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Em Morley

RLA: Pay Universal Credit Directly to Landlords to Stop Rent Arrears

Published On: September 24, 2019 at 8:31 am

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RLA: Pay Universal Credit Directly to Landlords to Stop Rent Arrears

The Residential Landlords Association has come out in support of the position that tenants receiving Universal Credit (UC) should have the right to choose whether the housing element of the benefit is paid directly to their landlord. They agree with the findings of a Smith Institute report commissioned by Southwark Council. 

Southwark was at the forefront of the rollout of full service UC, and therefore has a longer period of data to back up the findings of the report. The reports found that there is ‘a noticeable decrease’ in the levels of rent arrears for those claiming UC in 2018 when compared to 2016 and puts this change down to the earlier and increased use of alternative payment arrangements (APAs).

The report adds: “Originally designed to apply to a handful of cases, more than 40% of Southwark tenants claiming UC have now entered into APAs with the council to help manage their finances”.

Under current rules, landlords may apply for an APA, but only after two months of rent arrears have accrued.

David Smith, Policy Director the Residential Landlords Association, said:

“Our own research finds that over half of landlords with tenants on Universal Credit have seen them fall into rent arrears in the last year.

“Today’s report demonstrates that arrears are lower under direct payments to landlords and supports our call for the Government to give all tenants on Universal Credit the ability to choose to have the housing element paid directly to their landlord.

“Many tenants feel more comfortable with managing their finances knowing that their rent is paid and it should be up to them to be free to make that decision.”

Inverness landlords provided free tenancy deposits and disputes training

Published On: September 23, 2019 at 9:02 am

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tenancy deposits and disputes training

Free training in regards to tenancy deposits and disputes will be provided tomorrow for landlords within the area of Inverness in Scotland.

With a new study revealing that 50 disputes have arisen between landlords and tenants over the last 12 months in the area of Inverness, SafeDeposits Scotland has come up with a new way to help. By offering local landlords the option to undergo free training for managing tenancy deposits and disputes, the deposit protection provider hopes to make a difference.

This study also reveals the average amount tenants and landlords tend to disagree over, when it comes to deductions at the end of a tenancy, which totals £406.15.

The main reason for such deductions, causing tenancy deposit disputes, is cleaning. This accounted for 52% of all the cases reported within the IV postcode area.

The deposit protection provider believes that its free workshop should help to demonstrate the best way to present evidence in the event of a dispute with a tenant.

The workshop, which will be aimed at those who have not received any previous training on adjudications, will be held at Jurys Inn on Millburn Road on 24th September from 1pm to 4pm.

Paula Guthrie, adjudication account manager at SafeDeposits Scotland, has commented: “As well as protecting tenancy deposits, SafeDeposits is committed to providing guidance and raising standards in the private rented sector. These courses will help landlords and agents around Inverness better understand the principles of adjudication and in turn help them to protect their investments.

“Some landlords and letting agents make errors at the beginning of tenancies which can cause problems at the end of the lease agreement. The private rented sector is always evolving, so these courses are a great way to keep up to date with best practice and new legislation.”

Telford rogue landlord becomes first in England to receive banning order

Published On: September 23, 2019 at 8:28 am

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For the first time in England, a rogue landlord has officially been banned from the private rental sector (PRS).

A tribunal heard that Telford rogue landlord David Beattie made attempts to mislead his tenants of their legal rights and security of tenure by issuing them a licence instead of an assured shorthold tenancy.

These licences stated that the tenants could be evicted at 48 hours’ notice or less.

Telford and Wrekin Council has ordered Beattie to repay housing benefit paid to him as well as banning him from being a landlord. This comes to a total of £1,924.65 for two former tenants from 2018.

The tribunal was informed that he has previous convictions, on top of the banning order and rent repayment order applied for by the Council.

Despite knowing that he would be refused a HMO licence if he were to apply for one, Beattie continued to let a seven-bedroom house in Dudmaston, Hollinswood.

Telford and Wrekin Council officers have discovered that five people had been living there, as part of an investigation in 2018.

