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RLA Offers Advice to HMO Landlords on New Energy Regulations

Published On: November 11, 2015 at 12:24 pm

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Eco-friendly ways to reduce running costs and add value to a property

The Residential Landlords Association (RLA) has offered some guidance to landlords operating Houses in Multiple Occupation (HMOs) that will be affected by new regulations on heat and energy use in shared accommodation.

RLA Offers Advice to HMO Landlords on New Energy Regulations

RLA Offers Advice to HMO Landlords on New Energy Regulations

A European Union (EU) directive on energy efficiency was revised in 2012.

The directive is aimed at ensuring the people that directly use energy can see what they are using and take action to reduce their usage.

The Policy Director at the RLA, David Smith, explains: “As a result, the Government passed The Heat Network (Metering and Billing) Regulations 2014. These require that anyone providing heating, cooling, or hot water to someone who is required to pay for it whether directly or by incorporation in their rent must provide a metering system of some description to allow that person to measure their use and provide thermostatic valves to allow for a degree of control to be exercised by that user.”

The new regulations have caused great concern in the sector, as fitting these requirements in many HMOs would be expensive. Landlords are exempt from the rules if the cost is disproportionate.

In an attempt to resolve any complication, the National Measurement and Regulation Office (NMRO), the organisation responsible for enforcing the regulations, has updated its guidance.

Smith continues: “The new guidance makes clear that the regulations do not apply unless the energy user is in possession of a self-contained property, which contains sleeping, washing and cooking areas. Any communal provision of washing and cooking facilities will mean that the regulations will not apply.

“Therefore, the only landlords likely to be affected are those providing bedsit accommodation. These landlords will need to consider the technical feasibility and cost effectiveness of installing hot water meters, heat cost allocators and thermostatic radiator valves in each bedsit to allow measurement of the amount of heat energy being supplied.”1 

If the landlord believes that it is not technically feasible or financially viable to install these requirements, then they must repeat the assessment every four years.

If work is being planned that will create bedsits, the regulations must also be considered and metering is likely to be required. Landlords must also notify the NMRO of their status, alongside specified information.

Landlords are likely to need a thermostatic radiator value, as they cost less than £10. Meters may be more avoidable, as they are more expensive.

Failure to comply with the regulations is an offence with an unlimited fine.

The regulations will come into force on 31st December 2015. Landlords of bedsits must notify the NMRO immediately. They should also install thermostatic radiator valves and conduct a written assessment of costs if they do not plan to fit meters.

Read up on the legislation here: https://www.gov.uk/guidance/heat-networks

1 https://www.landlordtoday.co.uk/breaking-news/2015/11/rla-offers-energy-advice-to-hmo-landlords

 

Mortgage Lending rises in Q3 of 2015

Published On: November 11, 2015 at 12:20 pm

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Mortgage lending is rising and is in the middle of an, ‘upward trajectory,’ according to the latest report from the Council of Mortgage Lenders.

After a slow start to 2015, lending to first-time buyers and home movers increased during the third quarter of the year, in comparison to the second. In addition, there was also an annual rise from the same period twelve months ago.

Low rates

A lot of borrowers are seeing the benefits of low costs, due to the continuing record low in the Bank Rate. Mark Harris, chief executive of mortgage broker SPF Private Clients, said that,’ with summer out of the way, lenders have an eye on year-end targets and with the Bank of England hinting that interest rates might not rise next year, there are some very competitive deals to tempt borrowers.’[1]

The Council of Mortgage Lenders stated that gross mortgage lending amounted to £61.4bn during the third quarter of 2015. This was a rise of 18% on the previous quarter and a 12% rise on the same period in 2014.

In addition, the value of homeowner loans for property purchases made up 57% of gross lending. Remortgage activity made up 24%, with buy-to-let accounting for 18%.

Pick up

‘After a slight lull in August, monthly mortgage lending picked back up in September,’ said Brian Murphy, Head of Lending at the Mortgage Advice Bureau. ‘Lending is now at similar levels to those seen in June and July, which represented a post-recession high. Remortgage lending had a significant role to play in this growth, with both the volume and value of remortgage loans up substantially month-on-month. In contrast, the value of loans for house purchases saw a slight decline while the volume remained static,’ he continued.[2]

Mortgage Lending rises in Q3 of 2015

Mortgage Lending rises in Q3 of 2015

Paul Smee, Director General of the Council of Mortgage Lenders, also noted that, ‘the market was a slow starter this year, but this quarter shows it is now firmly on an upward trajectory. With competitive rates and high levels of product choice currently available, alongside generally improving economic conditions, we expect this to continue as we head into the new year.’[2]

‘Buy-to-let continues its growth this period, but at 18% of new lending in September remains the fourth largest lending type behind first-time buyers, home movers and remortgage. There were five times as many house purchase loans to home-owners as buy-to-let landlords in September, and the growth in buy-to-let lending largely continues to reflect its more belated recovery from recession,’ he concluded.[2]

Buy-to-let increases

Andrew Turner, director at Commercial Trust, echoed the positive sentiment surrounding buy-to-let lending. Turner said, ‘It is positive to learn that during September, gross lending of buy-to-let, buy-to-let house purchasing and buy-to-let mortgaging have all seen strong increases from the same time the previous year, indicating favourable lending conditions across all tenures.’

