Written By Em

Em

Em Morley

Do Your Tenants Receive Housing Benefit?

Published On: February 15, 2016 at 12:49 pm

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Categories: Finance News

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If you rent a property to tenants on housing benefit, you may be aware of the new welfare system that sees six benefits rolled into one monthly payment.

This is called Universal Credit, and the scheme is being rolled out across the country. As well as combining housing benefit with other payments, landlords will no longer receive housing benefit directly. Instead, tenants will be responsible for paying their rent to their landlord.

Do Your Tenants Receive Housing Benefit?

Do Your Tenants Receive Housing Benefit?

Additionally, there is sometimes a long crossover period between the traditional welfare system and Universal Credit, which is seeing some claimants land in debt.

As a landlord, you should protect your investment by communicating with your tenants about any changes to their finances and consider rent guarantee insurance, which will ensure you still get paid if your tenant defaults on the rent.

Since January, we have been informing landlords of where Universal Credit is now live. You can find previous areas, and links to earlier roll outs, here: /more-housing-benefit-tenants-subject-to-universal-credit/

If you have rental properties in the following areas and your tenants are on housing benefit, be aware of the changes in place from today:

  • CM13 3 and CM14 5 in Chelmsford.
  • CR3 5, CR3 6, CR3 7, CR5 1, CR5 3, CR6 and CR8 5 of Croydon.
  • DE74 in Derby.
  • The E3 2, E3 3, E6, E7, E11 1, E11 2, E11 3, E12, E13, E15, E16, E18, E20 1, E20 1 and E20 2 parts of east London.
  • G44 3, G46, G53 7, G76, G77 and G78 in Glasgow.
  • GU1, GU2, GU3 1, GU3 2, GU4 8, GU5, GU6, GU7, GU8, GU9, GU10, GU12 6, GU26 and GU27 of Guildford.
  • IG1, IG2, IG3, IG4, IG5, IG6, IG7, IG8, IG9, IG11 0, IG11 8 and IG11 9 in Ilford.
  • KA1, KA2, KA3, KA4, KA5, KA6 6, KA6 7, KA13 7, KA16, KA17, KA18 and KA19 7 in Kilmarnock.
  • KT4 7, KT17, KT18, KT19, KT20, KT21, KT22 2, KT22 7, KT22 8, KT22 9, KT23 and KT24 of Kingston upon Thames.
  • LE12 5, LE12 6, LE14 3 in Leicester.
  • NG1, NG2, NG3, NG4, NG5 1, NG5 2, NG5 3, NG5 4, NG5 5, NG5 6, NG5 8, NG5 9, NG6, NG7, NG8, NG9 2, NG11, NG12, NG13, NG14 5, NG14 6, NG15 5, NG15 6, NG15 7, NG15 8 and NG23 5 in Nottingham.
  • PA2 8 of Paisley.
  • RH1, RH2, RH3, RH4, RH5, RH6, RH7, RH8, RH9, RH10 3, RH12 3, RH12 4, RH14 0, RH19 2 and RH19 3 in Redhill.
  • RM1, RM2, RM3, RM4, RM5, RM6 4, RM6 5, RM7, RM8 1, RM9 6, RM11, RM12, RM13, RM14 and RM15 4 in Romford.
  • SM7 1, SM7 2 and SM7 9 of Sutton.
  • TN8 AND TN16 2 in Tonbridge.

Keep up-to-date with all changes to landlord finances at LandlordNews.co.uk.

Regulator criticises councils for slow searches

Published On: February 15, 2016 at 12:36 pm

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Categories: Property News

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A regulatory body for property searches has slammed some councils for providing a, ‘very poor service,’ which leads to a delay in transactions.

The Property Codes Compliance Board, regulator for the Search Code of Practice, stated that local authorities and private sector search companies provide information to conveyancers. This information corresponds to properties being purchased in the LLC1 and CON29 search documents.

Woeful

Kate Davies, chairman of the PCCB, said that despite the majority of authorities providing a good service, a growing number are, ‘performing woefully.’

Davies stated she was, ‘very concerned that he home buying and selling public are being adversely affected by very poor performance by some local authorities and in some cases transactions are breaking down due to the delays.’[1]

‘If you live in Wiltshire for example, it is an accident of geography if a lawyer can expect to receive searches back in six days or six weeks and this is totally unacceptable,’ she continued.[1]

Regulator criticises councils for slow searches

Regulator criticises councils for slow searches

No excuses

PCCB board member Kate Faulkner, who runs the consumer-focused online service Propertychecklists, was also less than complimentary about some councils. Faulkner said that with the housing market in a precarious position, ‘the last thing that prospective homebuyers and sellers need is unnecessary delays for which there is absolutely no excuse.’[1]

Faulkner also claims that personal search companies are being frustrated in their attempts to carry out a first class service to layer clients. This is due to the number of local authorities who are taking too long to give access to data than other councils.

