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‘Distasteful’ London Holiday Lets Ad Sparks Petition to Sadiq Khan

Published On: May 31, 2019 at 9:04 am

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Categories: Lettings News

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A ban on adverts encouraging landlords to move from providing long-term homes to tenants to Airbnb-style lettings has been called for in London.

Over 8,000 Londoners have appealed to Sadiq Khan, asking for changes to be made.

A petition was started by Generation Rent, the national campaign for private renters, on the 38 Degrees website. This movement has come after Hostmaker, a property management company, paid for adverts across the Transport for London (TfL) network, suggesting that landlords can earn 30% more by switching to holiday lets.

In response, Generation Rent supporters gathered yesterday at Bond Street Station entrance, to protest. They took their own advert on to the TfL network and one protester put on a pigeon mask, to represent the Hostmaker mascot, whilst another acted out shooing them away.

This petition fights back against the tube advertisement, described by Generation Rent as ‘distasteful’, for undermining the Mayor of London’s efforts to make affordable housing available in London.

Support has been gained from London politicians including Karen Buck MP and Assembly members Sian Berry and Tom Copley.

Generation Rent Campaigner Georgie Laming commented: “These tube ads are feeding a narrative that tenants are disposable, and profiteering from property is more important than providing long term homes. They are encouraging landlords to take homes off the market and turn them into hotels that will be often left empty, contributing nothing to the local community.

“If Sadiq Khan is truly committed to making housing affordable in London then he needs to ban ads like these. Unregulated holiday lets are driving up rents and preventing tenants from making a house a home.”

Megan Bentall, Campaigns Manager at 38 Degrees also commented: “Short term lets are spreading across London, pushing up the costs of rent and forcing people out of the communities they’ve always lived in. So these ads are in pretty poor taste.

“That’s why 8,000 people across London are calling for Sadiq Khan to step up and block these ads from Transport for London spaces. The public want politicians to work to fix the housing crisis – not allow companies to run dodgy ads that will make it worse.”

Update: Comment from Hostmaker

Nakul Sharma, Hostmaker CEO, has since commented on their ad compaign, stating: “We are sorry for the concern caused by our recent ad campaign and we acknowledge the tone was misguided. The adverts will be coming down this weekend and we will be reviewing all future creatives with our partners. 

“In a cosmopolitan city like London, there is a need for a range of housing and rental solutions to meet the needs of the wide variety of residents and visitors in our capital city. Whilst it’s critical that there is plenty of affordable housing stock available, our portfolio is made up of premium homes in zone 1&2 postcodes and does not take affordable housing stock away from the market.  We are here to meet the needs of Londoners and visitors to the capital who would prefer to stay in a high quality, furnished and managed home service. We provide a flexible lettings model to homeowners of these type of properties; blending long-term, mid-term and short-term rentals to suit market demands and help homeowners weather the current slump in rent prices and property sales, ensuring they aren’t left with gaps in the year when their property is standing empty.”

Spike in Landlords Leaving Rental Market as Tenant Fees Ban Approaches

Published On: May 31, 2019 at 8:06 am

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Categories: Landlord News,Tenant Fees Ban

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There has been a spike in landlords exiting the rental market, according to the 2019 April Private Rented Sector (PRS) Report from ARLA Propertymark.

On top of this, the number of tenants experiencing rent increases has risen and the number of tenants negotiating rent reductions has fallen.

The following information has been revealed in ARLA Propertymark’s report:

Landlords selling their buy-to-let

The report shows that:

  • During April the highest number of landlords selling their buy-to-let properties was seen by letting agents since May 2018
  • The number of landlords leaving the market has risen to five per branch, which is up from four in March

Changes to rent prices

Rent prices have also been affected:

  • The number of tenants experiencing increasing rents rose in April. 33% of agents witnessed landlords increasing them, up from 30% in March
  • Year-on-year, this figure is up from 24% in April 2017 and 26% in April 2018
  • During April, there was a decline in the number of successful rent negotiations made by tenants. They fell from 2.9% in March to 1.9% in April. This figure is at its lowest since May 2016 when it stood at the same

Rental stock – supply and demand from tenants

Leading up to the tenant fees ban, there has been a shift in property supply and demand:

  • The number of available lets has dropped marginally to 202 per member branch in April, from 203 in March – the highest since records began in 2015
  • Supply is up year-on-year by 13%, from 179 per branch in April 2018
  • There has also been a decrease in demand from prospective tenants in April. The number of house hunters registered per branch has fallen to an average of 64, compared to 67 in March

David Cox, ARLA Propertymark Chief Executive, has commented: “As predicted, April’s findings have shown an upsurge in the number of landlords selling their buy-to-let properties. 

