Written By Em

Em

Em Morley

Belvoir Issues Rental Index and Calls on Government to Take Urgent Remedial Action in Autumn Budget

Published On: August 28, 2018 at 9:30 am

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Categories: Lettings News

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Average House Price Drops Between April and May

Belvoir’s 2018 Q2 rental index reveals that more landlords are deciding to sell up, and less are investing in the Private Rental Sector (PRS), due to increased legislation and punitive taxation policies. Belvoir is calling for the Government to take urgent remedial action in the Autumn Budget to incentivise those landlords who are offering necessary high-quality accommodation for the UK’s ever-increasing tenant population.

Belvoir CEO, Dorian Gonsalves, commented: “Property supply and tenant demand is something that Belvoir has been tracking closely, ever since the government embarked on a flawed policy to try and reduce the number of investment landlords so that more first time buyers could enter the market,

“Belvoir has continually warned that this policy would not work, as the UK’s rising population requires more homes across all tenures, including those people wishing to buy, people wanting to rent privately, and of course people requiring social housing.

“Belvoir’s 2018 Q2 rental index shows that more agents than ever before are reporting that landlords are selling up. A sample survey of Belvoir franchisees reveals that there has been a slight increase (from 46% to 48%) in the number of offices reporting that their landlords are selling up to three properties, and an increase from 7% to 17% of landlords selling between six to 10 properties. One Belvoir office reported that they currently have 17 families on notice due to landlords putting their properties on the market.

“Although government policies such as a loss of mortgage tax relief, and increased stamp duty on second homes are hurting landlords, they still have a choice as to how to invest their money, whereas tenants have little or no choice of where to rent due to a reduction in supply.

“Belvoir’s Q2 rental index revealed just a slight increase in average rental inflation across the UK, with a similar number reporting static rents, but if landlords continue to sell up because their business model in the PRS is being continually attacked, it will undoubtedly result in a further shortage of properties, and inevitable increases in rents, as predicted in the latest RICS report, which stated that rents are likely to rise by 15% over the next five years.

“Concerns about the possibility of mandatory three-year tenancies may also influence the decision of landlords, and there are real concerns that there could be an increase in homelessness, as there is insufficient social housing to accommodate people.

“The majority of landlords are not actively against three-year tenancies. Our survey shows that tenants are already remaining in their homes for longer, with 40% staying for 19-24 months, and 17% choosing to rent a property for over two years. One office reported that their average tenants are staying for over four years, with another reporting the average as 2.5 years.

Should three-year tenancies become mandatory, landlords need reassurance that they can gain possession of their property when needed, and will be protected against tenants who do not pay their rent, or abuse a property or indulge in anti-social behaviour.

“We are urging the government to do more in the Autumn Budget to address stock shortages in the UK, by incentivising the new build sector with low maintenance homes through more Help to Buy and Buy to Rent schemes to provide more homes to own.

“Landlords also need rewards and incentives to encourage them to remain in the PRS, such as reversing current tax increases and introducing tax breaks, as well as initiatives such as tax incentives for landlords who buy large properties and turn them into several affordable and low maintenance flats suitable for the rental sector.
“It is anticipated that more landlords will make a decision about whether to retain their portfolio in 2019 when tax bills have been calculated and the true extent of any further erosion to their profits is seen. The Autumn Budget is the perfect time for the government to introduce the incentives that landlords who offer good quality properties at a reasonable rent really need.”

House Raid Finds 15 Men Living in Two-Bedroom Bungalow

Published On: August 28, 2018 at 8:33 am

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Categories: Landlord News

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Brent Council officers discovered 15 men huddled inside a two-bedroom bungalow in north London during an enforcement raid.

Tenants were found sleeping on mattresses which were scattered across the dining room and living room of the property, in addition to bunk beds inside the chronically overcrowded property.

What is the plan of action?

Authorities intend to search for the rogue landlord of the illegally overcrowded property, which was so cramped the tenants had resorted to storing their belongings in furniture protected tarpaulin in the garden.

The 15 men were all making payments of £50 each week, were plagued by damp, mould, poor ventilation, a broken soil stack, damaged light fixtures, poor maintenance and hazardous living conditions.

Officials also made the discovery that the safety of these renters was compromised by the fact that there was no fire safety system implemented inside the property by the landlord.

In total, the rent paid by these tenants was £3,250 per calendar month, twice as much as the amount shown on the tenancy agreement.

Officers also recently raided a second unlicensed property in Wembley. They discovered five households sharing one kitchen between them, in addition to a bathroom, and toilet.

