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Radical Action Needed to Protect Tenants from Rogue Landlords, Says RLA

Published On: April 29, 2016 at 8:25 am

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Radical action is needed to protect tenants from rogue landlords, insists the Residential Landlords Association (RLA).

The call comes after data received through a Freedom of Information (FOI) request indicates a worryingly low level of enforcement of rental housing regulations by local authorities.

Radical Action Needed to Protect Tenants from Rogue Landlords, Says RLA

Radical Action Needed to Protect Tenants from Rogue Landlords, Says RLA

The data, collected by the RLA, from the 255 councils that responded, suggests that just 827 prosecutions have been made against landlords over the last five years, following improvement notices being served.

The RLA does not believe that so few landlords have breached their legal obligations over this timeframe. Research shows that there are over 140 Acts of Parliament containing more than 400 regulations affecting the private rental sector.

The data received through the FOI request stands in stark contrast to figures from the London Borough of Newham, which has published a study stating that since January 2013, it has undertaken 779 prosecutions of landlords alone. The council did not respond to the FOI request.

Since 2013, the council has worked closely with the police, HM Revenue & Customs and the UK Border Agency to use the wide range of powers already available to tackle rogue landlords. It has conducted numerous high profile raids of properties that are substandard or overcrowded.

The RLA is now calling for a radical national overhaul of the way that regulations are enforced, enabling the majority of good landlords to be regulated by robust industry-run schemes, which would free councils to find and punish the rogues who often target vulnerable tenants.

The Chairman of the RLA, Alan Ward, says: “Tenants and good landlords are being let down by a system unable to cope with the powers already available to root out the crooks.

“Unsafe and unsanitary housing has no place in the 21st century – those responsible put the lives of their tenants in jeopardy. It angers the majority of decent landlords who enjoy good relations with their tenants.”

He continues: “Newham Council shows that with the will and resources, councils already have the powers needed to protect tenants from bad landlords.

“Rather than tinkering around the edges, we need a radical overhaul of the way the sector is regulated, freeing councils to find the crooks. The message should be clear to those renting out substandard housing: get it sorted or face the full force of the law.”

Landlords, remember to stick to the law and keep up to date with your responsibilities at LandlordNews.co.uk.

House price growth slows in April

Published On: April 28, 2016 at 1:22 pm

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The latest data released from the Nationwide Building Society shows UK house prices slowed in April, following a surge in activity during March.

Annual house price growth was revealed to have slowed to 4.9% in April, in the comparison to 5.7% recorded in the last month.

Slow growth

April has seen house price growth of just 0.2%, which is the lowest monthly rise since November 2015.

In addition, the Royal Institution of Chartered Surveyors has also suggested that demand for commercial property has dropped to a record low. The institution concluded that international investors have been deterred by the uncertainty caused by the pending EU referendum.

Nationwide noted that April’s slowdown in house prices comes after the highs in March, which were caused by residential landlords rushing to beat the additional stamp duty deadline.

During March, there were 165,400 transactions, according to official data from HM Revenue and Customs.

Robert Gardner, chief economist at the Nationwide, said, ‘it may be that the surge in house purchase activity resulting from the increase in stamp duty on second homes from 1 April provided a temporary boost to prices in March.’[1]

Highs

Figures from the report show that the average price of a flat or UK increased to a new high of £202,436 in April.

Gardner observes, ‘house purchase activity is likely to fall in the months ahead given the number of purchasers that brought forwards transactions. The recovery thereafter may also be fairly gradual, especially in the buy-to-let sector, where a wealth of other policy changes, such as the reduction in tax relief for landlords from 2017 are likely to exert an ongoing drag.’[1]

House price growth slows in April

House price growth slows in April

Uncertainty

The survey from RICS underlines that uncertainty being created by the Brexit vote. RICS said that demand from foreign investors for UK commercial property is at its lowest for three years.

Simon Rubinsohn, chief economist at RICS, feels, ‘there is no doubt that since the EU referendum became a certainty following the general election last May, we have seen a decline in interest from overseas investors in UK commercial property.’[1]

‘At least in the short-term, we know that international retailers and service providers are finding the UK market less attractive,’ he added.[1]

[1] http://www.bbc.co.uk/news/business-36153571

Could PRA proposals lead to increased activity?

