Category: landlord

Making the case for a new housing court

Lesley Davis Leave a comment

In June, we blogged about the idea of setting up a new, dedicated housing court. This has worked well in Scotland, where landlords can take action quickly when faced with rogue tenants. And, according to one of the biggest-ever surveys of landlords and letting agents done by the Residential Landlords Association, it would go down well here too.

The RLA says a massive 79% of private landlords with experience of using the courts to repossess properties are dissatisfied with the way they work. And 91% of landlords support the idea of setting up a new housing court.

Last week we urged you to get behind our campaign to keep Section 21. If it is scrapped, as the government plans, the existing court system will be completely overloaded with repossession cases. It already takes an average of five months to repossess a property – and this will get worse if nothing is done.

And it’s not just landlords who are unhappy with the way the system works – or doesn’t. Separate research from Citizens Advice proves that tenants too are put off taking landlords to court by the existing legal system.

More than half of tenants the consumer body spoke to, said the process is too long and too complicated. This stops people taking action when they are stuck with a bad landlord or a poorly maintained property. A properly funded and staffed housing court could go a long way towards solving the problem.

Everyone living and working in the rental sector is facing the most far-reaching changes we have seen for decades. As the RLA, rightly says, if the new Government decides it wants to go ahead with its proposals, “significant and bold” reforms need to be made to our court system. Anything else will lead to chaos.

Chris Norris from the National Landlords Association is calling for any improvements to the system to be in place, properly funded and fully functional before the government “even contemplates” changes to Section 21.

Even better; improve the court system so that it functions for everyone – and leave Section 21 alone.

How NOT to win friends – or votes!

Lesley Davis Leave a comment

If you want a lesson in shooting yourself in the foot, you don’t have to go much further than yesterday’s ‘right to buy’ announcement from the Labour party. Labour has pledged to introduce a new policy: if it wins the next general election it will give private tenants the right to buy the homes they live in.  

Shadow Chancellor John McDonnell framed the proposal as a response to the problem of “overcrowding” and landlords “who don’t maintain their properties”. This is a hammer to crack a nut. And it has produced the expected response from landlords and their member organisations. This is a badly considered plan and its timing is terrible. As we all hold our breath to see whether or not we will be facing another General Election in a few weeks’ time,  Labour just lost the votes of landlords around the country.

 Most landlords provide a well-maintained home for their tenants – and are right to expect a decent return for their investment. They are not providing social housing. Bad landlords are not the norm and as David Smith from ARLA says: “If there was to be any chance of this becoming law, there would be a mass sell-off of properties in advance”.

It is also doubtful, if the aim is to allow tenants to buy their rented home for below market value, whether or not lenders would be willing to provide mortgages on that basis. The housing market is predicated on market value, not on arbitrary sums set by the government.

Smith thinks Labour’s plans are effectively a kind of compulsory purchase that is entirely unacceptable and ultimately unworkable, reducing the availability of homes to rent and destroying the viability of the PRS. Spot on, we say.

Giving council tenants the right to buy in the 1980s ultimately produced a crisis in social housing, which successive governments have failed to address. The problem has spilled over into the private rental sector which now has to find homes for tenants who would, in the past, have been housed by their local authority. A well-regulated, strong PRS is an asset and responsible buy-to-let landlords are badly needed in a country with too few affordable homes to buy.

“Time to emigrate,” says Ringley & PlanetRent Group CEO Mary-Anne Bowring.  “Personally, I am fed up with out-of-touch politicians stereotyping private landlords.  There are some rogue landlords but these are the minority – by and large, private landlords are hard-working individuals trying to build a nest egg for their children or their retirement.  The Tories have squeezed landlords with mortgage tax changes, reduced their income by banning up-front fees and even expect them to clean up after tenants at the end of the tenancy!  Now Labour wants to dispossess them of their property altogether – I do wonder seriously, who is fit to run the country?”

In our opinion, the Labour party should turn its attention to finding ways to deliver a major housebuilding programme that would provide jobs, as well as homes for people. Attacking landlords and their ability to provide those much-needed homes is an own-goal of momentous proportions.    

