Written By Em

Em Morley

Rent Arrears the Fastest Growing Debt Problem

Published On: December 11, 2013 at 12:51 pm

Tags: living costs in the uk,national debtline number,rent arrears debt problem

Alarming reports from a national debt advice charity indicate that rent arrears are the quickest rising debt problem within the UK.

The Money Advice Trust has said that calls to its National Debtline number from people experiencing rent arrears rose substantially during the last year. In fact, numbers have been slowly rising since the economic crisis took hold during 2007.

Increase

Rent Arrears the Fastest Growing Debt Problem

From January to October this year, calls to the National Debtline totalled 18,963, in comparison to 7,722 during the same period in 2007. This signifies an incredible increase of 146%. In the last two years, telephone calls to the number from people affected by rent arrears have gone up by 37%.[1]

During the past 12 months, calls have increased by a further 13%.[1]

The report also suggests that renters have toiled in the face of more widespread debt problems. 57% of calls to the National Debtline in the previous year were from renters, compared to 43% in 2010.[1]

Danger of crisis

Chief Executive of the Money Advice Trust, Joanna Elson, is concerned that rent arrears are spiralling out of control and that we could be heading towards a dangerous period. Elson said: “The long-term trend for rising rent prices is clear and its impact on the debt landscape is significant. Rent arrears are now the fastest growing debt problem we help people with at National Debtline, and we are in danger of falling into a rent debt crisis.”

Elson believes: “Housing costs are the most important household bill of all,” and “to see such increasing numbers of people falling behind on rent payments is indicative of how the living cost squeeze has hit many families very hard since 2007.”

She says that the Money Advice Trust, “hear from thousands of people every month about the difficult decisions they have to make just to hold their family finances together.”[1]

Advice

Describing the risk of falling into rent arrears as “stark,” Elson says that “it is vital anyone concerned about their ability to pay the rent seeks free, impartial advice as soon as possible.”

She went on to say: “Advice is available online through My Money Steps, over the phone at National Debtline, or face to face at your local Citizens Advice Bureau. If you are a struggling buy-to-let landlord you can also get free, impartial advice from Business Debtline.”[1]

[1] http://www.moneyadvicetrust.org/media/news/Pages/Rent-arrears-the-fastest-growing-UK-debt-problem.aspx

Landlords avoid benefit tenants

Published On: December 10, 2013 at 9:44 am

Author: Em Morley

Categories: Landlord News

Tags: housing benefit tentants

Students experience problems with landlords

A Sky News report has suggested that landlords are staying away from benefit claimants, for fear that they will turn out to be non-payers.

Decline

The figures, obtained from the National Landlord’s Association, show that only 22% of people on benefits currently are being let to by landlords, compared to 46% only three years ago.[1]

More alarming figures suggest that 52% of landlords have said that they will not consider people on benefits when letting their property. This is attributed to the fact that around seven in ten landlords who have let to a tenant on benefits have experienced rent arrears.

Universal Credit Scheme

The report has come at a crucial time for the Government, with Work and Pensions Secretary Iain Duncan Smith about to be quizzed by MP’s on the upcoming Universal Credit Scheme. This scheme will see six benefits condensed into one monthly payment. It was hoped that the scheme would be implemented by 2017, but reports now show that up to 700,000 claimants could have to wait longer for the reform.

Dogged by difficulties

Sky News’ political correspondent Anushka Asthana was scathing in her assessment of the Government’s attempted welfare reforms. Asthana said, ‘The Government’s flagship welfare reform forces people to budget by paying their benefits in one monthly lump sum.

“It has been dogged by difficulties amid accusations of weak management and a timetable that keeps on slipping.

“Now fears are rising about the human consequences of this massive reform.[1]’

Landlords avoid benefit tenants

Delays

Figures published alongside the Government’s Autumn Statement gave a further bleak outlook for the Universal Credit Scheme. Instead of the expected 1.7 million claimants in receipt of the benefits in 2014-15, it is now expected that there will be far fewer. Furthermore, instead of the targeted figure of 4.5 million 2015/16, it is thought that this number will now be just 400,000. [2]

This expected failure has brought a predictable attack from Labour. Their shadow Work and Pensions Secretary, Rachel Reeves, said that, ‘David Cameron and Iain Duncan Smith repeatedly promised to deliver their flagship policy, Universal Credit, ‘on time and within budget’. That claim, and the credibility they staked on it, now lie in tatters.’[2]

Reeves went on to say that, ‘these OBR figures tell the truth of how David Cameron and Iain Duncan Smith have broken their promises on a spectacular scale.[2]’

Duncan-Smith certainly faces a difficult few months as the Universal Credit Scheme controversy builds.

