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Em Morley

Thousands of London Homes Left Empty Despite Housing Crisis

Published On: February 22, 2016 at 4:53 pm

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Tens of thousands of London homes have been left empty for so long that they are classed as long-term vacant, despite a chronic housing crisis in the capital.

Data obtained by The Guardian found that more than 1,110 properties have been left uninhabited for over a decade.

More than 22,000 homes have been left empty for over six months, despite an extreme shortage of housing in the capital, according to figures from London boroughs in response to a Freedom of Information request.

Councils hoping to bring empty properties back into use have a variety of options, including charging an additional rate of Council Tax, helping homeowners will the cost of repairs and even compulsory purchase orders.

However, the data shows that a large number of properties have been left vacant for years rather than months, suggesting that councils have not been using their powers to ensure existing housing does not go to waste.

More than a third of the total number of empty homes (8,561) have been left vacant for over two years, with 1,151 uninhabited for more than ten years.

The Green Party candidate for the Mayor of London, Sian Berry, comments on the findings: “With homelessness rising to crisis proportions, it’s not right that so many properties should be sitting empty and for so long.

Thousands of London Homes Left Empty Despite Housing Crisis

Thousands of London Homes Left Empty Despite Housing Crisis

“The best way of bringing them back into use is via self-help housing groups – in many cases building a constructive relationship with the owner, who may well not have wanted the property to fall into disuse in the first place and will welcome efforts to put matters right.”1

The real number of empty homes may be even higher, as homeowners are not obliged to report that their property is empty to their local council and councils are not required to keep registers of vacant homes. Additionally, Council Tax databases do not include properties in such a state of disrepair that they are uninhabitable.

Also, just 31 of 33 London boroughs responded to the request – Bromley Council did not respond, while Westminster claimed it could not supply the dates that the properties became empty.

Since April 2013, councils have been able to impose an empty homes premium of an additional 50% Council Tax, discouraging homeowners from admitting that their properties are unoccupied.

Greater London has 3.4m homes, but this number is insufficient in housing the capital’s growing population. Some councils, however, are starting to take action against the buy to leave trend, which sees investors purchase homes with the intention of leaving them empty, in order to take advantage of London’s spiralling house prices.

Last year, Islington Council enforced planning laws aimed at banning owners of new homes from leaving their properties unoccupied for over three months, with a threat of legal action for those that flout the law.

Other reasons that homes become unoccupied include owners not knowing what to do with inherited property or lacking the funds needed to repair properties to a habitable state.

The Chief Executive of charity Empty Homes, Helen Williams, says: “With so many people priced out of decent housing across London, it makes sense to make the most of existing properties, as well as build new homes, to address the capital’s housing needs.

“The casework that councils do with property owners can be incredibly effective in ensuring that homes that have been stuck empty are brought back into use. At the same time, we would like to see more long-term empty properties across England bought by councils and charities to create new homes that are affordable to people on low to moderate incomes.”

However, she adds: “But questions remain as to how well Government-funded housing programmes will continue to support this work, now that dedicated empty homes programmes have come to an end.”1 

If you are a landlord with an empty rental property, remember that you can protect your asset with unoccupied property insurance, before your new tenants move in or while you are completing repair work.

1 http://www.theguardian.com/society/2016/feb/21/tens-thousands-london-homes-deemed-long-term-vacant

 

Young struggling to get onto property ladder

Published On: February 22, 2016 at 12:49 pm

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Another report has underlined the notion that young people are becoming trapped in the rental market, due to spiralling house prices.

An investigation by the independent Social Market Foundation think tank has revealed that an extra 1.8 million people have been unable to get their foot on the property ladder since 2001.

Young struggle

The report shows that if home ownership levels among 25-34 year olds during 2016 remained the same as 2001, an additional 1.8 million people in this age group would now be owner-occupiers. Despite this, they are being faced with barriers in getting onto the ladder due to high property values, tighter lending criteria and difficulties in saving for a deposit.

Data from the investigation underlines a lack of housing supply as the most prominent factor in the lack of young homeowners. Results indicate that Britan will see a shortfall of nearly 1.3 million homes by 2026, if current supply levels and lack of growth remain constant over the same period.

In addition, the report looks at how the market could grow over the next decade and warns that supply could continue to come up short in the face of rising demand.

Young struggling to get onto property ladder

Young struggling to get onto property ladder

Boosts

This follows results from a different survey released last week by the independent Resolution Foundation body, which indicated that home-ownership for young, working class households could slip to just one-in-ten by 2025.