With this banning order in place, Beattie cannot legally let a house or be involved in property management for the next five years.

However, the tenants already living in his seven properties will be allowed to remain there until the end of their tenancies.

Councillor Richard Overton, cabinet member for enforcement at Telford and Wrekin Council, has commented: “This is a landmark case; the first banning order to be applied since it became part of law more than a year ago.

“It shows how seriously we take the issue of rogue landlords.

“It is thanks to the hard work and dedication of our officers that once his existing leases expire this now former landlord can no longer continue to operate until 2024.”

Labour Party Conference should consider ‘Right to Buy’ plans carefully

Published On: September 20, 2019 at 9:46 am

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Right to Buy

Labour Party plans to give tenants the right to buy their privately rented home should be debated extensively, says lettings payment automation provider PayProp.

This issue is due to be discussed at the Labour Party’s annual conference, which begins on 21st September.

Controversial plans unveiled by Shadow Chancellor

It was earlier this month that Shadow Chancellor John McDonnell announced plans for a private rental sector ‘Right to Buy’ scheme that will allow renters to purchase their homes from private landlords.

He informed the Financial Times that tenants would be able to purchase homes below market value at criteria set by the government.

McDonnell said the plans would aim to prevent landlords who neglect to maintain their properties from making a ‘fast buck’.

However, this is a worry that this scheme could lead to a mass buy-to-let selloff, causing property values to plummet.

Neil Cobbold, Chief Operating Officer of PayProp UK, says: “These proposals are not yet party policy and they need to be considered very carefully before being put forward as the official party line.

“The effort to help tenants buy their own homes is understandable, but it shouldn’t be at the expense of landlords. Politicians must also remember that many people now choose to rent due to the flexibility and lifestyle benefits it offers.”

A fair system needed for all parties

The Centre for Policy Studies has suggested that landlords should be given incentives to sell their properties to tenants, including Capital Gains Tax rebates.

Meanwhile, the Residential Landlords Association says any ‘Right to Buy’ measure should be voluntary for landlords, or else it would amount to a ‘form of compulsory purchase’.

Cobbold says: “There is nothing wrong with giving private tenants the option to purchase properties from landlords, but any such system must provide benefits for both parties.

“Private landlords have been hit with a range of tax changes in recent years, including additional stamp duty and the removal of buy-to-let mortgage interest tax relief.”

“If landlords were offered some sort of exemption from these measures in exchange for selling their properties to tenants, this could create a scenario that is fair for both sides of the transaction and benefits the overall health of the UK property market.”

Party conference season reinforces housing priority

The Liberal Democrats debated scrapping Section 21 at their conference last week. The Conservatives are also expected to discuss the eviction issue – as well as agents’ referral fees – at their annual gathering in Manchester from September 29.

Cobbold concludes: “This year, with a potential General Election in the offing, the stakes at party conference season are higher than usual. We expect to see lots of talk on housing at the Labour and Conservative conferences as they look to form key policies ahead of a potential campaigning period.

“New housing policies – and those covering the private rented sector in particular – could be pivotal in securing key votes in the coming months.”  

Will scrapping Section 21 trigger a rise in homelessness?

Published On: September 20, 2019 at 8:53 am

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scrapping section 21

As many as 50% of Section 21 cases handled by Landlord Action, the tenant eviction company, are a result of tenants wanting to be re-housed by the council.

They believe the abolition of Section 21, and subsequent expansion of Section 8, could put thousands of tenants at greater risk of receiving a County Court Judgement (CCJ) and ending up homeless as local councils will not be obliged to re-house those with rent arrears judgements. 

Landlord Action has pointed out that Section 8 cases are for mandatory two months’ rent arrears. Although it is unknown how many Section 21 cases happen as a result of rent arrears, Landlord Action says it is the number one reason landlords serve notice.

There were 22,527 accelerated possession claims issued in 2018, according to data from the Ministry of Justice. Of those accelerated possession claims under Section 21, 10,127 resulted in evictions carried out by County Court bailiffs.