“In just a few days’ time, on the 1st June, the Tenant Fees Act will come into force in England. This, coupled with the proposed scrapping of Section 21, is forcing landlords to either increase rents or leave the market altogether.

“As supply of rental accommodation falls further, tenants will only be faced with more competition for properties, pushing up rent prices on good-quality, well-managed properties and decreasing tenants’ ability to negotiate rent reductions. In order to remain profitable, landlords will increase rents to cover the additional fees they are now faced with and as a result, tenants will continue to feel the burn.”

Preparing for the Tenant Fees Act – Everything you Need to Know

Published On: May 30, 2019 at 10:14 am

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Categories: Law News,Tenant Fees Ban

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On Saturday, the Tenant Fees Act will come into force, meaning certain fees associated with letting a property in the private rental sector will be banned.

On Saturday (1st June 2019), the Tenant Fees Act will come into force. This means that certain fees associated with letting a property in the private rental sector will be banned.

Alexandra Morris, the Managing Director of MakeUrMove, has shared everything that you need to know about the Tenant Fees Act, how the law will affect landlords, and how you can be prepared ahead of its introduction this weekend.

Why is the Act being introduced?

The Government’s aim is to create a fairer and more affordable private rental sector. The Tenant Fees Act is just one measure the Government is taking to overhaul the industry, and to improve the relationships between landlords and tenants.

The Tenant Fees Act will apply to all Assured Shorthold Tenancies (ASTs) in England’s private rental sector.

Which fees will be banned?

Fees for viewing properties, setting up tenancies, check-out and third party fees will all be banned under the Tenant Fees Act.

  • Viewing: You cannot charge a prospective tenant for viewing your rental property.
  • Tenancy set-up: All costs associated with referencing, credit checks, guarantors and administration have to be covered by the landlord. The only exception is if a tenancy agreement began before 1st June 2019, stating that certain fees have to be paid, for example, renewal fees.
  • Check-out: Landlords can only charge tenants check-out fees if their tenancy was agreed before 1st June 2019. Otherwise, you cannot charge your tenant for tasks such as a professional clean of the property at the end of the tenancy. While a tenant is responsible for cleaning the property to the same standard as it was when they first moved in, if the property requires cleaning, then the costs must be supported with evidence and claimed through the tenant’s deposit.
  • Third party fees: You cannot charge a tenant for acquiring fees from a third party, such as reference checks, credit checks, insurance, gardening services or guarantors. The landlord must pay any costs associated with third parties.

Which fees can still be charged?

The only fees that landlords and agents are able to charge tenants from 1st June are: rent, a security deposit, a holding deposit, changes to the tenancy agreement, early termination of a tenancy, payments associated with utilities, broadband, a TV licence, Council Tax, or loss of key, and a default fee for late rent payment.

However, there are restrictions within these accepted fees:

  • Rent: This amount should be agreed before the tenancy agreement is signed. The monthly rent should be the same amount for each month of the tenancy. Landlords are only able to change the monthly rent through a rent review clause for a permanent increase or decrease in rent.
  • Security deposit: This must be no more than the equivalent of five weeks’ rent. If the total annual rent of the property is more than £50,000, then the deposit can be the equivalent of six weeks’ rent.
  • Holding deposit: This is limited to the equivalent of five weeks’ rent. However, you can only accept a holding deposit from one prospective tenant and you can no longer advertise the property after you receive the payment. The holding deposit has to be repaid following the tenant agreeing to the tenancy agreement. If the landlord chooses not to let the property to the prospective tenant, or if an agreement isn’t reached within 15 days after receipt of the holding deposit.
  • Changes to the tenancy agreement: If a tenant requests a change to the tenancy agreement, you can charge up to £50. However, if the associated costs could be higher than £50, then you’ll have to show evidence of the potential costs you would incur.
  • Early termination of a tenancy agreement: This is based on financial loss and reasonable costs incurred. Generally, this means that the amount should not be more than the amount of rent you would have received if the tenant had followed through with the tenancy until the end of the agreement.
  • Payments associated with utilities, broadband, TV licences and Council Tax: This depends on the individual tenancy agreement, but tenants are generally responsible for paying these fees.
  • Replacement or default fees: This has to be already written into the tenancy agreement in order for a landlord to charge for late payment of rent or the loss of a key. Late payment of rent is classed as more than 14 days overdue. The fee should also not exceed 3% more than the Bank of England’s annual percentage rate for each day the payment is outstanding or costs incurred.