[1] https://www.estateagenttoday.co.uk/breaking-news/2016/2/regulator-slams-councils-for-very-poor-searches-that-delay-transactions

 

Housing benefit changes to drive young out of market?

Published On: February 15, 2016 at 11:38 am

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A recent investigation has indicated that landlords feel Government changes to cut housing benefit from 18-21 year olds will make it far more difficult for them to get into rented accommodation.

The survey of over 1,000 landlords conducted by the Residential Landlords Association found that 76% of landlords would be reluctant to let to this age group. This is due to concerns over their ability to pay rents.

Negative Effects

In addition, data from the investigation shows the potential negative effects of the proposed benefit cap. 65% of landlords were reluctant to let their properties to tenants of working age on benefits, as the changes could alter their cash flow.

Those under 35 also face issues accessing rental accommodation. Since 2012, people in this age group have only been able to claim benefit for a room in a shared home. 53% said that they would not renew such tenancies, again over fears of missed or delayed payments.

Government statistics reveal that in 2013/14, 48% of all households aged between 25-34 were in the private rented sector.

Housing benefit changes to drive young out of market?

Housing benefit changes to drive young out of market?

‘Risky’

Vice-chairman of the RLA, Chris Town, noted, ‘the results confirm that reforms to housing benefit are making it increasingly risky for landlords to rent to those receiving it. Rented housing is crucial to enabling young people to quickly access work opportunities wherever they might be. By making it more difficult for them to secure rental properties Ministers are making work prospects increasingly difficult for them.’[1]

‘A simple solution would be to give tenants the option of having payments of the housing element of Universal Credit paid directly to the landlords. This would give all tenants and landlords the security of knowing the rent has been paid,’ Town added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/2/young-will-be-pushed-out-of-rented-housing

 

Many landlords unaware of Right To Rent obligations

Published On: February 15, 2016 at 10:08 am

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Landlords are once again being warned that they must comply with the regulations of the Right to Rent scheme, with a shocking new survey suggesting that the majority are unaware of the changes.

An investigation carried out by the Residential Landlords Association (RLA) revealed that 72% of landlords do not understand their duties under the policy. More alarmingly, 90% said they had received no information about the new law before it was rolled out nationally on 1st February.

Concern

There is tangible concern in the buy-to-let sector that many landlords are at risk of a £3,000 fine, as a result of not carrying out the correct checks.

Maynard Burton, a partner at law firm MFG solicitors, said that he was becoming increasingly concerned that landlords will be caught out. He noted that, ‘landlords who do not act face fines of up to £3,000. That’s potentially ruinous for someone who is self-employed and I’m concerned, as are other specialists, at just how few landlords have grasped not only their obligations, but the implications for them.’[1]

Many landlords unaware of Right To Rent obligations

Many landlords unaware of Right To Rent obligations

‘They really need to get advice immediately on the checks they should be making and the records they should be keeping,’ he added.[1]

Right To Rent Duties

Designed to make it more challenging for illegal immigrants to rent and ultimately stay in Britain. However, critics say that that the scheme makes landlords carry out duties to carry out checks normally conducted by trained immigration officers.

Burton went on to say, ‘it’s easy to sympathise with landlords who feel that these new rules are effectively turning them into unpaid immigration officials. Equally, it’s easy to feel frustrated at the lack of information that has been given out by the authorities. But the law is here and it’s in force. Landlords have to act now.’[1]

[1] http://www.propertyreporter.co.uk/landlords/landlords-warned-over-immigration-check-fines.html

 

Rents are Highest on Record, Says Countrywide

Published On: February 15, 2016 at 9:41 am

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Categories: Property News

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The average rent in the UK is now the highest on record, despite price growth slowing recently, according to the Countrywide monthly lettings index for January.

The figures show that compared to January last year, the average rent price in the UK has risen by 1.2% to £906 per month.

Although this is the slowest increase in three years, the average rent is still 12% above its pre-recession peak, hitting the highest level on record.

Rents are Highest on Record, Says Countrywide

Rents are Highest on Record, Says Countrywide

Expectedly, London has experienced the greatest rent price growth of anywhere in the UK since 2007, with rents sitting 34% higher than their pre-recession record. Between 2007-16, the average rent in the capital rose from £966 to £1,295 a month.

