Category: Tenants

How landlords drive up quality in the rented sector

Lesley Davis Leave a comment
Refurbishment is big business in the rental sector – and is helping drive up quality

Despite recent attempts by politicians to colour the PRS as sub-standard and riddled with rogue landlords, in fact the quality of rented accommodation is on an upward trend.

A survey published this week by InterBay Commercial proves the point. According to the specialist buy-to-let lender, the number of rented homes in England deemed ‘non-decent’ by the Office for National Statistics has fallen for the tenth year in a row. The most recent data reveals a decrease to 24.5% in 2018 from 44% in 2008. There is still a way to go but the vast majority of landlords are now providing good quality homes for people to live in. And this is in spite of the rapid expansion of the sector in the last decade, adding 1.5 million new rented homes.

Confirmation that quality is being driven up year-on-year is borne out by the latest English Housing Survey. This shows that the vast majority (84%) of private renters were satisfied with their current accommodation. 

In addition to the professionalisation of the sector due to the advent of buy-to-rent, which is promoting high-quality living space, InterBay claims that landlords’ commitment to upgrading properties has been a key factor in this improvement. 

The lender’s survey of more than 700 property investors shows that 70% of landlords who recently undertook a refurbishment did so to improve the property, either to enhance the presentation or to elevate the quality of the accommodation for tenants. 

As well as ensuring a property is an attractive prospect for potential tenants, refurbishment typically bolsters a rental property’s value and income potential: 74% of those who undertook a refurbishment said it enhanced the property’s value, and 82% saw monthly rents rise. Even after accounting for those who did not see the value of their property rise, the typical refurbishment added £13,000 to a house’s value.

So it may be an easy target for political point-scoring, but the private rented sector has been the success story of the housing market in the last decade. Growth and professionalisation have improved both choice and quality for tenants.

However, faced with a range of potentially damaging future policies and proposals from across the political spectrum, continued investment is not a foregone conclusion. Rather than demonising landlords and driving them out of the market, they should be well-regulated and properly supported. Interbay Commercial thinks that, should the current rate of change in the PRS continue, “it will weigh on landlords’ decisions to spend more on their portfolios, and risks undermining a decade of progress”.

We agree wholeheartedly.  

Top London rents: what else could you buy?

Lesley Davis Leave a comment

We all know how pricey London can be – after all, it’s one of the most expensive cities in the world. With Hamptons International confirming this week that average rents are up by 2% since last August, everyone living in the capital must sometimes wonder how much more they could get for their money if they lived elsewhere.

Property experts FastSaleHomes.co.uk decided to have some fun with this. They have surveyed London’s rental properties to find out just how much money renters in the capital’s poshest areas actually spend on their properties. The research is a real eye-opener. Here’s what you could buy with the money you would have to spend on renting these properties for a year.

The average UK house price is around £240,000, so with the £260,000 you would have to pay every month to rent a penthouse flat in Mayfair, you could BUY a three-bedroom house in Southampton. Or, a car enthusiast could buy a McLaren 720S supercar (which starts at £208,000). Alternatively, your month’s rent could sail two people around the world on a 112-night cruise – with spending money to spare. With the roughly £3M in rent payments for the next 11 months, you could invest in a four-bedroom, four-bathroom house in Florida. Or with just one year’s rent, you could buy around 16 properties in the East Midlands.

Two months’ rent on that Mayfair flat comes in at a whopping £520,000, but if you fancy moving to Manchester instead, that’s enough to buy you a new and luxurious three-bedroom flat in the city centre.

If you want to set your sights a tad lower, a flat in Hans Place – only a stone’s throw from Harrods – would cost you £97,500 monthly rent. The property comes with luxury amenities including a cinema room and 24-hour uniformed security and concierge services. However, if you could live without that, two or three months’ worth of rent and you’re already looking at making a big property investment outside of London. That £300,000 will buy you a four-bed, two-bathroom house in Edinburgh.

Or if you feel like splashing your cash, you could just buy a luxury car such as the Lotus Exige 3.5 Sport, or even an entry-level yacht, for only a month’s rent. A year’s rent in this part of Knightsbridge equates to around £1.1 million – which could net you up to seven properties in Yorkshire and the Humber.

Of course, for most of us, this is all just pie in the sky. The average monthly cost of renting in London is around £1737 pcm. But with three years’ rent you could buy a terraced house in Middlesborough or Blackpool.  And if you’re happy to continue renting, you could save yourself around £700 pcm by moving to Manchester and up to £1000 pcm by considering Leeds or Huddersfield.