Tenant demand – and rent – goes up as fees are dropped

Lesley Davis Leave a comment

According to the latest figures from Rightmove, demand from tenants looking for a new place increased 7% between May and June. This is an uplift seven times bigger than the previous four-year average of just 1% at this time of year. The online home finding specialist thinks this is a direct response to the Tenant Fees Ban that came into force on 1 June and we’re sure they’re right.

According to the report:

  • In London, there was a 13% increase in demand from May to June, compared to a four-year average of 4%
  • Agents are reporting an increase in enquiries from tenants looking to move now that the majority of tenant fees have been removed

Nationally (excluding London) asking rents are at a record high of £817 per month, and running at 2.7% up on a year ago, as the cost of renting continues to rise year-on-year.

According to new PRS data from ARLA, the number of tenants experiencing rent rises increased to the highest figure on record in July. A whopping 63% of agents witnessed at least some of their landlord clients increasing rents during July. And ARLA says this is a 15% increase from June -which already showed a record hike.

To put this in perspective, back in July 2018 the proportion of agents seeing rent rises was just 31%.

So as soon as the Tenant Fees Act came into force in June, rents started to rise faster and across the board. No surprises here for anyone working in the PRS. As ARLA spokesman David Smith said this week, the fees agents have been banned from charging are still being paid for by tenants – but it’s now through their rent, rather than in upfront costs. If the government’s aim here was really to help tenants, its backfired already.

Do we need an energy theft amnesty?

Lesley Davis Leave a comment
Don’t meddle with the meter.

Here’s an idea to ponder. According to Ofgem, tampered energy meters add £20 to every household bill each year. They also pose a life-threatening danger to personal and public safety. So the regulator is suggesting an energy theft amnesty. This would mean giving the public – including property professionals, landlords and tenants – the chance to own up (risk free) to breaking the law by stealing energy through a tampered meter. The meter would be made safe and no backdated charges applied.

Energy theft is a serious crime and it’s one which frequently goes under the radar. It is often committed by rogue landlords or tenants and injures or kills at least one person every fortnight in the UK.

During Ofgem’s proposed amnesty, energy thieves would neither be prosecuted, fined nor back-billed and would simply “get away with it.” The sentence is usually five years in prison.

Ofgem is so serious about this idea that it has done a survey to see what 1000 people round the country think. Over half would be in favour. So what are the pros and cons? Here’s what Ofgem has to say:

Benefits

  • Tampered meters are highly dangerous. They can cause fires, electric shocks and large gas explosions that can injure or even end lives. By making meters safe, an amnesty would help to make communities a safer place.
  • In the UK we all pay an extra £20 per year on our energy bills to pay for energy theft. Correcting tampered meters could help reduce the amount that everyone has to pay to fund stolen energy.

Drawbacks

  • An amnesty means that people who have previously broken the law by tampering with their energy meter will get away with it and won’t have to pay back what they have stolen. This could devalue the crime and make more people think they can get away with it – or other offences – in future.
  • If lots of people come forward, energy companies will need to visit thousands of homes to make their meter safe. This will be costly and does not guarantee these customers will not re-offend.

The research, which was carried out by UK-wide energy theft investigation companies, Echo Managed Services and Grosvenor Services Group doesn’t think the dangers of energy theft are well enough known.  The energy sector needs to work harder to educate people on the potentially-fatal risks that meter tampering can present, they say.

Ofgem will be weighing up the pros and cons of a possible amnesty in the coming months – so it will be interesting to see what happens. In the meantime, anyone thinking of tampering with an energy meter in a property they manage, let out or rent from a landlord should think again. It’s against the law and it’s dangerous.

Image courtesy of Caroline Ford [CC BY-SA 3.0 (http://creativecommons.org/licenses/by-sa/3.0/)]

Help us campaign to save Section 21

Lesley Davis Leave a comment

We have written several blogs lately about the proposed abolition of Section 21 – the so-called ‘no fault’ eviction process. At Ringley we don’t believe that scrapping this system is good for landlords – or ultimately for tenants. Here’s why.

