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Em Morley

Rental White Paper pause is a ‘golden opportunity’ to get rental reform right

Published On: October 4, 2022 at 1:03 pm

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Categories: Landlord News,Law News,Lettings News

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Renters (Reform) Bill 'a golden opportunity to improve standards in the PRS'

Rental payment specialist PayProp has submitted an extensive response to the Government’s recent Renters’ Reform White Paper. Neil Cobbold, UK Managing Director of PayProp, is calling on those in the housing sector to make their voices heard too.

Evictions

With the Government proposing a new Ombudsman to settle disputes between tenants and landlords, PayProp says we need more clarity on what role they will have in cases of rent arrears and antisocial behaviour before and during any eviction process.

Cobbold comments: “While the White Paper confirms the removal of Section 21 and the expansion of mandatory eviction grounds under Section 8, the Government may have to go further to speed up the Section 8 process to keep tenants and landlords out of limbo.

“As non-payment of rent makes up a large proportion of current Section 8 cases, we would also wish to see the Government allow third-party evidence from PropTech providers, as well as banks and other sources, to be submitted to the courts. We ask the department to establish a set of standards that this evidence must meet in order to be accepted by the courts as verification that it is a true reflection of rent demands and payment history.”

Cobbold says with this evidence, all rent arrears evictions cases could be dealt with by a First-tier Tribunal, as it will be clear at this stage if a tenant has breached the conditions of their tenancy agreement.

He continues: “We also call on the Government to clarify when a mandatory eviction notice can be served for persistent arrears, and to establish a new mandatory ground for eviction in cases when landlords need to refurbish a property to comply with the newly-proposed Decent Homes Standard.”

Rent changes

PayProp also argues that there should be a standard template for proposed rent increases that also lays out the tenant’s rights and means to challenge an unfair rent increase.

In order to help landlords and agents set expectations and allow tenants to challenge a rent increase, the Government is further urged to define what a ‘fair increase’ is and to produce a full set of criteria for what constitutes a fair increase. These could include inflation, rental prices on the open market and property conditions.

Additionally, in the current proposal, rent increases challenged at the Housing Tribunal can only be reduced. However, PayProp says tribunals should be allowed to set a higher increase than was initially demanded in line with market conditions at the time the case is heard.

The landlord/agent relationship

A large percentage of landlords use letting agents to manage their properties. However, says Cobbold, the White Paper does not fully recognise the opportunities this relationship brings to raise standards in the private rental sector (PRS).

He points out that many of the changes proposed by the White Paper require landlords to demonstrate compliance. The Government could reduce that burden by allowing letting agents who fully manage properties to take on some of those duties.

Cobbold adds: “We also ask the Government to allow managing agents to access the proposed Property Portal on the landlord’s behalf. “If they also provide Application Programming Interface (API) routes into the Property Portal, agents using PropTech can easily automate information and evidence uploads, greatly reducing the burden of compliance without compromising standards.”

Recognising the need for reform

Cobbold says: “Many in the PRS agree there’s a need for reform. With a new team at the Department for Levelling Up, Housing and Communities, the industry has a golden opportunity to engage with the new administration and iron out some of the inconsistencies in the recent White Paper. If we all work together at this, we can make sure the proposals deliver balanced reform that benefits tenants, landlords and letting agents.

“While we have yet to see where PRS reform sits on the new Government’s agenda during the ongoing cost of living crisis, the importance of the housing sector to the economy and to people’s lives mean that it should remain a priority.

“We ask the Government to take into account views from across the industry to ensure we have an efficient and accessible PRS that delivers high-qualify housing for all. “We also ask everyone with a stake in the future of the housing sector – landlords, letting agents and service providers – to let the Government know what they need from rental reform.”

Autumn spike in house sales predicted by property market data analysis

Published On: September 30, 2022 at 11:59 am

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Categories: Property News

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SpareRoom study shows most affordable places to rent in the UK

The property market is set to keep feeling the heat throughout the autumn months, estate agent comparison site, GetAgent reports.

It analysed the last 10 years of property market data, looking at both sales volumes and the average sold price across each season of the year.

In total over the last 10 years, house sales during June-August hit just under 2.7m, averaging 266,820 sales per year – the most of any season.

However, the autumn months of September, October and November aren’t far behind, with a total of 2.65m homes selling during autumn in the last 10 years, averaging autumn 265,198 sales per year.

This is substantially higher than both winter and spring, when an average of 223,897 and 229,474 respective sales take place each year.

When analysing the last 10 years of sold prices, GetAgent’s research shows that autumn and winter can be the best seasons to sell when it comes to achieving the highest price for their home.

Over the last decade, sold prices have averaged £215,574 during the autumn season, climbing to £216,541 during winter. In contrast, those selling in spring have achieved an average of just £207,761, with summer sellers securing £213,196 on average.

Colby Short, co-founder and CEO of GetAgent.co.uk, comments: “We’ve enjoyed a prolonged period of unprecedented property market boom since the start of the pandemic and there are now fears that this stellar rate of house price growth could start to subside, due to the current economic landscape and the growing cost of living crisis.