[1] http://news.sky.com/story/1179638/landlords-avoid-tenants-on-universal-credit

[2] http://www.landlordtoday.co.uk/news_features/Landlords-%E2%80%9Cavoid-benefit-claimants%E2%80%9D

Private rented sector are infected by Legionnaires

Published On: December 5, 2013 at 12:07 pm

Author: Em Morley

Categories: Landlord News

Tags: Legionnaires,Legionnaires disease

Concerning reports from leading safety experts indicate that millions of properties in the private rented sector are infected by Legionnaires disease.

Legionnaires

Safety experts LTM Compliance says that one in sixteen privately rented properties in the United Kingdom is infected with the potentially fatal disease. The disease is caused by bacteria being present in the property water supply, such as in boilers or air-conditioning units. If inhaled, the bacteria can cause muscle pain, fever, lung-infections and in extreme cases, fatalities.

Law permits all landlords to provide their tenants with a fit and safe property under the Health and Safety legislation. The Health and Safety Executive has recently called on landlords to accept responsibility for ensuring that Legionnaires is not present in their properties.

Private rented sector are infected by Legionnaires

Significant Risk

LTM Compliance Director Judith Richardson said that report showed that certain areas of the U.K were at serious risk from the disease. She said that, ‘Tests carried out by the AquaB Group in recent months show that more than six per cent of rented properties – that is more than one in 16 rented homes – tested positive for dangerous levels of Legionella. In an area like North Staffordshire, that means thousands of people are likely to be living in properties where there is a significant risk of contracting Legionnaires’ disease.’[1]

She went on to say that LTM Compliance were in the process of, ‘contacting letting and managing agents in Staffordshire to make sure they are aware of this legislation and have been giving advice on how to carry out this new risk assessment in a cost-effective way.’[1] In addition, she said that LTM Compliance’s, ‘main concern, is to, ‘provide advice on this amended code of practice,’ to ensure that, ‘managing agents and landlords can understand their obligations and help protect their tenants.’[1]

Serious

As a result of the serious nature of the disease, there are severe penalties for landlords found to have failed in organising sufficient testing in their property. Landlords will not only have their insurance policies revoked but could also face a £20,000 fine and a potential five-year custodial sentence.

LTM Compliance offers a service for landlords to ensure that the disease is not present within their portfolio. Their five-year assessment service complies to the Approved Code of Practice, thoroughly checking water supplies.

It is crucial that landlords conduct regular checks on all of their properties to ensure the safety on tenants. More information and advice can be found by calling a local Citizens Advice Bureau.

[1] http://www.justlandlords.co.uk/news/Landlords-Called-Upon-to-Protect-Tenants-Health-1781.html

Santander Breaks the Trend

Published On: November 29, 2013 at 3:53 pm

Author: Em Morley

Categories: Finance News

Tags: mortgage rates,Santander

Recent months have seen landlords being unfavourably affected by a sudden rise in interest rates on their mortgages. The Bank of Ireland case, in which they increased the margin differential on their lifetime tracker mortgages, has been particularly exposed.

Many banks have moved away from lending for buy-to-let purposes on account of the risks involved in letting private properties. Recent reports, however, have revealed that Santander have broken the trend and loosened their criteria for landlords. This is to open up to amateur landlords.

Santander Breaks the Trend

Santander’s director of retail assets, Phil Cliff, discussed the new measures, saying: “The buy-to-let market is continuing to see strong growth and the latest improvements to our criteria herald the next step in our journey to becoming the intermediary partner of choice, demonstrating our continued commitment to this market.

“We’re keen to support the non-professional landlords sector and will continue to review our buy-to-let criteria to ensure we’re offering your clients the right mortgage with features to meet their needs now and in the future.”

The lender has reduced their buy-to-let affordability rate from 6% to 5%. The maximum loan size per property will also be increased, from £500,000 to £750,000 from Friday 27^th September.

In addition, the Buy to Let Business Managing Director, Ying Tan, said: “This is fantastic news. Lenders are solely but surely moving more towards larger landlords who have been neglected during the past few years. Santander is one lender that can start to compete with BM and TMW with its balance sheet and proposition. It’ll certainly get business.”1

Under the revised criteria, landlords with a maximum of seven buy-to-let properties will be able to apply for a buy-to-let mortgage with Santander Intermediaries, while those with up to five properties can apply to Santander.

The minimum gross rental income requirement remains at 125% of the mortgage payment. Applicants must already have a residential or buy-to-let mortgage. At least one of the borrowers must be employed and earn over £25,000 per annum. Houses in multiple occupation are not eligible.

Additionally, the lender will also consider applications from those who have a minimum of one and a maximum of ten secured credit commitments at the time of application.

Santander is also launching a range of two-year residential track mortgages available up to 90% loan-to-value, with no early repayment charges.

With a high demand for private rental property, it is unsurprising that Santander aim to take a larger share of the buy-to-let lending market. However there are risks involved. Since the recession, evictions due to rent arrears have increased, meaning that landlords are more likely to miss one of their mortgage repayments without rent guarantee insurance. Any landlord thinking of applying for a mortgage through Santander in the near future should ensure they are financially secure and can realistically afford the repayments.