Published On: April 28, 2016 at 11:14 am

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Newly proposed underwriting rules for buy-to-let lenders as suggested by the Prudential Regulation Authority (PRA) could lead to an increase in market activity.

This is the view of buy-to-let specialist lender, Fleet Mortgages, who feel that landlords will look to secure finance before the PRA intervene.

Stricter conditions

Just last month, the PRA issued recommendations aimed at imposing stricter lending affordability measures on applicants looking for a buy-to-let mortgage. The PRA wants to see the amount of money being borrowed to be reduced,

Fleet Mortgages believes the new rules could come into place as soon as January 2017, but that some lenders will want more time to adapt to any alterations. Landlords and mortgage advisors could treat the coming months as they did in the period leading up to the stamp duty alterations on 1st April.

This period saw a surge in buy-to-let mortgage demand and activity and Fleet Mortgages suggests landlords looking to remortgage are more likely to do so before the new PRA lending criteria comes into play.

What’s more, it is feared that landlords with a large portfolio could be most affected by the changes, with many looking to secure finance in 2016 instead of waiting.

Increases

Bob Young, Chief Executive Officer of Fleet Mortgages, noted, ‘many have suggested that the recent stamp duty deadline is the only one facing the buy-to-let sector and market activity will now wither on the vine as landlords take stock of their positions for the foreseeable future.’[1]

‘The recent PRA consultation on buy-to-let underwriting actually makes it more likely that we will see activity levels begin to increase again over the course of the year as we get closer to the implantation of the rules. Certainly, given their intention to drive down the amounts buy-to-let landlords can borrow, it would be logical to think existing landlords seeking to remortgage or capital raise or both will make the most of the current market conditions which will allow them to borrow at higher levels,’ Young continued.[1]

Could PRA proposals lead to increased activity?

Could PRA proposals lead to increased activity?

Compromised

Mr Young went on to say, ‘Once the new rules kick-in, landlords and their advisers may well find their ability to secure the money they want has been compromised by the stricter underwriting criteria imposed on lenders, plus of course the likelihood that increased capital requirements will also impact on lender’s ability to offer the same levels of funding. It all adds up to the potential for renewed vigour in the buy-to-let sector, especially for those who may be deemed portfolio landlords, given the special affordability requirements they will face next year.’[1]

Offering advice to landlords, Young stated, ‘Our advice to advisers is to make sure any clients with these circumstances are contacted and they are made aware of how the lending landscape might change in 2017. Those in a position to make their new mortgage arrangements now are likely to find a much more hospitable lending environment, rather than waiting for lenders to implement these new rules and ultimately for them to end up disappointed.’[1]

[1] http://www.propertyreporter.co.uk/landlords/could-new-pra-proposals-reignite-market-activity.html

UK House Prices Down, but London Still Powers Ahead

Published On: April 28, 2016 at 11:05 am

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The average house price in the UK dropped slightly in March, but prices are still rising in London, according to the latest house price index from Land Registry.

House prices fell by an average of 0.5% last month, while they were up by 0.2% in London on a monthly basis.

UK House Prices Down, but London Still Powers Ahead

UK House Prices Down, but London Still Powers Ahead

Annually, house price growth now stands at 6.7%, taking the average property value to £189,901 in England and Wales.

The amount of property transactions has also increased over the last year. From October 2014 to January 2015, Land Registry recorded an average of 73,744 sales per month. In the same period a year later, the figure was 74,374. It has been claimed that this rise is a result of landlords rushing into the property market to avoid the 3% Stamp Duty surcharge.

Alongside the monthly increase recorded in March, London has also seen the highest annual house price growth of all regions, at 13.9%. The average property in the capital is now worth £534,785.

The East of England is the only other region to record monthly house price growth, of 0.2%.

The London borough with the highest annual price rise is Lewisham, at a huge 19.9%, while the greatest monthly increase was seen in Brent, at 2.8%.

Kensington and Chelsea experienced the smallest annual increase of 4.2%, amid claims that the prime London property market is running out of steam.

Prices were down the most in Hammersmith & Fulham, by 1.3%.

The Managing Director of estate agent Stirling Ackroyd, Andrew Bridges, comments on the data: “House prices across the country may be coasting in neutral, but the capital is speeding ahead. London’s lead is getting larger and the demand for life in the fast lane shows no sign of letting up.