‘It is clear that buy-to-let is continuing to show real improvement, growing far more quickly than any other type of lending and continuing its trend of being the strongest UK mortgage market in the years since the recession. Though the bulk  of both gross activity and yearly growth was remortgage loans, property purchase loans have also seen a more than modest climb – despite the continuously changing legislative environment in which landlords operate and the threat of increased buy to let regulation, both from pan-European legislation and the Bank of England itself.’[2]

Turner concluded by warning against a return to previous lending conditions. He noted that, ‘if the past few years have shown us anything, it is that buy-to-let has been the biggest driver of the housing market recovery and instrumental in servicing the housing needs of the UK. Whilst it is crucial that we do not return to the risky lending conditions seen prior to the recession, it is equally crucial that we do not stifle landlords’ ability to continue to invest and provide homes we desperately need.’[2]

[1] http://www.bbc.co.uk/news/business-34786105

[2] http://www.propertyreporter.co.uk/finance/18-rise-in-lending-sees-market-moving-in-right-direction.html

 

Proposals to tackle rogue subletting criticised

Published On: November 11, 2015 at 10:54 am

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A tenant eviction specialist has poured scorn over latest Government proposals designed to prevent subletting scams that ultimately lead to tenants being placed in unsuitable and cramped accommodation.

Founder of Landlord Action, Paul Shamplina said that the proposals would require a larger scale of enforcement resources in order to ultimately be effective.

Alterations

The Government plans to alter the scope of mandatory licensing of HMO’s to smaller and medium-sized properties. It believes that by expanding the number of properties to which the rules apply, this will make it easier for local authorities to bring standards up in properties used as shared houses.

While welcoming the ideology behind the plans, Shamplina said that some landlords will continue to abuse the system. He notes that these landlords, ‘are guilty of exploiting the vulnerable whilst profiting from the housing crisis, particularly in the capital. Therefore, anything which helps to eliminate this problem and impose proper sanctions in the case of violation is a positive step forward.’[1]

Hindrances

Shamplina feels that, ‘one of the biggest problems with implementing any new legislation is enforcement.’ He said that, ‘local councils do not have enough resources as it is, with environmental health officers already responsible for monitoring overcrowding, subletting, poor conditions, and most recently retaliation eviction.’[1]

‘There is no room in our sector for rogue landlords, but to tackle the problem properly, legislation needs to be backed up by more boots on the ground,’ he added.[1]

Proposals to tackle rogue subletting criticised

Proposals to tackle rogue subletting criticised

Culprits

Continuing, Mr Shamplina said that the leading instigators responsible of setting up uninhabitable rooms are not just rogue landlords, but also tenants posing as landlords.

‘Landlord Action has never seen so many subletting cases as it has over the last two years, with an 18% increase. This has been fuelled by sky high rents preventing some tenants from being able to afford even single-unit accommodation, forcing many to resort to bedsits or shared accommodation,’ he noted.[1]

A recent North London subletting case handled by Landlord Action uncovered a home where partition walls were erected in order to create more bedrooms.. Most rooms were just large enough to fit a single mattress in, with the rogue tenant subletting each room for £750 per calendar month.

‘Cases like this are not only damaging to the property and financially devastating for landlords, but are also extremely unsafe, creating untold health and safety issues, particularly relating to fire safety and sanitation issues,’ said Shamplina, ‘They should also act as a reminder to landlords of the importance of carrying out thorough tenant referencing checks, as well as regular property inspections,’ he concluded.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2015/11/eviction-specialist-warns-about-subletting-scams

 

 

Two New Custodial Deposit Schemes and Rogue Landlord Fund Announced

Published On: November 11, 2015 at 10:04 am

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Two New Custodial Deposit Schemes and Rogue Landlord Fund Announced

Two New Custodial Deposit Schemes and Rogue Landlord Fund Announced

The Department for Communities and Local Government has announced new measures for tackling rogue landlords and two new custodial deposit protection schemes.

The Deposit Protection Service (DPS) has been awarded a new license and from next year, there will be two new custodial schemes in England and Wales.

One will be operated by the Tenancy Deposit Scheme (TDS) and the other by My Deposits, both of which currently run insurance-based schemes.

The Department for Communities and Local Government also announced a £5m fund to assist up to 65 councils in combating criminal landlords. It believes that 3,000 rogue landlords could now face further enforcement action or prosecution.

Greg Clark, the Communities Secretary, claims the fund will help councils with a large proportion of their private rental housing stock, particularly beds in sheds.

Councils will be able to use the funds to increase inspections of properties, conduct more raids, bring more prosecutions and demolish illegal buildings.

Clark states: “We’re determined to keep the country building and increase the supply of good quality homes that families want, both to buy and for rent.