The 11 tenants included 2 children, and were paying £1,750 per calendar month in order to live in an unlicensed house in multiple occupation (HMO).

Councillor Eleanor Southwood, Cabinet Member for Housing and Welfare Reform, commented: I’m appalled at the conditions our team discovered here. There are no circumstances in which it is okay for people to have to live like this – in unsafe, squalid conditions. That’s why we expect landlords to license their properties and why we’re prepared to take the strongest possible action, including through the courts, if they fail to do so.

“There’s no excuse for landlords not to know who is living in their properties. It’s their responsibility to make routine checks. We will continue to crack down on landlords who refuse to manage their properties properly.”

Major Regional Difference in Landlord Experience and Buying Habits

Published On: August 28, 2018 at 8:12 am

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Categories: Landlord News

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Buy-to-Let Remains a solid investment option, Broker Insists

Buy-to-let landlords in the Midlands continue to invest in the sector on the back of a ‘positive outlook’, however, elsewhere in the country, landlords are generally scaling back, particularly in London, recent figures reveal.

Recent data from UK Finance, reveals that buy-to-let mortgages for property purchase have dropped by 40% overall since 2015, subsequent to the announcement of tax and regulatory changes for the sector.

However, the latest survey of over 680 landlords conducted by BDRC on behalf of Paragon, discovered that landlords in the Midlands seem to be challenging the trend, endorsed by strong, regional economic growth. A thriving higher education sector and continued, effective regeneration of Britain’s second city, Birmingham.

Moreover, landlords remain picking up property in the East and West Midlands, despite a significant drop in purchase activity in Central London and more modest reductions across the rest of the country, as a result of higher rental yields, in the region, with East Midlands landlords currently achieving a 6.7% average rental yield, whilst those in the West Midlands are attaining yields of 6.2%.

Some 42% of landlords in the East Midlands and 33% in the West Midlands claimed that tenant demand was rising, in comparison to the 24% of landlords who indicated growing demand.

Managing Director of Mortgages at Paragon, John Heron, commented: “These findings highlight a big regional difference in landlord experience and buying habits.
“Some central London landlords appear to be scaling back a little while landlords in the Midlands continue to invest on the back of a positive outlook.”

Renters Get Public’s Support for Protection from Eviction

Published On: August 24, 2018 at 9:58 am

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Categories: Tenant News

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Public support is widespread, when it comes to the issue of protection for renters from unfair eviction, results from a survation poll reveal.

With a majority of Conservative voters supporting limits on rent increases, and compensation for tenants evicted through no fault of their own. These results put pressure on the Government to improve its proposed reforms for three-year tenancies, which are out for consultation until this Sunday, 26th August.

The poll comes as renters deliver a petition to Housing Secretary James Brokenshire on Thursday which demands an end to landlords’ right to evict tenants with no reason, and is signed by 50,000 people.

59% of respondents to the poll were in mutual agreement that tenants who pay their rent arrears and maintain their home to a suitable standard should have to pay an automatic right to stay in it, while 61% believed that landlords who choose to evict tenants in order to sell their property or move back in should pay the tenant’s moving costs. Just 21% of respondents thought landlords should be able to evict a tenant without providing a reason for the eviction.

Support from controlling rents was even higher, with almost 72% of respondents agreed that landlords should not be allowed to raise rents by more than rate of inflation.

Furthermore, there was also strong support shown for the belief that landlords should be subject to the same levels of regulation as other business 79% and that tenants should expect the same level of consumer protection from their housing as they would from other services, such as their gas or electricity providers (81%).

If a utility company goes out of business, their customers are allocated a new supplier by Ofgem. Currently, if a landlord sells up, the tenant has to find a new place to live themselves – at their own expense.

The poll uncovers that these measures would be popular across the whole population and political spectrum. A majority of owner occupiers would support tenants receiving compensation if they were evicted by a landlord selling up or moving back in.

Older voters were far more in favour of rent caps than younger voters, with 79% of over 55s agreeing with the statement compared with 68% of 18-34-year olds.

Of the people who voted Conservative last year, support for limits on rent increase is, at 72%, of an equal level to the wider population, and 56% believe that blameless tenants should have their moving costs paid if they are evicted. 64% disagreed that landlords should be able to evict without reason. This statistic was more than the wider population. The law that allows this, Section 21, of the 1988 Housing Act, was introduced by the Thatcher Government.