How are current tenancy agreements affected?

If a tenancy agreement was agreed before 1st June 2019, then you will still be able to charge the banned fees, if they are already included in the tenancy agreement.

From 1st June 2020, the Tenant Fees Act will apply to all tenancies.

You should also note that, if you have charged a tenant for any of the banned fees for a tenancy agreement entered into after 1st June 2019, then you would be unable to use Section 21 powers, should you need to evict a tenant. You will have to repay the unlawful fees in order to use a Section 21 notice.

What are the penalties for a breach?

The fine for breaching the Tenant Fees Act will be a civil offence, with a fine of up to £5,000. However, if a landlord makes another breach within five years of the first fine, then the breach will be classed as a criminal offence instead. If you commit a criminal offence, you could face prosecution or a fine of up to £30,000.

Landlords who receive two or more financial breaches in one 12-month period or commit a criminal offence may find themselves on the rogue landlord database.

Is Luton the Best Buy-to-Let Hotspot for Investors?

Published On: May 30, 2019 at 9:38 am

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Is Luton the best buy-to-let hotspot for property investors? Specialist property investment agency Surrenden Invest certainly thinks so!

With prices correcting over the past two years, London has definitely not been the best location when it comes to buy-to-let investment. 

However, Surrenden Invest believes that the capital’s fortunes are on the turn, making it an ideal time to consider commuter belt properties in areas of pent-up housing demand, such as Luton.

Jonathan Stephens, the Managing Director of Surrenden Invest, explains the town’s appeal: “Life in Luton means easy access to the best that London has to offer, but without the capital’s extortionate housing costs. The town has excellent amenities, with a lively local culture that appeals to those looking to balance access to London with a realistic lifestyle. This is one of the reasons that Luton exhibits such excellent growth potential.”

According to estate agent Savills, London will lead the UK’s compound rent price increase over the five years to 2023, with growth of 0.5% this yearaccelerating to 1.5% in 2020, 4.0% in 2021 and 4.5% in the following two years. This overall growth rate of 15.9% compares to a rise across the rest of the UK (excluding the capital) of just 11.5%. This is certainly good news for those looking at investing in residential property in and around London.

Luton is a growing town that is known for being one of the capital’s most sought-after commuter spots. Indeed, estate agent Jackson-Stops has flagged it as the top commuter hotspot for 2019.

Luton is located 30 miles northwest of central London. Direct trains run into London St. Pancras in as little as 22 minutes. 167 trains per day provide an almost round-the-clock service. Rents, meanwhile, are around a third of the cost that they are in the capital. For tenants, it’s the ideal combination.

Luton’s popularity is, as a result, increasing rapidly. Between 2018-41, the Office for National Statistics expects the town’s population to grow by 12.9%, to 248,500. At the same time, it is in the grips of a serious housing shortage, as is the case in many towns and cities in the UK.

However, Luton’s housing shortage is more acute than most, with developer Project Etopia expecting that it will be 22.1 years behind where in needs to be in terms of housebuilding by 2026, if the current rate of development continues. At present, Luton is building 430 new homes a year – it needs to build 1,417 to meet demand.

The town’s housing shortage spells good news for buy-to-let investors over the long-term, as it points to a sustained level of tenant demand, as renters snap up the homes that are available. It also has the potential to drive up house prices, as well as rents and yields. Luton is already bucking the trend in terms of house price growth.

While many southern locations are seeing a market correction at present, with falling prices or flat growth, Luton’s average property value rose by 1.6% in the year to April. Savills, meanwhile, projects growth of 9.3% in the five years to 2023 for the wider South East region.

In terms of its rental market, Luton enjoys an average rent price of £632 per month for a one-bedroom apartment and £828 for a two-bed, according to Zoopla. This is significantly less than equivalent homes in London.

