tenants. Speaking of Bedroom Tax, he says this has nothing to do with rent difficulties: “All they have to do is have a lodger!

“They refuse to do so, and consequently choose not to afford the rent out of their usually other extensive welfare benefits. If they choose not to afford their rent, then they should move into the private rental sector.”

Barrett defends disabled tenants who have suffered from the Bedroom Tax, but says for most tenants, it has been “correctly applied.”

He continues: “Social housing should be for the normal domestic tenant circumstances. The Bedroom Tax is a brilliant idea to ensure social housing goes to those with the need for a relevant number of bedrooms.”1

The issue concludes with one member, Paul Routledge, suggesting that insurance claims should also increase, due to landlords having to cover lost rent and eviction costs.

1 http://www.landlordreferencing.co.uk/forum/discuss/community-forum/ministry-of-justice-figures-show-evictions-were-up-by-11-during-2014-the-highest-recorded/#p28559

HMRC Reveal House Sales Drop

Published On: February 24, 2015 at 2:27 pm

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Property sales in the UK dropped in January, falling by 6% compared to last year, however, estate agents’ opinions on the significance of the matter differ.

January saw a total of 97,320 transactions, revealed the latest figures from HM Revenue & Customs (HMRC).1

HMRC Reveal House Sales Drop

HMRC Reveal House Sales Drop

 

This is the lowest amount since October 2013, and the fourth consecutive monthly decrease in sales.

Experts are predicting property price increases of 4% in 2015.1

Estate agent views

In 2014, house sales were at their highest level since the start of the financial crisis, with 1.2m properties being sold.1

Despite this, sales have started to decline in recent months.

Peter Rollings, from Marsh and Parsons estate agents described buyer demand as “still rosy”, and expects activity to pick up again.

He says: “January has seen a boost in agreed sales, which has firmly set the ball rolling for 2015, and this will only gather faster momentum during the spring, typically one of the most popular times to move house, when these completions come to fruition.”1

Nevertheless, estate agent Jeremy Leaf believes that stricter mortgage rules and doubt caused by the upcoming general election would halt activity.

Leaf explains: “The slowdown has come with a thud. At the beginning of the year, we were seeing movement, but over the last few weeks there has been a change in the mood.”1

The outlook depends on local housing markets around the UK; however, recent figures reveal that prices are increasing to some extent in every county and region of the UK.

Annual house price inflation was at 10.2% in England, 4% in Wales, 5.5% in Scotland, and 4.9% in Northern Ireland in 2014.1

To look specifically at house prices across the country, use the BBC’s property price calculator.

1 http://m.bbc.co.uk/news/business-31605848

How Landlords can Help Social Housing Tenants Move

Published On: February 24, 2015 at 11:28 am

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Landlords can help their social housing tenants downsize to avoid Bedroom Tax, or move home for a new job.

Mutual exchange

Mutual exchange is the act of social housing tenants swapping homes. It is sometimes the only realistic option to tenants wanting to move. In a recent survey by the Chartered Institute of Housing (CIH), 88% of organisations said that they are encouraging more mutual exchanges due to Bedroom Tax.

How Landlords can Help Social Housing Tenants Move

How Landlords can Help Social Housing Tenants Move

Successful strategies include: giving tenants in rent arrears the opportunity to exchange; employing a dedicated officer to organise exchanges; offering financial incentives towards the cost of moving;
and arranging home swap events.

Support under-occupying tenants

90% of respondents told CIH that they offer help to all tenants looking to downsize, not just those affected by Bedroom Tax.1 Landlords do this by giving priority to under-occupiers when they allocate houses, and by offering financial support.

Some are providing support for specific groups of tenants, such as older people, who may not need to live in the type of house they do currently.

Localism Act

Just 30% of organisations say that they have used the transferring tenant options of the Localism Act, which lets providers set their own policies on transfer requests by tenants who are not considered to be in housing need.1 Organisations could make use of these fairly new powers.

Those that do use them are creating new bands in their allocation schemes for transferring tenants with a good tenancy record, they also allow all existing tenants with no housing need to register on the allocation scheme, and they give priority to tenants who need to transfer for work commitments.

Moving to a different area

Some allocation schemes give tenants the opportunity to move to partnering local authorities. This is beneficial in places where employments markets cross local authority boundaries, as tenants can easily move for work. There is a great chance for providers to partner with other areas to help tenants move for economic reasons.

Buying or renting

Depending on the cost and quality of private rental homes and home ownership options in the area, moving to a different type of tenure can be a good choice. For some landlords, helping other tenants move to different housing could make more social housing available for other tenants. Few organisations help tenants who want to move to other tenures. Landlords could dedicate an officer to help tenants move to shared ownership properties, or provide a private rental sector bond scheme, or offer financial support to those affected by Bedroom Tax.

Using websites

There are more and more websites dedicated to offering support for social housing tenants looking to move to another area through a transfer, but who want to remain in social housing. Tenants can register and search for properties in their local area, or further away.

Landlords are also able to subscribe and register homes that they are finding difficult to let. Through this, they can support their tenants.

1 http://www.theguardian.com/housing-network/2015/feb/24/landlords-social-housing-tenants-move-home?CMP=share_btn_tw