Claiming crowdfunding could be used to boost savings of young, would-be buyers, the report also suggests that the supply of new homes could be increased by providing crowdfunded equity to small and medium-sized constructers.

Social Market Foundation economist Katie Evans, also the author of the report, said, ‘getting onto the housing ladder is becoming harder and harder for young people. Our failure to build enough homes means this problem threatens to stretch into the future. Property crowdfunding could be the means to tackle both demand and supply.’[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/2/another-report-shows-younger-people-locked-out-and-forced-to-rent

 

 

Yet More Tenants Move Onto Universal Credit

Published On: February 22, 2016 at 12:28 pm

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Since the start of the year, we’ve been keeping you up-to-date with Universal Credit as it rolls out across the UK.

The Government’s new welfare system means claimants are now paid one monthly payment of all of their benefits, instead of receiving them separately. This includes housing benefit.

Yet More Tenants Move Onto Universal Credit

Yet More Tenants Move Onto Universal Credit

So how could this affect private landlords? For landlords with tenants on benefits, the main difference will be that the landlord is no longer paid housing benefit directly – the tenants are now responsible for paying their rent themselves.

Additionally, there have been reports of long crossover times between the old system and the new, which have pushed some claimants into debt. As a result, some landlords may face rent arrears. Remember to communicate with your tenants about changes to their finances and protect yourself with rent guarantee insurance.

From today, more tenants will move onto Universal Credit, as it continues its rollout. If you have rental properties in any of the following areas, be aware that as of today, any tenants you have on housing benefit may face financial difficulties in the coming weeks.

  • AL3 8 and AL5 3 in St Albans.
  • CA8 2, CA8 7 and CA9 3 of Carlisle.
  • CF5 5, CF5 6, CF11 7, CF11 8, CF32 0, CF61, CF62, CF63, CF64 and CF71 in Cardiff.
  • DH8 9 in Durham.
  • HP4 1 in Hemel Hempstead.
  • LU1, LU2, LU3, LU4, LU5, LU6 and LU7 of Luton.
  • MK17 8, MK17 9, MK43 0, MK43 9, MK44 3 and MK45 in Milton Keynes.
  • NE10 8, NE13 6, NE15 0, NE17, NE19, NE20, NE22, NE23, NE24, NE25 0, NE25 9, NE26 4, NE27, NE31, NE32, NE33, NE34, NE35, NE36, NE37 3, NE41, NE42, NE43, NE44, NE45, NE46, NE47, NE48, NE49, NE61, NE62, NE63, NE64, NE65, NE66, NE67, NE68, NE69, NE70 and NE71 of Newcastle upon Tyne.
  • SG5 3, SG5 4, SG15, SG16, SG17, SG18 and SG19 1 in Stevenage.
  • SR5 1 and SR6 of Sunderland.
  • TD12 and TD15 in Galashiels.

Details of the previous rollout postcode areas can be found here: /do-your-tenants-receive-housing-benefit/

For the latest updates and landlord advice, remember to visit LandlordNews.co.uk.

Tenants staying in PRS for longer

Published On: February 22, 2016 at 11:33 am

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Latest government figures suggest that private rental sector tenancies are getting longer.

Additionally, data from the report shows that the typical length of residence in a family-sized rental unit is increasing.

Rises

The English Housing Survey 2014/15 shows that in the last 10 years, the proportion of privately rented homes with dependent children has risen from 30% in 2004-05, to 37% in 2014/15.

In addition, the average length of private sector residencies rose to 4 years, from 3.5 one year ago. The survey also found that tenants living in privately rented accommodation for a greater length of time generally paid less.

Tenants staying in PRS for longer

Tenants staying in PRS for longer

Break down barriers

As a result, the RLA has called on the Government to break down barriers that prevent longer-term tenancies. These include restrictions imposed on landlords by lenders

RLA chairman Alan Ward, believes, ‘more can be done to help landlords offer longer term tenancies without the need for compulsory three or five tenancies. We are calling on the Government to use the Housing and Planning Bill to remove barriers preventing landlords from offering longer tenancies, including mortgage and leasehold conditions that may prevent this.’[1]

‘Notable increases in the average length of time tenants stay in a private rented property show the system already enables longer tenancies that so many are calling for. Landlords are already meeting tenants’ requirements and there is no need for heavy-handed legislation that would disrupt supply of badly-needed accommodation,’ Ward went on to say.[1]

 

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/2/private-rental-sector-tenancies-for-families-are-getting-longer

 

Buyers 10% better off than renters

Published On: February 22, 2016 at 10:06 am

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New research from Lloyds Bank indicates that those getting a foot on the property ladder are better off than those renting.