Despite data showing continuous rent rises over the last nine years, most of the country has seen rents growing steadily in line with wages. The average income has increased by 12% since 2007, according to the Office for National Statistics (ONS), compared to a 12% rise in rents.

However, there is still a distinct north-south divide in the rental sector. In the North West, North East and Wales, the average private tenant is still paying less than they did in 2007 by £12 a month. Across the whole of the UK, one in five renters are paying less than they were in 2007.

But in the capital, rents have spiralled compared with wages. Incomes have only rise by 10% since 2007, while rents are up 34%, fuelled by a lack of supply and high demand. Consequently, private tenants have been forced to share, downsize or move further out of central London.

It is expected that in the three regions where rents are still below their pre-recession peaks, the average price will surpass 2007 levels by the middle of 2016. In these areas, many long-term tenants have enjoyed years without any rent increases.

In January, more landlords in the North West, North East and Wales were able to raise rent prices for tenants that renewed their contract than at any point since 2012.

In 2007, the average rent in the UK hit a record high of £809 per month. Between the end of 2007 and 2008, the average rent on a new home dropped by 11%, or £87. This took the average cost of renting down to £720 a month. It wasn’t until the start of 2010 that rents began rising again.

The Research Director at Countrywide, Johnny Morris, comments on the data: “Nationally, rents in January rose at the slowest rate since 2012, as some of the upward pressure on prices subsided and affordability limited further rises.

“Across most of London and the South East, the slowdown in rental growth is the first since 2010, where rents have been growing for the past six years.”

He explains how we can overcome affordability issues in the private rental sector: “The most sustainable way of creating a more affordable rental market in London and the South is by building more homes of every tenure. Unlike in the US, where institutional investors build homes to rent, in the UK the sector is dominated by small landlords, meaning the link between new homes getting built and the rental market isn’t nearly as close as it should be.”1 

1 https://www.landlordtoday.co.uk/breaking-news/2016/2/countrywide-rents-at-highest-on-record

Landlords’ confidence, ‘at all-time low’

Published On: February 14, 2016 at 11:11 am

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An alarming statement by the CEO of the National Landlords Association (NLA) has painted a worrying picture of the current state of the buy-to-let sector.

According to Richard Lambert, confidence in the market is at an all-time low and is, ‘worse than levels witnessed during the financial crash.’[1]

Tumbling

Mr Lambert will address peers at the Building Societies Association’s annual meeting and is expected to say that confidence in landlords’ business expectations have slipped by more than a third in the last year. He believes it is fallen from 67% to a record-low of 43%.

If he is to be believed, the current level of confidence in the BTL sector is 5% lower than levels seen after the financial crash of 2007.

Also in his address, Lambert will highlight how the actions of the Chancellor in the Budget and Autumn Statement has led the NLA to backtrack on predictions of growth in the sector. Originally, the NLA suggested that the sector would grow by more than one million households in the next five years.

Now, the firm suggests that if landlords act as predicted, there will be a sharp sell-off of properties of up to 50,000 in the next year. This will be followed by another 100,000 properties sold every year thereafter to 2021.

Landlords' confidence, 'at all-time low'

Landlords’ confidence, ‘at all-time low’

Bleak findings

Lambert will also present findings from the NLA Quarterly Landlord Panel survey, which shows:

  • The number of landlords looking to sell in the next year has doubled from 7%-19%
  • 28% of landlords do not plan to add to their portfolio
  • 10% plan to reduce their housing stock
  • 5% intend on selling their entire property stack

‘Two speeches from the Chancellor in 2015 have led to a crisis in confidence greater than when all but a few BTL products were immediately withdrawn from the market following the 2007 financial crash,’ Lambert said. ‘Up to half a million properties could come onto the market as a result of the Summer Budget and Autumn Statement, which the Chancellor will no doubt deem a success.’[1]

Continuing, he said, ‘there is no guarantee that these will be the one or tow-bedroom flats of small houses that will appeal to first time buyers, especially as landlords are more likely to offload less desirable stock in less desirable areas.’[1]

‘We’ve always said that Mr Osborne is blinded to the impact of his decisions by his commitment to homeownership. He may have intended to focus on the small-scale part-time investor, but it’s the larger and more professional landlords who will be hit worst by cuts to mortgage tax relief and increases to stamp duty and who appear most likely to leave the sector,’ he concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/landlord-confidence-crashes-to-all-time-low.html