Therefore, if landlords are forced to use Section 8 route in the future, thousands more tenants will have rent arrears judgements against them, rather than simply being evicted using Section 21. In addition, more tenants could find themselves with a County Court Judgement (CCJ), which will severely impact their future credit rating.

Paul Shamplina, founder of Landlord Action, has commented on what this means for tenants: “Local councils will see when a tenant has a rent arrears possession order made against them so will consider that that tenant has made themselves homeless.  Therefore, the council will not be obliged to re-house them as they do at present under Section 21 accelerated procedure. 

“If those tenants cannot get accommodation in the private rented sector and cannot be re-housed by the council, what will happen to them?”

Paul Shamplina is also concerned that the figures indicate there will be an increase in Section 8 hearings due to landlords having their alternative option of Section 21 removed.

Recently, MHCLG attended Landlord Action offices shadowing the solicitors and paralegal staff to gain a greater understanding of the possession process, and what impact reforms to Section 8 and court processes could have.

“As well as a rise in homelessness, I believe there will be many other unintended consequences following the abolition of Section 21. These will include, but not be limited to; vulnerable tenants struggling to find accommodation as landlords become more selective; a surge in Section 21 claims as landlords feel increasingly powerless and opt to exit the market. 

“A shrinking private rented sector will result in further rent rises for tenants. In addition, unless anti-social behaviour is tackled within the reforms, unruly tenants will have the opportunity to remain in properties for longer causing landlords and their neighbours unnecessary stress,” adds Paul.

UK Finance’s latest Mortgage Trends show increased interest in buy-to-let mortgages

Published On: September 19, 2019 at 9:05 am

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mortgage trends

The latest mortgage data for UK Finance’s lending trendshas been released, showing an increase in buy-to-let mortgages completed.

The highlights include:

  • There was a 5.8% increase in new first-time buyer mortgages completed in July 2019, compared to the same month in 2018.
  • There were 7.1% fewer new mortgages with additional borrowing in July 2019 than in the same month 2018.
  • There was a 5.5% increase in new buy-to-let home purchase mortgages completed in July 2019, compared to the same month in 2018.

Sam Harhat, Head of Financial Services at Andrews Property Group, has commented on this new data: “A collapse in remortgaging activity points to the rapidly rising popularity of product transfers but consumers need to be very careful with these. 

“They may feel like the easy route for those reaching the end of their fixed term but product transfers with an existing lender, however attractive and good value they seem, will rarely be the most competitive option.

“It’s no surprise that first time buyers are still at the forefront of the market.

“The real surprise is a robust increase in activity by landlords, who are normally a bellwether to watch when it comes to economic uncertainty.

“Lenders are competing very hard for business and the result is we’re seeing a lot of innovation, especially surrounding self-employed mortgages and limited company buy-to-let.

“Despite the uncertainty surrounding our potential exit from the EU, more and more people are simply getting on with their lives.

“Property prices are competitive, the jobs market is strong and mortgage rates have once again nudged down in recent months. 

“We’re seeing a definitive shift towards 5-year fixes, which can be as low as just over 2%. These fixes offer medium-term peace of mind, which for many people in the current climate is crucial.”

Shaun Church Director at Private Finance, has also commented: “As existing homeowners approach the UK property market with a slight sense of caution, first-time buyers continue to be emboldened by the current market conditions with the value of lending to first-time buyers reaching the highest level seen so far in 2019.

“The traditional barriers that have long been blocking many first-time buyers from purchasing a home over the years are eroding. House prices are easing, stamp duty has been taken out of the equation for many and mortgage rates have fallen considerably.

“The challenge of raising a sizeable deposit – which has typically been the greatest obstacle facing first-time buyers – has been minimised or removed altogether thanks to the flurry of 90-95% mortgages and launch of 100% mortgages.

“The options available to assist first-time buyers have arguably never been greater. The advice of an independent mortgage broker is therefore crucial for prospective homeowners to help them navigate this field of choice and ensure they’re making decisions best suited to their finances and future goals.”