Tag: landlords

Will there be a post-pandemic rental crisis?

Lesley Davis Leave a comment
With an estimated 2.6 milion tenants at risk of arrears, is there a rent crisis looming?

There is a “looming crisis in the rental sector” due to the financial hardships being faced by both landlords and tenants as a result of the coronavirus pandemic. This was the verdict of the Housing, Communities and Local Government Committee, which published the interim report in May from its call for evidence to examine the effect of the pandemic and Government support for tenants. Committee chair, Labour MP Clive Betts, told the BBC last week that the UK is currently in “the lull before the storm.”

Key points from the committee’s report are:

  • A recommendation to bring forward legislation to amend the 1985 and 1988 Housing Acts to allow judges to use discretion where a tenant is in rent arrears due to the coronavirus crisis for the next 12 months at a minimum. Discretion could include consideration of whether a pre-action protocol has been complied with.
  • The Government must accelerate its plans to introduce the proposed Renters’ Reform Bill to Parliament and abolish ‘no-fault evictions’ under section 21 of the Housing Act 1988 within the next 12 months. By amending the Act to allow judges to exercise discretion, the Government will have time to deliver a Bill that provides greater security for tenants.
  • The Government must ensure that the Local Housing Allowance (LHA) rate is set at a level that reflects real market rents and ensures those in need are able to afford properties in their areas.

The committee believes that unless the Government amends existing housing legislation, its plans to introduce a pre-action protocol to the private rented sector will be toothless. This poses the danger of a cliff edge of evictions once the moratorium on possession cases ends.  

Research from the Resolution Foundation published last weekend reveals that one in eight private sector tenants have fallen into rent arrears to-date. And as the impact of the pandemic on the UK economy really starts to bite, Citizens Advice calculates that around 2.6 million tenants could find themselves in rent arrears.

The National Residential Landlords Association told Landlord Today that more than half of its members have already experienced some combination of rent payment problems or unanticipated void periods. Some landlords who already had possession cases for rent arrears going through the courts prior to the ban, could find themselves trying to cover more than a year’s worth of rent if the courts are unable to resume existing cases from the planned date of 25 June. So it is calling for a “careful re-opening of evictions needs”. 

Of course, landlords who do find themselves in financial difficulty can ask their lender for a mortgage holiday, but the reality is that this only pushes payments further down the line – and may ultimately impact their credit rating.

In London, more than 2,500 households have agreed not to pay their rent thanks to a campaign by the London Renters Union. The LRU is calling on tenants to withhold their payments to landlords if they find themselves in financial hardship One activist told Landlord Today that the government is prioritising landlords’ profits over renters’ survival. “Right now, it must suspend rent, cancel rent debt and make the eviction ban permanent, she said. “Otherwise we’re headed for a chaotic rent debt and eviction crisis.”

However, the official guidance from the MHCLG remains clear.  Landlords and tenants should work together to address any concerns and find solutions to overcome rent arrears, such as an affordable repayment programme. This is very much our view too.

But will this approach be enough to prevent the pandemic causing widespread problems for landlords and their tenants? What do you think?

Don’t forget – Tenant Fees Act in force from Monday!

Lesley Davis Leave a comment
The Tenant Fees Act applies to all tenancies in England from Monday 1 June

Landlords, from next week the Tenant Fees Act 2019 applies to all your tenancies and you are banned from charging renters any fees apart from those specified in the legislation. That’s rent, tenancy deposits, holding deposits and any default charges that are specifically stated plus a few others we list below.

The Act came into effect in England on 1 June 2019 with a one-year transitional period, which exempted existing tenancies from the new rules. This is about to end. So from Monday 1 June, all assured shorthold tenancies and HMO licences are subject to the legislation. The legislation also introduced a deposit cap that limits deposits to five weeks’ rent (or six weeks if the annual rent is £50,000 or more).

To remind landlords of the rules, here’s a list of allowable charges:

  • A refundable deposit
  • A refundable holding deposit – capped at one week’s rent
  • Rent, utilities, communication services, TV licence and council tax
  • Fees for changing or ending a tenancy at the tenant’s request
  • Default fees for late payment of rent  
  • Fees for replacing a lost key or security device, where required under a tenancy agreement and with evidence of the cost in the form of a receipt or invoice.

If landlords charge for anything that isn’t on this list that’s a breach of the new legislation. This carries a fine of up to £5000. And even worse, if you break the rules again within five years of being fined the first time, that counts as a criminal offence and carries an unlimited fine. So make sure you understand the new rules.

For a full list of charges that are now banned under the legislation, you can read the Government guidance in full here.