According to the data, first-time buyers are £865 per year more wealthy than tenants in the rental market.

Costly

The average monthly buying fees, inclusive of mortgage payments, attributed to first-time buyers purchasing a three-bedroom property stood at £672 in December 2015. This was £72 lower than the average monthly rent of £744 paid by renters in the same type of property.

This shows an increase of £105 over the course of the last year. Average monthly rents have risen more sharply, showing a 3% increase, in comparison to a 2% rise in monthly buying costs.

At present, the financial gap between buying and renting (£865) is more than double the saving of £397 recorded in 2010. In this period, average rents have gone up by 23% (£139) per month from £605 and buying costs have risen by 17% (£100 per month) from £572,

Since 2009, buying has been the cheaper option.

Regional variations

Average monthly buying costs in the South East (£965) are £65 greater than the average rental costs in the UK. This is the only region in Britain where renting is the more cost effective option.

Alternatively, buying is more affordable than renting in monetary terms in the North West, where the average first-time buyer pays £133 per month less than the average renter. This was followed by Scotland, where owner-occupiers pay £120 less and Wales, where buyers enjoy savings of £103.

Buyers 10% better off than renters

Buyers 10% better off than renters

First-timers

First-time buyer numbers hit 310,000 in 2015, slightly down from the 311,700 recorded in 2014. However, this is a rise of 60% since first-time buyer totals fell to a low of 193,700 in 2011.

The number of first-time buyers made up 46% of house purchase made with a mortgage during 2015. This was up from 36% at the beginning of the downturn in 2007.

Mike Songer, Mortgage Director at Lloyds Bank, observed, ‘we’ve seen a significant shift over the past five year, with people consistently paying less on average per month when owning their property as opposed to renting. In 2015 this gap widened by over £100 to an annual saving of £865.’[1]

‘This has been helped by record low mortgage rates and rising private rents, making owning a home a much more attractive proposition than renting. This steady improvement in the costs of buying compared to renting has helped to boost the number of first-time buyers over the past few years, who now account for 46% of all home sales in 2015-up from 36% in 2006. Official government schemes, such as Help to Buy have also played a part in helping first-time buyers as have improving economic conditions,’ Songer added.[1]

[1]  http://www.propertyreporter.co.uk/finance/buying-10-better-off-than-renters-says-lloyds.html

Two Peers to Call for Right to Rent Rollout to be Postponed

Published On: February 22, 2016 at 9:41 am

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Two peers are set to challenge the Government this week over the rollout of the Right to Rent scheme.

On Wednesday (24th February), Liberal Democrat peer Baroness Hamwee will move that the commencement order of Right to Rent under the Immigration Act 2014 should be annulled.

Two Peers to Call for Right to Rent Rollout to be Postponed

Two Peers to Call for Right to Rent Rollout to be Postponed

Meanwhile, Labour peer Lord Rosser will move that “this House regrets that the Immigration Act 2014 (Commencement No 6) Order 2016, laid before the House on 11th January was laid following inadequate consultation, and asks the Government to undertake a further consultation before the commencement order comes into force”1.

The Right to Rent scheme, which went live in England on 1st February, requires landlords or their letting agents to check the immigration status of prospective tenants before the start of a tenancy.

Further rollouts to the rest of the UK are expected, but the schedule has not been announced.

The Residential Landlords Association (RLA) says that it supports attempts to annul the commencement order.

The organisation believes that the evidence from the pilot scheme in the West Midlands, which operated from December 2014, was insufficient to justify the rollout.

The RLA believes that landlords were not sufficiently prepared for the scheme, as they weren’t offered the necessary information. It also warns that UK nationals without a passport would find it incredibly difficult to access private rental housing.

In a recent survey of 1,500 private landlords, the RLA found that over 90% had not received any information regarding Right to Rent, either by email, from an advertisement, from a leaflet or online, and 72% did not understand their obligations.

The RLA adds that tenants may see their rents increase, as over a quarter of landlords said they are considering raising rent prices to cover the costs of conducting the immigration checks.

Almost half (44%) said they would only let their rental properties to those with documents that they were familiar with, while 45% would only accept tenants who could provide the required documents immediately.

The RLA fully supports postponing the rollout.

1 http://www.publications.parliament.uk/pa/ld/ldordpap.htm