Stephens adds: “It is Luton’s combination of capital growth potential and pent-up demand for private rented sector homes that has caused the town to top LendInvest’s UK buy-to-let index for so much of the past three or four-year period. This is a town with outstanding growth potential.”

Majority of those in Private Rental Sector are Unaware of Tenant Fees Act

Published On: May 30, 2019 at 9:05 am

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Tenant demand hits all-time high, Paragon Bank finds

The majority (59%) of those within in the private rental sector, including landlords, letting agents and tenants, are unaware of the upcoming Tenant Fees Act, which will be implemented on Saturday (1st June 2019).

New research by our sister company Just Landlords revealed that just 41% of respondents are currently aware of the impending regulation change, while 30% are skeptical about how they will benefit from it.

From 1st June, landlords and letting agents will be banned from charging upfront fees to tenants, including charges for administration, renewals and referencing.

With the average tenant fee costing a total of £400, the Government’s new law aims to make renting cheaper and more secure for tenants.

However, Just Landlords uncovered a limited awareness of the approaching Tenant Fees Act, with 17% of respondents believing that tenant fees are actually being introduced on 1st June, as opposed to being banned.

Limited knowledge of the Tenant Fees Act could be problematic for landlords and letting agents, as they could be fined £5,000 for charging fees to tenants when the ban is introduced.

Many respondents also presented a cynical attitude towards the Government’s attempts to make renting cheaper and more transparent for tenants. Three-quarters of those involved in the private rental sector believe that the Tenant Fees Act will fail to save tenants money, while 49% predict that rent prices will increase to accommodate scrapped fees.

Those aged 25-34 and single individuals were the most sceptical about the positive impact of the upcoming ban.

Rose Jinks, our Editor and the Spokesperson for Just Landlords, says: “There has been a lot of talk within the property industry that landlords will increase rent prices as a result of the tenant fees ban, as they look to recoup potentially higher charges imposed by letting agents.

“It is clear that our respondents felt the same; rents will go up, causing the Government’s efforts to make renting cheaper fall flat on its face.”

While the majority of respondents are reluctant to believe that banning tenant fees will positively impact renters, 27% think that it will speed up the tenancy agreement process, 23% predict easier interaction with landlords and letting agents, and 22% think that the change will reduce administration tasks for tenants.

Jinks has some final advice: “The tenant fees ban is just around the corner, but so many of those involved in the private rental sector are unaware of what the new law even means. We urge tenants, landlords and agents to get themselves up to date, and prepare for the changes where necessary – don’t get caught out!”

Number of Disputes Handled by the Property Redress Scheme Surges

Published On: May 30, 2019 at 8:09 am

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The number of disputes handled by the Property Redress Scheme last year surged significantly year-on-year, according to the consumer redress ombudsman’s latest annual report, covering 2018.

The report shows that there was a 103% increase in final decisions in 2018 and an 82% rise in proposed decisions issued by the Property Redress Scheme, compared with figures from 2017.

The total amount of compensation awarded to consumers by the Property Redress Scheme in 2018 was almost £300,000, with an average award of £1,102.83.

Membership of the organisation has continued to grow at a rapid rate, with a further 37% increase in members in 2018. The current membership of the Property Redress Scheme is now close to 11,000 letting agent offices.

The report details not only an overall rise in complaints, but increases in different types of complaints, too. In 2018, the following issues recorded more complaints than in the previous year: fees and charges; general communication; poor service and complaint handling; and rent collection.

Sean Hooker, the Head of Redress at the Property Redress Scheme, comments: “2018 was a fundamental year for the Property Redress Scheme, and this was mirrored in the wider sector, as further developments in the Government’s project to reform the housing market started to take shape.”

It will be interesting to see how complaints within the private rental sector change following the upcoming tenant fees ban, which will prohibit landlords and letting agents from charging upfront fees to tenants. 

The Government’s plans are designed to make renting cheaper and more secure for tenants. However, concerns have been raised over whether the changes will be successful – will rent prices increase as a result, thus pushing housing costs up for tenants? 

The effectiveness of the ban will also rely on landlords and agents complying with the law – read up on your responsibilities here: https://www.landlordnews.co.uk/category/tenant-fees-ban/