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Sadiq Khan to Push Rent Controls as Part of Re-Election Campaign

Published On: March 4, 2020 at 10:44 am

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Sadiq Khan to Push Rent Controls as Part of Re-Election Campaign

The mayor of London, Sadiq Khan, has placed rent controls at the heart of his re-election campaign, calling the upcoming mayoral election “a referendum on rent controls”. 

Mr Khan is demonstrating that he is on the side of London tenants, who spend an average of 43% of their income on rent and saw rents increase by a third in the ten years since 2010.

He has issued a challenge to the Prime Minister, who had previously ignored Khan’s plans for rent control in the capital, stating:

“The case for rent controls is now absolutely undeniable. But Tory ministers have blocked us from introducing our plans for rent controls in London and have simply said no.

“That’s why today I am making the mayoral election on 7 May a referendum on rent controls – showing Londoners that I will stand up for renters. The prime minister will have to give us the powers we need because if he refuses to do so he will be denying the express democratic will of millions of Londoners. And as we have all heard Boris Johnson repeatedly say himself, the democratic will of the people must be respected and it is not for politicians to frustrate it.”

The Residential Landlords Association (RLA) and National Landlords Association (NLA) have taken the stance that rent controls would harm tenants rather than help them. John Stewart, policy manager for the RLA, and Chris Norris, policy director for the NLA said: 

“Rent controls might appear attractive to those already renting but they would be a disaster for anyone looking for somewhere to rent. 

“All they would achieve, as history and experience elsewhere tells us, is to drive landlords out of the market exacerbating an already serious shortage of homes available. 

“Instead of putting out simplistic and superficially appealing proposals in attempt to win votes, the Mayor should focus on boosting the supply of available housing using the powers he already has. 

“Only then will he make any discernible impact on improving the affordability of housing across the capital.”

But there are many who believe that this argument doesn’t hold weight, pointing to major cities such as Berlin and New York City where tighter rent controls have been shown to be effective. 

The free market dictates that where there is demand, there will always be an enterprising business or individual willing to supply. In effect, rent controls could simply drive out landlords whose business models are unable to adapt, strengthening the market overall.

Caitlin Wilkinson, a policy manager at the campaign group Generation Rent, said: 

“London is one of the most expensive cities to be a renter on the planet. Soaring rents mean the basic necessity of a secure, safe home is out of reach for too many people. Londoners are being priced out of the neighbourhoods they grew up in or forced to leave the city altogether.”

Property Activity Index shows figure slowdown in February 2020

Published On: March 4, 2020 at 9:43 am

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Rental demand increases, led by south coast

Following a strong start to 2020, the property market began to slow in February. The latest Agency Express Property Activity Index shows mixed activity across the UK.

Looking at the figures for properties ‘Sold’, we can see a robust increase of 12.8%. However, figures for properties coming onto the market fell at -0.6%. It has been noted that this activity does remain on-trend with year on year data.

All twelve regions recorded in the Property Activity Index have reported increases in properties ‘Sold’. When it came to properties coming onto the market, only six regions reported increases.

Scotland sat at the top of this month’s leader board with new listings ‘For Sale’ at 20.9% and properties ‘Sold’ at 22.9%. This month’s figure is indeed buoyant, but historical data shows a greater level of activity in 2019.

There was a similar trend in London, which reported figures for properties ‘Sold’ at 22.5%. This marks the largest increase for the month since 2017. However, the greatest decline in this month’s index was also recorded in the capital. Following a bounce in activity during January, month on month figures for new listings in the capital fell to -10.4% and to -17.5% over a three-month rolling period.

Other regional hotspots in this month’s index included:

New listings ‘For Sale’

  • East Midlands 6.6% 
  • Yorkshire and Humberside 4% 
  • North East 1.7% 
  • Central England 1.2% 
  • West Midlands 0.8% 

Properties ‘Sold’

  • Central England 18.2% 
  • Wales 15% 
  • East Midlands 14.2% 
  • South West 13.8% 
  • South East 13.2%

Stephen Watson, Managing Director of Agency Express, has commented on the latest Property Activity Index data: “We typically see figures plateau in February following the January spike, but the latest data from the Property Activity Index has shown a marginally slower-moving market compared to 12 months previous. 

“Nevertheless, we have seen a resurgence in activity when compared to the back end of last year, which leaves us in good stead for forthcoming months.”

