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Em Morley

Thousands of landlords still haven’t signed up to Rent Smart Wales

Published On: September 15, 2016 at 10:43 am

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Concerning new figures have revealed that thousands of landlords in Wales have not yet signed up for Rent Smart Wales. This is despite there being less than two months remaining before the scheme becomes a mandatory requirement.

Rent Smart Wales

Rent Smart Wales is a registration and licensing system in Wales, which went live last year. The scheme requires all landlords and letting agents to register their properties and undergo training to obtain a licence should they wish to self-manage their investment.

Landlords and letting agents in Wales have been given a deadline of 23rd November in which to comply with the new legislation. After then, it becomes a criminal offence to let or manage a property without the sufficient licence.

In particular, landlords in Swansea are causing concern, with extremely low numbers signed up to the scheme.

A Freedom of Information request has revealed that only 1,565 landlords in Swansea had already registered with Rent Smart Wales at the end of August. This is only just over a fifth of the total number of landlords required to do so.

Quality

The scheme is designed to improve the quality of rental accommodation in Wales, through both providing training courses and giving local councils a better understanding of where properties are situated.

However, Rent Smart Wales estimates that 8.3% of homes in Swansea are privately rented. This amounts to around 7,500 eligible properties in the city.

Welsh Liberal Democrat politician, Peter Black, noted: ‘with the registration period almost over, the failure to enlist the vast majority of landlords into this compulsory scheme has put it into crisis mode.’[1]

‘Unless there is a surge of registrations in the final two months then it will become impossible to administer this scheme effectively. Swansea tenants will miss out on the protections offered by the legislation and those living near badly managed privately rented properties will have fewer options to deal with problems.’[1]

‘This is not Swansea Council’s fault. This scheme is being administered by Cardiff Council on behalf of the Welsh Government. However, ministers are trying to do it on the cheap. They have not given sufficient resources to Rent Smart Wales to promote the scheme and councils do not have funds to chase those who do not register,’ he continued.[1]

Thousands of landlords still haven't signed up to Rent Smart Wales

Thousands of landlords still haven’t signed up to Rent Smart Wales

Numbers

According to a Welsh Government spokesperson, more than 19,000 private landlords in Wales have signed up to the scheme. In addition, more funding has been made available to local authorities to enforce the scheme.

The spokesperson said, ‘after just nine months, more than 19,000 private landlords have registered and more than 33,000 have taken the first step and opened accounts on the scheme. This compares with just 3,000 or so registered with the previous voluntary scheme.’[1]

‘We are committed to improving the arrangements for people who rent their home from private landlords and the benefits of Rent Smart Wales are already emerging-96% of those who have completed the relevant training have said it will make them a better landlord.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/9/thousands-of-landlords-have-not-signed-up-to-the-rent-smart-wales-scheme

 

Over-55s Also Being Hit by the Struggles of the Housing Crisis

Published On: September 15, 2016 at 9:14 am

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We’re used to hearing about how aspiring first time buyers are finding it difficult to get onto the property ladder, but did you know that over-55s are also being hit by the struggles caused by the housing crisis?

The latest research by online estate agent eMoov.co.uk has found that those in the later stages of life are also struggling to get buy in current conditions, forcing many to draw equity from their property in order to survive.

Over-55s Also Being Hit by the Struggles of the Housing Crisis

Over-55s Also Being Hit by the Struggles of the Housing Crisis

The agent found that there has been a sharp rise in the number of people aged 55 and over drawing on the equity from their property in order to get by. Around £17 billion of funding has been provided to 350,000 homeowners since 1991 – a third of which was released in the last five years alone.

Equity release plans are long-term agreements based on indefinite terms that usually last until the customer either moves into care or passes away. There is no payment required or interest due on the amount paid out until this point, and an equity release provides better long-term security than a residential mortgage.

During the second half of 2015, the Equity Release Council found that UK homeowners aged 55+ released housing wealth worth a total of 898m – the greatest amount of any half-year on record.

The data also shows a significant increase in those aged 85 and over taking out equity release, accounting for 5.9% of all customers – almost double that in 2014.

The research suggests that for many, the cost of living, alongside the repayment of their mortgage, means that private and state pensions are often inadequate.

Additionally, equity release provides a source of income to fund this, as well as home care and other costs incurred during retirement.

Depending on whether they opt for a drawdown release or a lump sum, equity release customers across the UK are able to boost their finances by between 109-179 weeks’ full-time take home pay, taking an average of £49,607 in equity through a first drawdown withdrawal, or as much as an average of £81,324 in one lump sum.