“However, this is yet to materialise and the latest indicators show that the market has continued to perform with resilience, with house prices climbing ever higher.  “For those worried about entering the market at present in case they can’t secure a buyer or their required asking price, the historic data shows that this trend is only likely to continue throughout the remainder of the year, with transactions likely to spike this autumn, while house prices should keep on climbing right through until Christmas.”

Landlords lose confidence in Government’s approach to housing

Published On: September 28, 2022 at 11:18 am

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Categories: Landlord News,Lettings News

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Tenants in England paying council tax bills up to the equivalent of 37.5% of rent

House share portal SpareRoom has conducted a series of polls for insight about the UK rental market.

One poll revealed that 94% of landlords have no confidence in the current Government’s approach to housing. Another found 36% of respondents plan to reduce their portfolio this year and a further 16% plan to leave the rental market entirely in 2022.

In a third poll by SpareRoom they asked landlords and agents what they believe will most likely help the rental market. The responses included:

  • Reverse the changes to buy to let mortgage interest tax relief – 72%
  • Scrap the 3% Stamp Duty surcharge for landlords – 66%
  • Scrap the Renters Reform Bill – 56%
  • Better enforcement on criminal landlords – 45%
  • Build more houses – 43%
  • Make the rogue landlord database public – 42%
  • Introduction of a national landlord register – 22%
  • Freeze rents – 4%

The final poll revealed that the Government has almost entirely lost the confidence of tenants too, with 95% saying they have no confidence in the Government’s approach to housing.

Matt Hutchinson, SpareRoom director, comments: “The UK is currently in the grip of a rental crisis. Demand for rooms is at an all-time high, while supply has dropped to a 9-year low. That’s making life incredibly hard for tenants trying to find a place to live.

“Government’s plan to squeeze smaller buy to let landlords out of the market seems to be working, but there doesn’t seem to be a plan to replace them with an alternative. Unless something changes, we’re looking at a very bleak period for the rental market. If it’s not working for landlords and it’s not working for tenants, the question has to be, who is it working for?”

‘Biggest package of tax cuts in generations’ includes Stamp Duty cut

Published On: September 23, 2022 at 12:59 pm

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‘Biggest package of tax cuts in generations’ includes Stamp Duty cut

The Chancellor of the Exchequer, Kwasi Kwarteng, has announced his Growth Plan for tackling rising energy costs to bring down inflation, including a change to Stamp Duty.

The nil rate band will be doubled from £125,000 to £250,000. The Chancellor says this cut means 200,000 more people every year will be able to buy a home without having to pay any Stamp Duty.

The Chancellor comments within the HM Treasury announcement: “Economic growth isn’t some academic term with no connection to the real world. It means more jobs, higher pay and more money to fund public services, like schools and the NHS.

“This will not happen overnight but the tax cuts and reforms I’ve announced today – the biggest package in generations – send a clear signal that growth is our priority.

“Cuts to Stamp Duty will get the housing market moving and support first-time buyers to put down roots. New Investment Zones will bring business investment and release land for new homes in communities across the country. And we’re accelerating new road, rail and energy projects by removing restrictions that have slowed down progress for too long.

“We want businesses to invest in the UK, we want the brightest and the best to work here and we want better living standards for everyone.”

Paresh Raja, CEO, Market Financial Solutions: “One of Whitehall’s worst kept secrets this week, the confirmation of the Stamp Duty cut, is nonetheless significant. Like Johnson and Sunak’s actions during the pandemic, today’s mini budget underlines the new-look Government’s determination to maintain a buoyant property market.

“But the true impact of this move remains to be seen. One common theme of the Stamp Duty holiday in 2020-21 was that sellers inflated asking prices to account for buyers’ Stamp Duty savings. Will we see the same again? It is likely, to an extent at least. But this time around we have rising interest rates impacting the amount buyers can borrow, so that will also shape the way that house prices move.

“I think more action should have been taken to incentivise developers, investors and homeowners to improve properties’ sustainability. Buyers and renters want greener homes, while the energy price crisis has demonstrated the need to improve how energy efficient buildings are. So, further financial incentives to encourage owners to lower the carbon footprint of their property would have made perfect sense at this time. We should expect this to be a recurring theme in the months to come.”

Iain Crawford, CEO of Alliance Fund, comments: “Today’s Stamp Duty cut is great news for homebuyers and will act as a shot in the arm for the UK property market, putting any fears of an impending market slowdown to rest. 

“We’ve already seen just how beneficial a Stamp Duty tax incentive can be in fuelling buyer demand and not only will home sellers benefit from this heightened market activity, but it should also entice the nation’s housebuilders to pick up the pace where the delivery of new homes is concerned.”

Jatin Ondhia, CEO of Shojin, comments: “The property market is undoubtedly integral to the UK economy, and its value extends far beyond SDLT tax receipts for the Government, given what it means for developers, investors, agents and service providers. Once again, as turbulence has struck, the Government has reacted quickly to support the market, just as they did with the Covid-19 Stamp Duty holiday.