Nearly Half of Buy-to-Let Investors Are Now Women

Published On: March 3, 2020 at 12:03 pm

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Nearly Half of Buy-to-Let Investors Are Now Women

The gender gap in the property investment industry is slowly closing, with women making up 47% of investors, up from 46% in the previous year.

An extra 100,000 women have invested in property between the 2015/16 and 2016/17 tax year, bringing the total to 1.2 million according to London estate agent, ludlowthompson.

They put this increasing popularity down to the perception of property investment being a lower risk option for investment when compared to more volatile bets such as equities. Women supposedly have less tolerance for risk than men, so the relatively transparent business model, regular pay-outs and low price volatility associated with buy-to-let property has helped make the asset class increasingly popular amongst women.

To back this up, ludlowthompson points to data from eToro and HMRC that shows that other investment classes have a much less equal gender split, that weighs more heavily towards men as the risk increases. They say that women account for only 43% of stocks and shares ISAs, owning 957,000 shares ISAs compared to 1.2 million men, and at the furthest extreme, women represent just 8.5% of cryptocurrency investments.

Stephen Ludlow, Chairman at ludlowthompson, says: “The buy-to-let sector has a reputation of providing stable, long-term returns. Whilst some investors have become distracted by more speculative investments, buy-to-let continues to build increasing interest amongst investors who value income and long-term growth.”

“It may not be long before we see a 50/50 gender split amongst buy-to-let investors which is significant given the much wider gaps in other asset classes, such as equities.”

“Buy-to-let property is popular across investors of all different risk appetites. It is a sensible way to diversify an investment portfolio and does not require in-depth knowledge of accounting rules that you might need for investing in shares.”

“There have been some naysayers suggesting that the property market is risky. However, even throughout years of Brexit uncertainty, house price growth has been relatively stable – unlike other areas of financial markets where price swings have been enormous.”

Number of female buy-to-let investors increases 4.8%*

*HMRC 2016/17, latest data available

Housing Hand expects little help for middle-aged renters from new Housing Minister

Published On: March 3, 2020 at 10:08 am

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help for middle-aged renters

According to information from the Office for National Statistics (ONS), people in their mid-30s to mid-40s are three times more likely to be renting than those in the same age group were 20 years ago.

Of these middle-aged renters, a third were renting privately in 2017, up from just one in ten in 1997.

UK rent guarantor service Housing Hand points out that this is a concern that these people are “trapped” in the rental sector.

Jeremy Robinson, Group Managing Director of Housing Hand, says: “We’re seeing the age of the average renter change as it becomes harder to get onto the housing ladder. There’s been a marked change in the number of those renting later into life over the past two decades. What does this mean for those renters as they get older? 

“At the same time, the number of young people who own their own home is dropping, so the number of older renters will continue to swell.”

Figures from the ONS show that half of people in their mid-30s to mid40s had a mortgage in 2017. This is down from two thirds back in 1997. Housing Hand highlights that with the rise of freelancing in the UK, it’s easy to see why there’s a growing demand for rent guarantor services.

Robinson continues: “For many working professionals, the nature of their work has shifted from fulltime employment to freelancing. Private landlords may shy away from freelancers due to the potential instability of their income or else ask them to pay several months’ worth of rent upfront. 

“Rent guarantor services exist to help the tenant avoid such an onerous condition while also providing the landlord with the assurance they are seeking in terms of the rent being paid on time.”

Now that Christopher Pincher has replaced Esther McVey as the new Housing Minister as part of the February 2020 Cabinet reshuffle, we could see improvements finally made to the difficulties faced by middle-aged and older renters.

However, not one of the other 18 Housing Ministers appointed in the last couple of decades has had the time to fully understand, consult, implement changes and then monitor their effects fully.

Robinson concludes: “The housing market is incredibly complex. Without sufficient time to analyse and understand its complexities, Housing Ministers are forced to make knee-jerk, headline-hitting decisions, which they then don’t take ownership of because they’re usually replaced by the time their ideas have been fully implemented. 

“It’s unlikely that a long-term solution to the increase in the number of middle-aged and older renters will be found under such conditions.”

Housing Hand also believes that it is not necessarily in the government’s interest to move people out of the private rental sector. Some of the tenants that have worked with the guarantor service are paying as much as 70% of their income on rent. In some circumstances over 40% of that rent goes to the government as tax.