Unsurprisingly, the figure is highest in London, where the average lump sum increases to £209,739, down to £102,184 in the South East and £78,531 in the South West. The lowest amount on offer across the UK is in Scotland, where the average lump sum is just £39,384.

The founder and CEO of eMoov, Russell Quirk, comments on the findings: “There has been a dramatic increase in the number of over-55s, particularly those 85 and above, having to draw equity from their property in order to survive, due to the ever inflating cost of living in the UK.

“Although record low interest rates are good news for those struggling to get on one end of the ladder, it’s not the case for those at the other end who have seen the interest accrued on their life savings dwindle with the cut in rates.

“With savings rates ever lower, it’s evident that income from pensioners’ savings is under pressure, and therefore, necessitating that grey equity within such housing is being increasingly turned to in order to make ends meet.”

Tax changes in buy-to-let sector will remove ‘dinner party’ landlords

Published On: September 15, 2016 at 9:07 am

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Alterations to tax measures, including the increased stamp duty and changes to mortgage interest tax relief, will lead to more professional landlords in the sector, according to a leading industry peer.

Adrian Moloney, of One Savings Bank, expressed his views at the Financial Services Expo (FSE) London exhibition. Moloney was one of an industry panel debating a wide range of issues.

Changing nature

When asked for his opinion of the changing nature of buy-to-let and the impact on landlords, Moloney said, ‘we are seeing a move towards a more professional sector and we’re going to see less of the dinner party landlord. This is very much an era of professionalism and I don’t think that’s necessarily a bad thing for the private rental sector.’[1]

However, Moloney was not as keen to welcome alterations to mortgage interest tax relief- to be introduced from April next year. Moloney said, ‘my hope is that the Chancellor will change the tax rules for buy-to-let landlords in the Autumn Statement but that’s probably not going to happen.’[1]

Mr Gary Salter, of Nationwide Building Society, believes, ‘we will see a change. This is the direction of travel we are going in-we moved to a 145% rental calculation earlier this year. Lenders will need to be much more prudent.’[1]

Tax changes in buy-to-let sector will rid 'dinner party' landlords

Tax changes in buy-to-let sector will rid ‘dinner party’ landlords

Actions

The panel was also asked what action they would like to see Chancellor Philip Hammond take in his first Autumn Statement.

John Coffield, of Paradigm Mortgage Services, has proposed changes to stamp duty land tax, in London and the South East primarily. He argues that estate agents are not welcoming enough properties to market, as people are deterred by the costs of moving.

Mr Moloney agreed that stamp duty in these regions could be changed, stating, ‘I would like to see some help for home movers,’ adding, ‘perhaps we could relax stamp duty in that area.’[1]

[1] http://www.propertyreporter.co.uk/landlords/will-changes-in-the-prs-signal-the-end-of-dinner-party-landlords.html

Rogue Landlord and Letting Agents Fined £20k for Failing to License Property

Published On: September 15, 2016 at 8:31 am

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A rogue landlord and letting agents have been fined over £20,000 and given criminal records for failing to license his property in Willesden and ignoring tenants’ pleas for essential repairs.

The rogue landlord had left the property in a terrible state of repair

The rogue landlord had left the property in a terrible state of repair

Despite repeated warnings from Brent Council’s Private Housing Services officers, Khalid Latif and his letting agents PMC Management and Collections did not act upon the notices to bring the property on Chandos Road in Willesden Green up to a licensable standard.

The six tenants that lived at the four-bedroom property approached the council to complain about the poor living conditions at the house, which included no hot water or central heating, rotten and damp fittings and disregard of basic fire safety measures.

Watford-based Mr. Latif, who has owned the run-down property since 2000, was earning more than £2,500 per month in rent from the home.

Brent Magistrates’ Court was told that Brent Council had repeatedly contacted both Mr. Latif and PMC Management and Collections over an eight-month period and visited the property on several occasions, finding that no repairs had been undertaken.

Both the rogue landlord and letting agents were convicted of failing to license the property. The court also considered the hazards found in the property to be aggravated, and fined both Mr. Latif and PMC Management and Collections £9,500, with another £695 each in costs and £120 each in a victim surcharge – a total of £20,630.

Councillor Harbi Farah, Brent Council’s Lead Member for Housing, comments on the case: “Unlicensed, unsafe properties like this are a danger to the entire community and it is unacceptable that anyone in London should have to rent a property that lacks basic facilities like hot water.

“The vast majority of landlords and letting agents in Brent are honest and law abiding, but we take a zero tolerance approach to the minority who think they can treat their tenants like this.”

She adds: “Our licensing scheme ensures that landlords maintain their rental properties to a decent standard. If you’re a landlord, failure to license your property could result in an unlimited fine and a criminal record.”