So if you are thinking about leaving London behind – and don’t need to commute back into town every day –  why not look further afield. There is life – and property – outside the capital that could be worth considering. Why not check out the sales and lettings on our LifebyRingley website to find out more.

No slowdown for BTR pipeline in the Northwest

Lesley Davis Leave a comment

Last week, the Northwest Insider event looked at issues around housing supply and demand. Life by Ringley MD Sam Hay was there, so for those of you who are interested, here are a few of the most interesting takeaways. 

When it comes to rental values, build to rent property continues to command a premium. Pounds per square foot does not come into BTR, instead it’s all about quality of product. Rental growth for July was around 1.13% but Andrew Cook from M&G commented that there will be pressures on pricing as more schemes come onto the market.

Low entry costs on BTR flats are making things much easier for renters. Increasingly, people want a transient way of life and easy entry and exit, so they are likely to try different buildings before they settle longer term. Lifestyle choices are changing fast and renting is no longer frowned upon. Renters react positively to being viewed as customers, not tenants; maintenance issues are dealt with fast and longer-term leases are expected to take off. As a result, BTR is a huge growth area with 1.4 billion total investment this year in Manchester alone. Manchester is currently at the hub of BTR and is very much being used as a test case. Manchester City Council thinks there will be an undersupply but at this moment in time, due to Section 106 requirements, consents are slowing down.

One downside of the BTR explosion and the high demand for one-bedroom homes, according to Tim Heatley from Capital and Centric, is that Manchester city centre is not ready for families. Chris Shaw from Urban Splash agrees. He thinks offers in our town centres need to change, and there should also be schemes in rural areas. Maybe with new ways to sell being considered, such as pre-approved mortgages where you turn up and pick your home. At the moment it is easiest to develop BTR schemes in city centres and building an investment case in other locations can be difficult.

Lambert Smith Hampton told the Northwest Insider audience that 54% of all housing investment in the North East is now for ‘alternative’ homes, such as BTR and student accommodation. The success of the latter in Manchester and other university towns has provided a model for new developments in the region. Diversification and a huge undersupply of high quality residential housing are now driving investment in residential portfolios as opposed to the standard commercial property investment model. There is even an argument in favour of BTR as a separate asset class.

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.

Insurance: are you covered?

Lesley Davis Leave a comment
Your landlord should be insured for this kind of damage but what about the contents of your flat?

Insurance, like braces on your teeth or income tax, is a necessary evil. It’s a topic that needs be taken seriously. We’ve blogged before about the importance of ensuring you have the right cover in place. So we want to share some new research from Aviva with you.

According to the insurer, which provides cover for one in four UK households, a growing number of renters are putting themselves at risk by choosing to remain uninsured. Aviva polled 2,057 people in June, including 567 respondents living in rented accommodation and 585 respondents who own their house with a mortgage. The results are interesting.

First, the vast majority of renters taking part in the survey, don’t have any form of protection in place; life insurance, critical illness cover or income protection. This means they may have trouble paying their rent if they unexpectedly have a drop in income and compares badly to homeowners. Three out of five people with a mortgage told Aviva they have some kind of protection insurance in place.

The research also reveals that only two out of five households living in rented accommodation have contents insurance. This rises to nine out of ten homeowners with a mortgage. Aviva calculates that this means almost six million renting households could be without any insurance cover at all if their possessions are damaged by fire or flood or stolen.

The reality, of course, is that the responsibility of buying a house or flat often triggers the purchase of life insurance and contents cover. And buildings insurance is a standard requirement. This is not the case for tenants, who are also likely to spend a larger proportion of their income on housing costs and so have less spare cash. Aviva found that on average renters spend 35% of their income on rent, compared to the 25% spent on a mortgage. And people living in the private rental sector are paying the most, with figures averaging out at 40%; this is considerably higher for many people renting in London.

No surprise then that insurance is an expense too far. If you’re young and single, the need for life insurance may seem negligible but contents insurance is a different matter. People living in flats may feel they have added protection from theft due to block security, concierge staff or just knowing there are plenty of other people for thieves to choose from. However, fire, as we all know too well, is often devastating and can leave people literally with just the clothes they are standing up in. And leaks from neighbours’ flats can quickly destroy fixtures and fittings as well as personal possessions.

Never assume your landlord’s insurance will cover you. It may pay for redecoration if the bathroom upstairs floods but it won’t pay out for that damaged laptop or your book collection. So if you are renting your home, think again about contents cover. It’s cheap and quick to buy online. You may never need it – but is it worth taking the risk?

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!