Landlords Spending Over a Quarter of Their Income on Maintenance

Published On: March 2, 2020 at 11:08 am

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Landlords Spending Over a Quarter of Their Income on Maintenance

Some buy-to-let (BTL) landlords are spending 28% of their rental income on maintaining the property according to new research from Howsy.

Newly released figures from the lettings management platform have shown that BTL landlords are spending an average of £2,213 per year on maintaining each of their properties.

They recommend the 1% rule, i.e. budgeting to spend 1% of the value of the property per year on essential maintenance, but admit that the cost varies across the country. 

Howsy then looked at the current average rent across the market and what proportion of rent is required to cover these maintenance costs and how it differs regionally.

Wales sees some of the highest percentage of rental income spent on maintaining rented property with 1% of the average property price being £1,639, and the average annual rent being £6,182, meaning that 27% is spent on maintenance.

The East of England takes the top spot, with 28% of average rental income spent on upkeep. Whilst at the opposite end of the scale is The North east, with 20%.

Surprisingly, London is home to the fourth lowest maintenance costs, with 1% of property value accounting for just 23% of the average annual rent.

However, landlords looking for the lowest maintenance costs should look to Glasgow, where just 13% of average rental income is required to cover the upkeep of properties. 

Inverclyde (14%), West Dunbartonshire (14%), Midlothian (14%), Burnley (15%), East Ayrshire (15%), Belfast (15%), Falkirk (15%), Dundee (16%) and Clackmannanshire (16%) were also amongst the lowest buy-to-let locations for maintenance costs.

In London, Tower Hamlets (20%), Barking and Dagenham (21%), Newham (21%), Greenwich (23%) and Hounslows (23%( were the boroughs home to the lowest buy-to-let maintenance costs as a proportion of the average annual rent.

Calum Brannan, founder and CEO of Howsy, commented: 

“Covering maintenance costs is an essential part of managing your buy-to-let investment as failing to do so will not only reduce the profitability of your investment as tenants look elsewhere, but it can also land you in hot water legally if your property is not fit for purpose.

“Using the one per cent threshold of the purchase price of your property is a sensible place to start when budgeting for maintenance and although it acts as a rough rule of thumb, it should cover everything but the very worst damage to your property.

“Of course, the government’s consistent attack on the profitability of the buy-to-let sector could have alternative consequences as landlords cut corners on maintenance to get by, but as our research shows, this doesn’t have to be the case.

“The UK rental sector is a vast and varied one and investing in the right property, in the right place, will see operating costs remain palatable and profits remain robust.

“However, with technology changing the face of the industry, landlords now have even more options at their disposal when it comes to keeping their investment profitable and all of their costs under one roof.

“That’s the exact reason we launched Howsy Protect, as it not only guarantees rent if your tenant falls behind, but it protects against unforeseen repair costs. So rather than keep a chunk of rental income back for a worst-case scenario, landlords can pay one consistent, manageable monthly cost and rest safe in the knowledge we’ve got them covered.”

Landlord Pays £9,500 Penalty for Failing to Maintain Property 

Published On: February 28, 2020 at 12:12 pm

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Landlord Pays £9,500 Penalty for Failing to Maintain Property

A Liverpool buy-to-let landlord has been ordered to pay close to £9,500 after his property failed to meet acceptable living standards.

John William Kildare did not comply with an improvement notice and was found guilty of the offence which left his tenant living in dangerous conditions. 

The property on Hanford Avenue in Orrel Park, according to Liverpool City Council, had a long list of issues  including damp, mould, electrical problems, asbestos, and missing smoking alarms. 

Kildare, of Eldred Road, Childwall, was fined £2,000 at Liverpool Magistrates Court, where District Judge Andrew Shaw also ordered the rogue landlord to pay £3,000 in relation to the failure to comply with the Improvement Notice and awarded the council costs of £4,410.

Cllr Lynnie Hinnigan, deputy mayor and cabinet member for housing, commented: “This prosecution highlights the desperate need for our Landlord Licensing scheme.

“Here we have a landlord operating with wanton disregard for the safety of their tenant and blatantly ignoring our attempts to get him to licence the property and carry out basic improvements to make it liveable.

“Landlord licensing is a foot in the door, enabling us to create a dedicated team who have made a huge difference to the lives of many vulnerable tenants.

“We are determined to take action where we can to ensure that housing is suitable and safe, and will robustly enforce and use all available powers in all instances.”