The majority of private landlords in Brent are legally required to obtain a license from the council. Find out more here and avoid being named and shamed as a rogue landlord!

Cleaning costs most common cause of student deposit deductions

Published On: September 14, 2016 at 1:46 pm

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Fresh research from independent comparison website money.co.uk has revealed the most common reasons why students’ deposits are withheld by landlords.

Results from the survey show that cleaning costs and damage to fixtures and fittings are the most common reasons why landlords hold some or all of a student’s deposit.

Holding

With young adults across the British Isles heading to University this month, many will have to face up to not getting their full deposit back at the conclusion of their agreement. In fact, data from the report shows that 38% of students will not receive their deposit in full.

Of those students, landlords typically keep 29% of their deposit, amounting to an average deduction of £164 each.

Cleaning amounted to over half of landlords’ reasons for not returning a deposit (52%), with students failing to return a property in an acceptable state of cleanliness for a full deposit return.

24% of landlords cited damage to fixtures and fittings as a reason for not returning deposits. Excessive wear and tear (22%) was also a popular reason. However, only 5% cited unpaid bills.

Cleaning costs most common cause of student deposit deductions

Cleaning costs most common cause of student deposit deductions

Unfair

Unsurprisingly, two out of three students felt that their tenancy deposit was retained unfairly. Alarmingly, roughly one-quarter of students did not receive prescribed information on the tenancy deposit scheme their deposit was registered with. One in ten claimed that their landlord did not even protect the deposit!

Despite, two-thirds of students claiming that their deposit was held unfairly, only 15% disputed the decision and got money back.

Hannah Maundrell, editor in chief at money.co.uk, observed that this is the first time that many students will have lived alone and rented out a property.

She noted, ‘landlords are not the enemy-students must make sure they keep the property in a decent state so there’s no reason for their landlord to keep their cash-this is money they’ll be relying on getting back.’[1]

‘With over half a million students in private rented accommodation the scope for problems is huge,’ she added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/9/cleaning-costs-biggest-cause-of-deductions-to-student-rental-deposits

Housing Minister Backs the Private Rental Sector in First Major Speech

Published On: September 14, 2016 at 10:54 am

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The new Housing Minister, Gavin Barwell, has backed the private rental sector in his first major speech.

Barwell, who was appointed as Housing Minister in July, used his speech at the RESI Conference to shift Government policy away from a focus on homeownership.

He insisted: “We need to build more homes of every single type and not focus on one single tenure.”

He also suggested that the Government is considering abandoning its pledge to build 200,000 Starter Homes by 2020, due to a shift towards supporting the private rental sector.

The Government’s Starter Homes policy involved building homes for first time buyers, sold at a discounted rate of 20%. However, Barwell explained that such policies, which encourage homeownership and increase the level of demand, could affect the amount of homes built to rent.

Housing Minister Backs the Private Rental Sector in First Major Speech

Housing Minister Backs the Private Rental Sector in First Major Speech

He said: “There’s a little bit of a tension between the overall supply objective and measures specifically to help people onto the housing ladder.”

Barwell indicated that affordable rental homes could now be included in the Starter Homes target.

He added: “The way you make housing in this country more affordable to rent and buy is you build more homes. There is still a role for the Government doing specific things to help people onto the first rung, but this can’t be at the exclusion of all else.”

In the past, Government policy has largely focused on homeownership, at the expense of private rental sector development.

Additionally, buy-to-let landlords are now facing an additional 3% Stamp Duty charge when they purchase a rental property.

Barwell commented: “A growing number of families and young professionals are choosing the [private rental sector], and while homeownership is still the goal for the majority, many will rent for some years before they buy.

“I’m very clear that our ambitions will never be achieved without a significant boost in institutional investment to the [private rental sector], to ensure more choice and quality for people living in rented accommodation.”

Adam Challis, the Head of Residential Research at JLL, describes the Starter Homes policy as “a big distraction”, adding: “This is welcome news, as it signals this Government’s desire to support housing across all tenures.

“The private rented sector is the fastest growing tenure, but had been overlooked under old policy. This is the first step in putting that right.”

Barwell also gave his backing for build-to-rent schemes, highlighting one by Essential Living in north London and another by Pocket Living in south London, which uses modular techniques.

He said: “Recent growth in the bespoke rental market has been impressive, but this progress must be expanded.”

London’s Deputy Mayor for Housing, James Murray, also expressed his backing for the private rental sector, while defending his 50% affordable housing target.

He said: “If we’re going to increase supply and have affordable [housing] within that, you need to use every route of delivery, and if build-to-rent can deliver at scale and speed, then we should support that.”

Is the Government’s change of focus good news for landlords?