“Key to this is rooting out the minority of landlords in the private rented sector that let out poorly-maintained and unsafe properties to vulnerable tenants, making their lives a misery.”1 

According to the Department for Communities and Local Government, there are currently over 4.4m households renting privately.

Since 2013, almost 40,000 inspections have been conducted and more than 3,000 landlords are now facing further enforcement action or prosecution.

1 http://www.propertyindustryeye.com/two-new-custodial-tenancy-deposit-protection-schemes-announced/

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Which Two London Boroughs will See Highest Growth Over Next Five Years?

Published On: November 10, 2015 at 3:37 pm

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Categories: Property News

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Despite recent warnings of a housing bubble, a new forecast by a leading estate agent states that house prices are set to increase even further across London over the next five years.

According to Savills, two London boroughs – Waltham Forest and Lewisham – are expected to experience the highest growth by 2020, up to 20%.

East London’s Waltham Forest has witnessed some of the greatest price rises in the capital, due to an increase in demand from buyers priced out of more central spots.

Which Two London Boroughs will See Highest Growth Over Next Five Years?

Which Two London Boroughs will See Highest Growth Over Next Five Years?

House prices in Lewisham, south of the river, are set to rise at a similar rate, caused by strong interest in popular parts such as Blackheath, Brockley and New Cross. Further investment from the council and plans for new build property developments are contributing to growth predictions.

If you have an investment property in either of these boroughs, or are considering buying there, your investment could see a surge in value over the next five years.

However, Head of Residential Research at Savills, Lucian Cook, claims that these predictions are largely dependent on the rate of interest rate rises in the next five years.

He says: “If rates rise too quickly, mainstream house price growth will be quickly curtailed. On the flipside, if rates remain low for too long, there is a risk that prices will rise too far, creating affordability issues further down the line when they do eventually rise.

“That risk has been mitigated by recent mortgage regulation, which, by stress testing affordability, caps the amount people can borrow relative to incomes. That is likely to cap price rises, particularly in London, where house price to household income ratios are highest, thanks to growth seen over the past ten years.”1

In the outer suburbs of London, house prices are set to increase by an average of 17% by 2020.

This includes the cheapest borough, Barking and Dagenham, where the average home is valued at £318,000. It also encompasses Greenwich and Newham, which have both experienced some of the highest rises over the last year.

Even house prices in the most expensive boroughs, Kensington and Chelsea and Westminster, are forecast to grow by 15%, despite recently recording price declines.

Savills expects this slowdown to be short-lived, as buyers get used to higher Stamp Duty and international buyers are likely to return to the market soon.

Growth is expected to be slowest in Islington and Richmond, where the average property price is already over £500,000. However, price rises of 10% are still predicted.

In Hackney, now one of the capital’s most expensive boroughs, prices have spiralled recently. However, Savills still expects growth of 15% in Hackney and Southwark, where prices are catching up with prime central London and the City of London, which border both boroughs.

If you’re a landlord in London, make sure you keep up to date with the property market, to determine the growth in value of your asset.

1 http://www.savills.com/_news/article/105347/196636-0/11/2015/the-pace-of-interest-rate-rises-will-dictate-the-pace-of-house-price-growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rents Continue to Rise, but Buying is Still Unaffordable for Renters

Published On: November 10, 2015 at 1:15 pm

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Newly agreed rent prices are continuing to increase, but at a slower rate, according to the latest data.

Rents Continue to Rise, but Buying is Still Unaffordable for Renters

Rents Continue to Rise, but Buying is Still Unaffordable for Renters

Additionally, two thirds of tenants have claimed that saving a deposit to buy a home is unaffordable.

Excluding London, the average new rent in the UK is now £749 per month, a 3.5% rise on last year’s £724 a month.

Although this is running at a higher pace than inflation, it is significantly lower than the 8.5% growth recorded earlier this year.

The average new rent in the capital is now 7.5% higher than last year, standing at £1,560 per month.

This means that rents in London are now over £800 more per month, or 108% higher, than the typical rent agreed in the rest of the UK.

Lettings specialist HomeLet has conducted a survey of 15,000 renters, which found that 64% expect to continue living in rental accommodation for the foreseeable future.

CEO of HomeLet’s parent firm, Barbon Insurance Group, Martin Totty, says: “Our survey showed that many tenants ultimately aspire to own their own home, but that just over half of them aren’t actively saving for a deposit; 66% of those questioned said that a deposit wasn’t affordable for them.

“However, the positive news is that almost nine out of ten tenants told us they were happy with the standard of their current rented property, and the majority told us they were happy with the service provided by their landlord or letting agent.”

He adds: “Whilst we are seeing upward pressure on the rental market, it’s important that the sector continues to drive professional standards forwards for mutual benefit of tenants, landlords and letting agents.”1

For the second consecutive month, HomeLet reports that rent prices are growing fastest in Scotland, where rents over the three months to October have risen by 9% compared with the same period in 2014.

Rent prices on new tenancies increased in nine out of 12 regions, the exceptions being the North West, East Anglia and Northern Ireland.

1 http://homelet.co.uk/news/article/tenants-look-to-prs-for-the-long-term