Finally, it’s worth remembering that any deposit taken before 1 June 2019 that was higher than the five or six-week cap that is now in place, doesn’t need to be refunded immediately. Instead, renters should receive a refund at the end of the tenancy. The new tenancy deposit cap will apply to any new tenancy agreed after that.

www.planetrent.co.uk

Why not READ our Property Blog too at www.ringleypropertyblog.co.uk

Landlords in the firing line – again!

Lesley Davis Leave a comment
Landlords in the firing line don’t deserve always to be seen as the bad guy

Landlords in the firing line from another consumer group may once again be wondering what they have to do to prove that they are not always the bad guy. Following on from recent calls for tenants to pay no rent if they are suffering financial hardship due to Covid-19, this week Citizens Advice wants buy to let properties to be re-let only if the tenants in them want to move.

The proposal is just one in a list of tenant-related demands made by the organisation, most of which relate to the Coronavirus outbreak. But yesterday Citizens Advice told Letting Agent Today that “properties should only be put on the rental market if the tenant has said they want to move.”

We think there’s a major misconception here. There seems to be an assumption that just because tenancy agreements are for a fixed term, landlords automatically want to change tenants. They don’t.

Ringley Group MD Mary-Anne Bowring says: “The truth is that a sane landlord would want to end the tenancy only if they were experiencing problems with the tenants. Why face a void period if your tenant wants to stay.  A void means not only the loss of a couple of weeks rent but also the need to refresh the property, spruce it up a bit and maybe even change curtains, furniture or carpets”.

Citizens Advice is also calling on the Government to “accelerate its policy to scrap Section 21”. We wholeheartedly disagree with this too and have campaigned to keep a system that we believe is effective. Section 21 is simply a polite way to evict difficult tenants. It stops the court system being clogged up with many small rent arrears cases and gives landlords some certainty that their worst bad debt is the term of the tenancy without protracted court proceedings.

Most property owners who rent a home to tenants do a good job. They are not constantly trying to rip-off or evict renters who pay their bills and look after the property. So why put landlords in the firing line – again!

www.planetrent.co.uk

Why not READ our Property Blog too at www.ringleypropertyblog.co.uk

Landlords – don’t forget, new electrical safety checks are on their way

Lesley Davis Leave a comment

Regulations for mandatory electrical safety checks in rented homes come into force for new tenancies on 1 July 2020. For existing tenancies, the new rules will apply from April next year.

Under the new regulations, landlords must ensure all electrical installations in their properties are inspected and tested by a qualified engineer every five years and a report provided to confirm the property meets the right standard.

Local authorities will enforce the new rules. From July, they can hand out fines up to £30,000 if a landlord doesn’t comply. They can also commission any upgrade that’s needed, recovering the costs from the landlord on completion of the works.  Fines will be retained by the local authority to help fund their enforcement role under the new legislation.

The National Association of Professional Inspectors and Testers (NAPIT) estimates that almost a quarter (22%) of the 4.7 million privately rented homes covered by the new regulations, don’t have a valid electrical safety report. So we are urging landlords to ensure their electrical installations will pass muster. Despite the social distancing required due to Covid-19, government guidelines are clear –  landlords must ensure their properties are safe. This is considered essential work and must be carried out to bring homes up to the correct safety standard.

However, we fully appreciate the problems being faced by landlords at the moment –  and the understandable fears of tenants around letting people into their homes – even to do essential work. So here’s a reminder of what the guidelines say about compliance during the Covid-19 outbreak:

“If a landlord can show they have taken all reasonable steps to comply with their duty under the regulations, they are not in breach of the duty. … A landlord could show reasonable steps by keeping copies of all communications they have had with their tenants and with electricians as they tried to arrange the work, including any replies they have had. Landlords may also want to provide other evidence they have that the installation is in a good condition while they attempt to arrange works.”

Our advice is to be guided by the rules on social distancing and safe working and by your tenants, particularly if they are self-isolating or in a vulnerable group. However, NAPIT thinks there are plenty of rental properties out there that will need remedial works to ensure the electrical installation within the property is in a satisfactory condition. So if you can find an electrical engineer to safely carry out tests and do any work required, go ahead. If not, and you are not putting tenants at serious risk, follow the guidance outlined above and wait until the lockdown is lifted.

By July, when these regulations kick in, the world could look quite different from the way it does today. So, as the government announces an easing of the lockdown restrictions, we’re all keeping our fingers crossed for better times ahead.

Finally, to ensure your properties are always compliant with all the rules and regulations that landlords need to abide by, why not take a look at our new cloud-based PlanetRent platform. Our lettings software means that when the law changes, so do your processes. It’s pay-as-you go, so check it out today and never get caught out by new legislation again.

www.planetrent.co.uk

Why not READ our Property Blog too at www.ringleypropertyblog.co.uk

How PlanetRent supports buy-to-let landlords

Lesley Davis Leave a comment
Buy-to-let landlords can now automate their lettings in a just few clicks with PlanetRent

Are you a buy-to-let landlord? If so, you can now manage your rented homes remotely with PlanetRent. Our new cloud-based, automated lettings platform makes the whole lettings process simple and hassle-free.