“It will be interesting to see what impact this has from an investment perspective. For instance, we have seen retail investors deterred from buy-to-let purchases due to higher tax bills, but will this SDLT cut offer enough incentive to reverse that trend? I am not sure – the complexity and high cost of traditional property investment continues to alienate many, so we could see more people go down alternate routes, like fractional investing in real estate.”

James Forrester, Managing Director of Barrows and Forrester, comments: “Yet another reheated housing policy by the government and little more than a smoke screen, allowing them to take the easy way out instead of making any meaningful headway tackling the housing crisis. 

“Of course, the government can hang its hat on a buoyant housing market as ‘proof’ of economic success and so keeping house prices artificially inflated by fuelling demand is their only concern. 

“Unfortunately for those already struggling to purchase their own home, the meagre saving made via a Stamp Duty cut will soon be absorbed by this higher cost of homeownership.”

Demand has increased for London bills included rental properties

Published On: September 21, 2022 at 9:36 am

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Categories: Lettings News,Tenant News

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Rental data reveals London has become unaffordable for graduates

Demand for rental homes with bills included within the cost of renting has climbed considerably since April across London, research from lettings agent Benham and Reeves shows.

However, tenants are still paying a rental premium for this option.

Benham and Reeves analysed current rental stock available across the capital and found that currently only 5% offer to cover the cost of bills within the monthly rent.

Availability is at its highest in Brent, where 12% of all current rental properties listed on the market include the cost of bills within the monthly rental cost. This is followed by Hounslow and Barking and Dagenham (10%).

Benham and Reeves also found that 34% of rental properties that include the cost of bills within the rent paid have already had a let agreed, up from just 26% in April of this year.

The average rent for a London let where bills are included currently stands at £3,045 per month, a 51% increase on the £2,023 in April 2022. Rental properties without the cost of bills covered are understandably more affordable at £2,460 per month, although this cost is still up 43% since April 2022.

The average cost of monthly bills is now £321 across the capital, up 34% since April alone, says the lettings agent. Despite this increase, those paying their rent and bills separately are only paying £2,781 per month. That’s £265 less a month than the average rent for a property with bills included, a difference of £3,175 per year.

What’s more, back in April, the cost of paying bills and rent in one payment was just £59 (£711 per year) compared to those paying their rent and bills separately. That’s an increase of £206 per month or £2,464 per year since April, for those opting for the convenience of a rental home with bills included.

Director of Benham and Reeves, Marc von Grundherr, commented: “Many tenants prefer the convenience that comes with a rental property where all running costs are covered in one monthly payment along with their rent. Of course, this rental cost is going to be higher than a property where bills aren’t included and landlords may well charge more as a contingency for a less stringent approach to managing the consumption of gas, electricity and water.

“However, as our research shows, just a few short months ago it equated to an additional £59 per month which is a very manageable increase for such a heightened level of convenience. But since then, the cost of living crisis has spiralled out of control and the cost of running our home has been one of the driving factors behind this.

“Now the increase in asking rents for bills inclusive rental properties is huge, having increased by over £200 per month since April alone.

“Of course, this isn’t down to savvy landlords trying to offset their own high energy costs, it’s simply the reality of the world we’re currently living in.

“However, it’s important for landlords to consider just how much they may be in line to pay should they find themselves with a tenant who plans to work from home this winter, as it could leave them out of pocket even when charging a rental premium to cover the increase in running costs.  “At the same time, any landlord who does opt to keep the bills in their name may also find themselves liable should their tenant fail to cover these costs.”

Survey finds landlords denied access for important checks such as gas safety

Published On: September 20, 2022 at 9:12 am

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Survey finds landlords denied access for important checks such as gas safety

A recent survey revealed nearly half of landlords have at some point been denied access to carry out property checks.

Landlords letting properties with gas appliances are legally required to have a gas safety inspection carried out each year by a Gas Safe registered engineer. A copy of the gas safety certificate must then be issued to the tenants.

However, a recent survey of 1,100 landlords carried out by Landlord Action has found that 46% of landlords have been denied access to their rental property to carry out routine checks or gas safety inspections.

In support of last week’s Gas Safety Week (Monday 12th – Friday 18th September), Landlord Action is reminding landlords of the importance of carrying out annual gas safety checks and requesting that tenants ensure they grant necessary access to landlords to facilitate this. 

Paul Shamplina, founder of Landlord Action, says: “Gas safety checks are not only a landlord’s legal obligation, but they are also imperative to ensuring the safety of the property and the tenants living there. Of course, sometimes it comes down to when is convenient, but when tenants continually deny access, it becomes a real problem.”

Landlord Action is currently in the process of putting forward a case for introducing a discretionary ground for possession of unreasonably refusing landlords access for inspections. This would help give landlords the necessary authority when requesting access.

Paul adds: “As the market evolves and the balance of power shifts towards the tenant, landlords are contacting us with increasingly complex legal challenges, which are likely to broaden in the future as the sector reforms. We already offer access injunctions to complete gas safety checks and are currently looking at what other support landlords may need.”