1)      Section 21 works. The system is widely understood by both landlords and tenants as it has been in place since the Housing Act 1988 was enacted.

2)      Many landlords find it cheaper and quicker to use Section 21 to get their property back rather than opting for a Section 8 eviction or breach action. Because the Section 8 route is so adversarial, as soon as they are served with a Section 8 notice (which may not be for rent arrears) the tenants simply stop paying rent. And because Section 8 procedures are adversarial the landlord ends up facing thousands in costs and huge voids, with cases sitting backed up in the court queues for months.

3)      There are already provisions to stop landlords using Section 21 wrongly. Before a landlord can even get as far as serving a Section 21 Notice, s/he must have complied with certain legal requirements for all tenancies entered into since 2015, including for example provision of:

  • An Energy Performance Certificate
  • The How to Rent Guide
  • Prescribed Information on the protection of a deposit (having also protected that deposit)

Landlords are also required to provide a valid gas safety certificate, not only before a Section 21 Notice, but before occupation. This was confirmed in the recent case of Caridon Property Limited v Shooltz (2018). So if a landlord has not provided a gas safety record at the start of the tenancy, s/he will not be able to rely on the no-fault basis for termination during that particular tenancy. Instead, s/he will have to rely on another ground for possession, such as rent arrears, where the process is longer and therefore more costly.


4)      Under the Housing Act 1988, a BTL landlord worried that he might need his property back can already protect himself if, not later than the beginning of the tenancy the landlord gave notice in writing to the tenant that possession might be recovered on the basis of Ground 1 specified in Schedule 2 of the 1988 Act, or, if the court is of the opinion that it is just and equitable to dispense with the requirement of notice because:
(a)           at some time before the beginning of the tenancy, the landlord who is seeking possession or, in the case of joint landlords seeking possession, at least one of them occupied the dwelling house as his only principle home; or
(b)           the landlord who is seeking possession or, in the case of joint landlords seeking possession, at least one of them requires the dwelling house as his or his spouse’s only principal home and neither the landlord (or, in the case of joint landlords, any one of them) nor any other person who gave the notice mentioned above acquired the reversion on the tenancy for money or money’s worth. 

The government has claimed landlords’ use of Section 21 eviction notices is the leading cause of homelessness in the UK. The National Landlords Association (NLA) completely rejects this idea. Referring to data provided by the government that of 33,020 households assessed by local authorities between October and December 2018, the NLA points out that just 11.8% (3,890) faced homelessness as a result of being served with a Section 21 notice.

Nor does the NLA think that the Government has considered the impact of these new policies on the most vulnerable members of society.  We agree that the proposals are likely to deliver a whole range of unintended consequences. These include a lower supply of private rented housing alongside more risk-averse landlords. The NLA tells us landlords are now exiting the market at a faster rate. This further damages the already fragile supply of properties in the areas where they are desperately needed. Tenants on Universal Credit or benefits and anyone with a bad credit record, CCJs or pets will lose out, they say.  We agree. And the removal of Section 21 will make more landlords more susceptible to rogue tenants – they are out there and they cause endless heartache and a lot of money.

Above all, landlords must be able to evict bad tenants.   If they can’t, we will end up coming full circle: needing new legislation to encourage landlords into the rental market as we did all the way back in 1988.  The institutions are coming into the market and may cover the towns and cities but a healthy market needs a range of accommodation types across the spectrum. Continually trying to push buy-to-let landlords out of the market is nonsensical. We badly need our rental market to work – for everyone. Scrapping Section 21 isn’t the way forward.

So we are calling on anyone who agrees with us to use the four points we outline above to respond to the government consultation here before 12 October. Please join us and make our voices heard.

New advice on Right to Rent

Lesley Davis Leave a comment

After months of uncertainty for landlords, the Home Office has now released updated guidance on Right to Rent, to help anyone letting property in England ensure they are compliant with the law.

The new guidance provides advice for landlords with tenants from Australia, Canada, Hong Kong, Japan, Singapore, South Korea and the United States (B5JSSK nationals), who are in the UK for up to six months.