“Such momentum in London also comes despite a few road bumps. Stamp Duty surcharges have caused a slight slowdown at the top end of the market and particularly in the west of the capital. Gears are grinding in old prime areas, such as Kensington and Chelsea and Hammersmith & Fulham. The new champions of the London property market are areas further east and further out.”

The London property market looks set to face changes in the near future, as the London mayoral election takes place next week. Online estate agent eMoov has analysed what each candidate can do for the housing crisis: /london-mayor-candidate-best-housing-market/

Worries in the Private Rental Sector as Supply Drops Sharply

Published On: April 28, 2016 at 9:40 am

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The supply of rental housing stock on letting agents’ books has dropped sharply, causing worry in the private rental sector, according to the latest report from the Association of Residential Letting Agents (ARLA).

The March Private Rental Sector report found that the supply of rental accommodation fell to the lowest level since the start of last year in March.

Demand was also down last month, with ARLA agents reporting an average of 33 prospective tenants registered per branch, down by 11% from the 37 seen in February. This is also down on last year, from an average of 33.

Worries in the Private Rental Sector as Supply Drops Sharply

Worries in the Private Rental Sector as Supply Drops Sharply

Supply has also dropped on an annual basis. In March 2015, the average number of properties managed per letting agent branch was 192. This year’s figure of 169 properties marks a decrease of 12% and is the lowest level seen since records began in January 2015.

However, the private rental sector appears to be healthy in Scotland, where agents had an average of 273 properties on their books. In Yorkshire and the Humber, agents have 207 properties to manage. Contrastingly, there are just 122 rental properties available per letting agent branch in London.

Due to the 1st April’s introduction of a 3% Stamp Duty surcharge for buy-to-let landlords and second homebuyers, two-thirds (65%) of ARLA agents predict that current and prospective investors will leave the market, causing a decline in the supply of rental properties. Indeed, many have questioned whether buy-to-let is still a lucrative investment opportunity.

In March, rent prices rose for a third (32%) of tenants, and three in five (61%) ARLA members fear that they will increase further as a result of the changes. It has long been considered that buy-to-let tax changes will push rents up for tenants.

The Managing Director of ARLA, David Cox, comments: “We don’t expect falling supply to stop here – the recent Stamp Duty changes are very likely to cause supply to decrease even further, as landlords withdraw from the market.

“Not only do our agents predict that rent costs will increase further, but rental homes may also face a decline in quality over time, as landlords struggle to keep up with maintenance costs alongside the higher Stamp Duty charge.

“While landlords adjust to the increase in costs, we can expect to see one of three outcomes prevailing in the buy-to-let market: landlords absorbing the cost and taking the hit; landlords withdrawing from the market causing supply to fall; or landlords regaining those costs through hiking rents. Next month we can start to assess the damage.”

Rogue landlord jailed for fake HMO documents

Published On: April 28, 2016 at 9:20 am

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A rogue landlord from Luton has been jailed, following being found guilty of six counts of fraud.

Mr Moses Ogoe obtained properties using false documents. He then proceeded to covert these properties into HMO’s, before letting them and falsely posing as the landlord.

Claims

In total, Mr Ogoe pretended to be the landlord for seven properties, even pretending to be landlord when on court bail!

When obtaining the property, Ogoe produced fake documents, claiming his profession was a doctor, catering manager and security manager. Mr Ogoe’s actual profession was a temporary security guard.

On numerous occasions, Ogoe evicted tenants without notice if they did not pay an increase in rent immediately.

Throughout the duration of the investigation, Mr Ogoe maintained his innocence and reportedly refused to co-operate with officers. However, on the first day of the trial, he changed his plea to guilty.

Rogue landlord jailed after fake HMO document

Rogue landlord jailed after fake HMO document

Greed

Upon sentencing Ogoe, his honour Judge Kay said, ‘you saw an opportunity to rent relatively sizeable properties and sublet them to desperate individuals who needed somewhere to live. You were not providing a public service because you did this for greed. You defrauded them as you did not provide a genuine tenancy and the protection that would give.’[1]

Before this sentencing, Mr Ogoe had received a caution, relating to housing offences under the Housing Act for one of the illegally converted properties.

Ogoe was sentenced to 16 months in prison and told to pay a total of £7,500 in costs. In addition, the judge ordered the computers on which the fake documents used to obtain the property were produced to be forfeited.

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/4/fake-landlord-claim-and-false-hmo-documents-lead-to-prison-term