With social distancing likely to be with us for some time, PlanetRent reduces contact with agents, tenants and contractors to a minimum by automating all the key processes around letting, re-letting, repairs and even marketing. PlanetRent gives small landlords access to Rightmove and Zoopla as well as helping you to easily create your own website to showcase properties.

 In just one click, PlanetRent provides all new tenants with legally-required documents such as a copy of the Government’s How to Rent checklist and Deposit Protection Scheme details, as well as energy performance and gas safety certificates. This gives you the peace of mind that every legal box is ticked and helps you avoid compliance-related fines that could cost as much as £20,000.

 PlanetRent allows all key documents and files to be accessed virtually and enables fully compliant contracts to be generated in seconds. These can then be e-signed remotely.

A tie-up between PlanetRent and Reposit gives landlords the ability to offer properties as deposit-free while giving them eight weeks rent cover. This means landlords can easily cater to cash-strapped renters who want to avoid the financial burden of paying up to five weeks rent upfront while staying protected.

 We’ve also got tenancy renewals covered. In just three clicks, PlanetRent prompts tenants to see if they want to renew. It then automatically markets properties and triggers move-out checks if the tenant chooses to vacate.

Using PlanetRent adds value for your tenants too. So why not make their lettings journey simple and hassle-free. Our new platform gives renters an easy-to-use portal they can access to see everything about their property including floorplans and utility references, as well as their inventory and contract. As documents get renewed, copies are automatically emailed to them and they can request and monitor repairs through the platform too.

 So why not try PlanetRent today? It’s pay as you go, with no need for sign-up fees or subscriptions, making it really easy to check it out. PlanetRent really is lettings automated, so you can still provide your tenants with a first-class rental experience, even in lockdown. 

www.planetrent.co.uk

Why not READ our Property Blog too at www.ringleypropertyblog.co.uk

PlanetRent – lettings are now just a click away!

Lesley Davis Leave a comment
planetrent logo

PlanetRent is our new automated lettings platform. It’s launching this week to save landlords and agents time, money, and hassle. PlanetRent automates and simplifies lettings by harvesting data and digitising all the key processes, making lettings quick and simple for everyone involved.

 Covid-19 has brought the traditional lettings process to a halt and we’re all having to find new ways of working remotely. So at Ringley, we have reacted fast to the lockdown, bringing forward the launch of PlanetRent, our cloud-based platform that helps landlords and agents cope with the social distancing measures introduced by the government in response to coronavirus.

PlanetRent connects agents, landlords, tenants, contractors, accountants and site staff, each through their own portal, so they can access the data they need, enabling them to carry out transactions from the comfort and safety of their home.

While coronavirus means the government has urged people not to move unless absolutely necessary, as social distancing measures are gradually lifted Ringley expects to see a surge in rental demand. We think households will want to avoid the expense and hassle of buying or selling a home and lenders are likely to tighten mortgage requirements in response to the economic uncertainty, giving renting renewed appeal.

Mary-Anne Bowring, group managing director at Ringley and creator of PlanetRent, says, “Coronavirus has undoubtedly caused huge disruption to the housing market but as the crisis fades we will still be left with the same problem of a rental market stuck in the analogue era when we are in the digital age”.

By automating key functions and replacing a host of existing subscriptions and manual processes, PlanetRent saves landlords and agents considerable time and expense. Read last Tuesday’s blog to check out the detail and find out how PlanetRent can take the hassle out of lettings in just a few clicks.

And if you’re a buy-to-let landlord, come back on Thursday when we’ll be looking at the ways PlanetRent will help support you and your tenants.

www.planetrent.co.uk

Why not READ our Property Blog too at www.ringleypropertyblog.co.uk

Why we say tenants need a payment holiday too

Lesley Davis Leave a comment
Pay it forward: landlords are taking mortgage holidays but what about tenants who are facing hardship?

A recent survey by Landlord Action found nearly three-quarters of landlords have been contacted by tenants worried about their rent payments. This highlights the severe impact the lockdown is having on household finances.
 
Mary-Anne Bowring, group managing director at Ringley, thinks renters should have their rents reduced if they can prove they have been unable to access cash through the government’s income support schemes, and their furlough or government money means a reduction in their normal household income. After all, she says, that income is what the affordability of the letting was granted on. In particular, Mary-Anne thinks this should be the case if the landlord is benefiting from a mortgage holiday.  “Otherwise,” she says, “this is a lose-lose situation for the government and the wider economy – which means all of us”.
 