Generation Rent is campaigning to strengthen the protections for tenants by abolishing Section 21, thus ending the ability to evict without grounds. The campaign proposes that rent rises should be restricted to wage growth and that landlords evicting to sell or move back in pay the equivalent of three months’ rent to support the tenant in finding a new home. This would also incentivise sales with sitting tenants.

The End Unfair Evictions coalition will be handing in a petition to the Housing Secretary at the Ministry of Housing today at 1pm, and is urging renters to respond to the government’s consultation by the end of the week. The End Unfair Evictions coalition is Generation Rent, ACORN, London Renters Union and New Economics Foundation.

Director of Generation Rent, Dan Wilson Craw, commented:
“Private renters are well aware of how precarious their tenancies are. Few have any certainty that their home will be theirs in a year’s time, and if their landlord serves an eviction notice, they will face months of upheaval and thousands of pounds in costs to find a new place to live.

“It is heartening to see that the wider public recognises that we all need a stable home. The government has timid proposals for three-year tenancies, but there is clear support across the political spectrum for indefinite tenancies with real protections for renters. This should give ministers the confidence to go much further.”

Housebuilders Looking to Profit from Generation Rent

Published On: August 24, 2018 at 9:27 am

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Categories: Property News

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Property developers are looking to gain profit from the number of private renters by investing further in purpose-built rental accommodation.

The Build to Rent model provides housebuilders with a new method to generate profit from Generation Rent, which largely explains why the sector is predicted to become a vital growth area in the housebuilding market.

According to the Housebuilding Market Report – UK 2018-2022, including residential conversions, there were around 258,000 new dwellings delivered across the UK in 2016/17, up by 13% on the previous year.

For 2017 to 2018, it is estimated that the rate of growth has been similar, with 280,000 new homes being added in part to purpose-built private rented housing.

In addition to attracting some of the larger housing associations, an increasing number of larger private housebuilding groups are also diversifying into Build to Rent, usually in partnership with private investors.

To obtain the desired rates of return, concentration on their investments is on large-scale apartment developments in major locations of London, the West Midlands and the North West, which offer economies of scale.

In regards to purpose-built student accommodation (PBSA), this is mainly being achieved through the increased specification of prefabricated building components and even full offsite building systems such as volumetric modular construction.

Separate research by the British Property Federation (BPF) earlier this year also found that there has been a significant rise in the number of Build to Rent homes complete, under construction and in planning across the UK.

In the UK there are currently in excess of 100,000 Build to Rent homes across all stages of the development lifecycle.

Director of Real Estate Policy at the BPF, commented: “The Build to Rent sector is evolving quickly, with significant delivery in the regions and more houses, rather than just apartments, coming forward.”

Council with Most Prosecutions of Agents and Landlords is Named

Published On: August 24, 2018 at 8:58 am

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Categories: Law News

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Camden has been revealed as the local authority with the highest number of prosecutions of agents and landlords in London.

According to the Mayor of London’s rogue landlord and agent checker, launched last December to assist Londoners in securing affordable homes with the knowledge that their agent or landlord has not committed previous offences, Camden has prosecuted on 59 occasions and put 35 names on the blacklist.

Southwark Council has brought 51 prosecutions and placed 14 names on the blacklist. In third place is Newham with 44 prosecutions, and 27 names on the blacklist.

Camden Council’s prosecutions include one of a property management firm which was accommodating 26 people in over-crowded conditions above a former pub. The case resulted in a £40,000 fine.

Camden claimed that as a result of its prosecutions, more agents were coming forward to get HMO licences and seek advice.

Tenants also received compensation after seeking rent repayment orders for living in unlicensed HMOs, with £9,000 reclaimed in the last six months.

Dissimilar to the national ‘blacklist’ of agents and landlords, the Mayor of London’s database is completely accessible to the public. The national blacklist, launched in April, can only be viewed by local and central Government.

Notable prosecutions by Camden Council in the last year include:

  • Over £42,000 in fines and costs secured from the managers of an unlicensed house in multiple occupation which had come to the council’s notice after tenants complained of a rat infestation, rotting windows and the need to use saucepans to catch water dripping through the bathroom floor
  • A £40,000 fine for a property management company who were found to be accommodating 26 people in overcrowded conditions above the former Grand Union Pub on Camden Road.
  • Clamping down on a landlord who illegally sub-divided rooms in the listed building which was the birthplace of Benjamin Disraeli.

Tenants are also receiving compensation after seeking rent repayment orders for living in unlicensed HMO’s, with £9,000 reclaimed by tenants in the last 6 months and more on the way.