1 http://www.justlandlords.co.uk/news/Santander-Relaxes-Lending-Criteria-for-Landlords-1780.html

Tenants at Risk in Unacceptable Properties

Published On: November 22, 2013 at 3:15 pm

Author: Em Morley

Categories: Property News

Tags: dangerous properties,unacceptable properties

A landlord in Reading has been fined £12,000 for failing to maintain a rental property.

This is one case of the increasing problem of tenants being put at risk by dangerous housing, says the Association of Independent Inventory Clerks (AIIC).

Ravinder Singh Takhar, 57, was prosecuted under the Housing Act and Local Government (Miscellaneous Provisions) Act, for not observing the regulations in place for running Houses in Multiple Occupation (HMOs), and retaining information in regard to the property.

Tenants at Risk in Unacceptable Properties

The house was owned and let by Takhar, who rents the property out as four separate flats. Examples of his negligence include: not testing the fire extinguisher since November 2006; allowing the rear garden to overgrow and collect discarded items in it; and a gap left in a metal railing at the front of the property, that was wide enough for a small child to slip through to the basement.

Common hazards in rental properties are: severe damp and mould; bare wires; broken windows; overgrown gardens; cupboards not properly attached to the wall; faulty boilers; damaged brick walls; no keys to windows; and no fitted smoke alarms.

Chair of the AIIC, Pat Barber, says: “It is an unfortunate truth in the UK, many disadvantaged tenants are put in danger by unscrupulous landlords who exploit their vulnerability. Some of these tenants have to live in properties full of dangerous hazards, which put their safety at risk.

“We have seen no end of dangerous hazards in a range of properties, including: faulty gas boilers and fires; excessive mould throughout the property; exposed electric wiring; gardens littered with rusty car parts and other metal items; and faulty fire alarms.

“In one recent property, during an end of tenancy check out inspection, the inventory clerk discovered a completely overgrown garden pond which was so hidden she almost fell into it. The garden shed was so dilapidated that it leant at an alarming angle and could have collapsed at any time. It was impossible to open the door to reach any gardening equipment and also posed a serious safety hazard to the tenants.”

Barber continues: “Many families and young children are at risk from negligent landlords, all of whom have a duty of care, and as such, should be making regular visits to properties, every three months, to check health and safety.”¹

The AIIC has recommended time scales for landlords to respond to repairs requests. Some are more urgent than others.

Emergency response – Gas and water leaks, serious electrical faults.
24-hour response – Heating and water systems, other non-life threatening electrical problems, for example, broken windows, if not caused by tenant negligence.
72-hour response – Kitchen appliances, other items that affect the daily life of a tenant.
Less urgent responses – Broken lawn mowers, a fallen fence panel, dripping taps.

Professionally completed inventories are stressed to landlords, tenants and letting agencies by the AIIC.

¹http://www.landlordtoday.co.uk/news_features/DANGEROUS-PROPERTIES-ARE-PUTTING-TENANTS-AT-RISK

Welsh Housing Bill a Bureaucratic Mess, says NLA

Published On: November 21, 2013 at 11:07 am

Author: Em Morley

Categories: Landlord News

Tags: landlord licensing,letting agent licensing,welsh housing bill

The Housing (Wales) Bill has recently been introduced as a forthcoming change to legislation. The Act reaffirms the Welsh Government’s commitment to ensuring that all landlords and letting agents become licensed by their relevant local authorities.

Red-tape

Private rented sector are infected by Legionnaires

Despite the seemingly positive announcement, the CEO of the National Landlords Association (NLA), Richard Lambert, was disappointed with certain aspects of the plans. Lambert stated: “While it comes as no surprise that the Welsh Government wishes to register all private landlords, it is deeply disappointing that the plans appear mired in burdensome bureaucracy. The requirements outlined in the Housing (Wales) Bill requires landlords to not only register, but to subsequently obtain a licence from what could be numerous local authorities, each of which may stipulate its own conditions and fees.”[1]

Mr Lambert also feels that it is “unnecessary,” and “unhelpful” that private landlords are permitted to “submit details of their investments to a public register in the name of driving improvements and rooting out criminals.”

He argues: “Far from combatting criminality within the private rented sector and offering solutions to the undersupply of residential property, these measures look certain to increase the cost of providing homes by forcing landlords to comply with yet more red-tape.”[1]

Despite saying that “the NLA shares the Welsh Government’s desire to raise standards in the private rented sector,” Lambert is “unconvinced that a national register of landlords is the right approach.”

Instead, he believes that this “will only serve to increase the cost of living for many hard working families as the fee for registering and subsequently obtaining a license will inevitably be passed on to tenants.”[1]

[1] http://www.landlords.org.uk/news-campaigns/news/welsh-housing-bill-bureaucratic-mess-says-nla