Since May B5JSSK nationals have been able to use electronic gates at UK airports, so they don’t have their passports stamped on arrival. This has caused difficulties for landlords because their passports didn’t visually prove their right to be in the UK.

Now, the latest Home Office advice confirms that landlords can use the following as acceptable evidence of entry to the UK:

  • An original or copy (hardcopy or an electronic copy) of a boarding pass or electronic boarding pass for air, rail or sea travel to the UK, establishing the date of arrival in the UK in the last six months
  • An original or copy of an airline, rail or boat ticket or e-ticket establishing the date of arrival in the UK in the last six months
  • Any type of booking confirmation (original or copy) for air, rail or sea travel to the UK establishing the date of arrival in the UK in the last six months
  • Any other documentary evidence which establishes the date of arrival in the UK in the last six months.

The requirement is waived for holiday lettings of less than three months.

If a potential tenant is unable to present any of the above evidence, a landlord can use the Landlord Checking Service to confirm Right to Rent eligibility. It’s important that landlords keep evidence of Right to Rent checks on file throughout the tenancy, and for 12 months after the tenancy ends, after which time data should be securely disposed of.

For more information and to read the new guidance in full, click here.

Renting – what do you think about it?

Lesley Davis Leave a comment

Despite all the bad press that renting often seems to attract, most people are happy with their rented home and have no complaints about their landlord. This is the good news for the rented sector from the latest English Housing Survey Private rented sector report, published yesterday.

Private rentals are the second biggest housing sector in England. The government estimates the PRS at 4.5 million households compared to 14.8 million owner occupiers, with about one in five households in England renting their home.

Most renters are happy in their homes says the latest English Housing Survey

According to the survey, the vast majority (84%) of private renters say they are ‘satisfied’ or ‘very satisfied’ with their current accommodation, though satisfaction levels are higher among owner-occupiers (95%).  Private renters are also less happy with their tenure, at 69%, compared with 98% of owner-occupiers. In a country where owning your own home is a key aspiration for most people, this is not unexpected.

Compared with social renters and owner-occupiers, private renters spend the most money on housing. On average, they spend a third of their household income on rent. And there are no surprises in the fact that Londoners spent more on rent than people living outside the Capital. What is more unexpected is that despite the often high cost of renting in comparison to paying a mortgage – and the number of renters who receive Housing Benefit –  the majority of people polled said they found it ‘easy’ or ‘very easy’ to pay their rent.

And despite the difficulties of getting onto the house-buying ladder, more than half of private renters thought they would eventually buy a home – even though a sizeable proportion freely admit they have no savings. Younger renters were more likely to think they would eventually become home owners. But without any clear idea of how this might happen, this sounds more like the optimism of youth, rather than a sign of increasing affordability in the housing market!

Is it time to ditch licensing schemes?

Lesley Davis Leave a comment

Passports are fashionable in the rental sector right now. Last month we had deposit passporting and now we have the concept of a so-called rental property passport.

This is the suggestion of  Theresa Wallace, head of lettings customer relations at Savills and current chair of The Lettings Industry Council. Speaking at The Property Ombudsman Conference last week, she told delegates the passport “could rapidly improve the quality of accommodation and landlords, and would be far fairer than the slew of licensing schemes now in force”.

Could the idea of rental property passports signal the end of licensing schemes?

It would be based on the DVLA model which manages the details of almost 50 million drivers and 40 million vehicles. Letting Agent Today outlines how the passport might work.

  • Each rental property would have a unique reference number. These are already allocated to properties by the Land Registry;
  • Any property without a reference number would not be ‘official’, so may have been illegally converted;
  • Every advertisement for a rental property must include its reference number and would also include the equivalent of a ‘property MOT’ certificate to ensure it had passed appropriate tests. 

Delegates at the conference were told that Hunters have already successfully piloted the scheme and that the Lettings Industry Council has found a not-for-profit supplier who may be able to operate a PropTech portal. This would mean the properties could be quickly and easily viewed by the public and Trading Standards.

If you are a landlord – or a tenant – we’d like to know what you think about this idea, so do leave your comments below.

Looking forward to the flat of the future

Lesley Davis Leave a comment

Ever wondered what the flat of the future will look like? Laura Geode from American Proptech company Homebase has some interesting ideas. Most of them revolve around IoT or the internet of things. This means greater connectivity between the devices and appliances in our homes; something we will soon all take for granted.

First, says Laura, our homes will talk to us. Many of us already have AI assistants in the form of Alexa or a Google hub but this technology is evolving fast. For flat owners and renters, a digital concierge will soon be there to turn on your lights, rent a car from the block’s car-sharing service or find a film for you to watch.

The internet of things will transform the way we live

And what about fixtures and fittings? Laura predicts that from windows to appliances and light bulbs to locks, there will be dozens of IoT devices in each unit making them more user-friendly and energy efficient. Picture this: your refrigerator door features a screen showing a digital image of all the food inside of it. You click on the chicken breasts and a list of recipes appears, all based on the food you have in stock. Missing an ingredient? There’s a one-click option to buy and have it delivered to you in time for tea!

Developers are keen to take up this technology but Laura says it’s important to approach it correctly. Most properties that try to be “smart” start with installing IoT devices like thermostats and locks, she says. Instead, developers should start with property-wide wi-fi, Bluetooth, and sensors. This network infrastructure allows devices to work seamlessly together.

In America apartment blocks feature air conditioning as standard. In the UK this may be essential in future as global warming takes hold. So in order for a block air conditioning system to be as energy efficient as possible it needs to communicate directly with the lights, thermostats and windows in the building. That’s not possible without network infrastructure in place.

Above this, says Laura, will sit the building operating system. This means residents will be able to control all of their devices from a single app and property managers can collect building-wide data too. This data makes it possible to find ways to run blocks more efficiently and create a better resident experience. And if all this sounds a bit far-fetched, don’t forget that the 5G technology we need to make all this possible, is already here.

Finally, Laura urges block owners and managers – especially in the rented sector –  to constantly ask themselves “How can we provide more things ‘as a service’?” From dog walking to wifi, residents want to live somewhere that makes their life easier. Hospitality and block management are coming together. And that won’t stop anytime soon. 

Buy-to-let – where can you get the quickest returns?

Lesley Davis Leave a comment

UK rents are going up. According to new figures from HomeLet, rents have increased by an average of 13.9% in five years. The average rent in the UK is now £941 a month, – an increase of £17 – on the same time last year. Rents in June increased in all 12 regions monitored by HomeLet, led by gains in Northern Ireland, where rents are up 4.7% year-on-year.

Also, rental yields are at their highest level for two years, according to the latest Buy to Let Britain report. The average yield now stands at 4.5% – the highest rate since the first quarter of 2017.

Buy-to-let: where’s the best UK location?

Great news for landlords, particularly those with buy-to-let property. They are under increasing pressure from the government in the form of additional tax, property reforms and new regulations – with more to come in the next few months. So research from Benham and Reeves could be required reading for anyone thinking of investing in the BTL market in the near future.

The report looks at the best parts of the UK to buy your BTL property. It ranks locations on the time it takes to recoup the investment on purchase and stamp duty costs, based on annual rental return. Benham and Reeves say Scotland is the now best place to invest. They claim annual rent is repaying stamp duty and average property prices in just over 17 years.

Northern Ireland comes out second, followed by England and then Wales. In Scotland, buying a rental home in Glasgow shows the quickest returns at 13.3 years, followed by Belfast at 15.8 years and Aberdeen at 17.8 years.

In England, Nottingham and Newcastle show the fastest returns. And in London, Tower Hamlets is the best location, closely followed by Barking and Dagenham, Newham and Greenwich.

But making a good return on a rental property is complicated. There are other things to take into account. Contingency budgets, capital growth and the impact of gentrification or other types of development on the location you choose must all be considered.

What this research really shows is that BTL isn’t the best way to make a fast buck. It’s a long term investment that needs careful thought. With so much changing in the market, only those who are prepared to stay the course – and understand the obligations and responsibilities of providing homes for tenants – should think about putting their money into rental property.