The government has already banned eviction proceedings from happening and is urging landlords to work with their tenants in situations where they are struggling to pay rent. Tenants who are out of work and living on reduced incomes surely have a right to know if their landlord has secured a mortgage repayment or a repayment-and-interest holiday. How can it be right for the landlord to still expect tenants to pay their full rent if they are being propped up by their mortgage lender?  Of course, the government still needs to help renters either not covered by income support schemes or who have not yet received the additional cash.
 
Mary-Anne adds: “The word ‘unprecedented’ has been used a lot in response to the impact Coronavirus is having but statistic after statistic shows a level of damage not even seen during the worst of the Financial Crisis. The government has moved decisively to help protect tenants and landlords, but it is inevitable some households will fall through the gaps as the various income support schemes get up and running and payments are processed.
 
“Transparency is key, and renters have a right to know if their landlord has benefited from a mortgage holiday and, if they are struggling financially, they should be able to request a reduction in rent. Any rent reduction must be conditional on being able to prove financial hardship to prevent abuse of the system and it is important tenants and landlords work together during this uniquely difficult time.”
 

Why landlords should be looking beyond COVID-19

Lesley Davis Leave a comment

Despite the obvious pressure on the rental market resulting from the current health emergency, longer-term, buy-to-let remains an attractive asset class, says Ringley Group MD Mary-Anne Bowring.

Quoted in today’s issue of Landlord Today online, Mary-Anne says: “A subdued for-sale market will likely see demand for rental homes grow over the course of the year, as buyers put off committing to purchasing a new home and sellers hold off owing to a dip in values and the impracticalities of trying to sell when social distancing measures are in place”. Her comments are in response to the latest figures from Zoopla, showing demand for rental homes up by 30% in the first half of this month.

However, as Landlord Today points out, the increase is coming from a very low base with demand falling dramatically by 57% as the country went into lockdown at the end of March. The improvement is likely to be because more people are staying at home, so anyone who is finding their current property unsuitable may find they have more time on their hands to plan for the future and think about moving once the lockdown is lifted.

Putting the figures into context, Mary-Anne says, “The latest BPF figures show strong growth for build-to-rent in key regional cities which is positive news but completed BTR homes still make up only a tiny fraction of the overall rental market. 

“More worrying is the slowdown in activity in London, where demand and need for high quality rental housing is arguably greatest, with investors put off by potentially hostile policies such as rent controls.”

According to Zoopla, the Coronavirus outbreak may be impacting demand but it is having little effect on supply. The total number of homes available to rent remains broadly unchanged. There has been no large-scale withdrawal of homes listed to let since the start of the lockdown and rental listings are down just 3% compared to figures from 1 March.

In contrast, the rate of new rental listings coming to the market has slowed, after a surge in homes to rent before the lockdown, as landlords in some cities moved short-let homes to the long-let market.

And with annual UK rental growth at 2.4%, up from 1.5% in March 2019, Zoopla expects rental growth for the rest of the year to remain moderately positive for landlords.

Read yesterday’s blog for more on the Build to Rent market.

www.planetrent.co.uk

Why not READ our Property Blog: www.ringleypropertyblog.co.uk

Landlords, don’t forget the changes to CGT – they apply to you!

Lesley Davis Leave a comment
A number of tax changes that impact landlords are now in force

Although COVID-19 is uppermost in all our minds at the moment, it’s important to remember that all the same legislation still applies to the way you operate your rental property – and so do tax changes. For landlords, this April sees a big change to the rules that govern Capital Gains Tax as well as a new regime for lettings relief.

From 6 April, new legislation is in force that means anyone selling a property eligible for capital gains tax (CGT) must pay what is due within 30 days of completing the sale. Up until now, anyone who paid tax via a self-assessment tax return could report a sale and pay what they owed via their tax return. That gave sellers a period of between 10 and 22 months to find the money. Now, those days have gone and anyone who doesn’t comply with the new rules could find themselves paying hefty charges.

Tax specialists Royds Withy King explained the implications in the press last week, saying: “Where CGT is due, the change could mean that sellers have to get funds in place to cover the CGT liability before the sale is completed…30 days is not very long at all. This could be a particular issue where there are large historic gains.” So it’s important not to get caught out.

Other reforms coming into force this month are:

  • Lettings relief, whereby landlords could claim tax relief on any let property that used to be their main residence, can now only be claimed for the period during which the property is shared with a tenant.
  • Principal private residence tax relief, which applies to landlords selling a property which was previously their main residence, is reduced from 18 to nine months.

Also, the final stage of Section 24 of the Finance (no 2) Act 2015 has now been enacted. This amendment to UK tax law means the amount of income tax relief landlords receive for residential property finance costs is now restricted to the basic rate of tax. The changes have been phased-in since April 2018 and mortgage tax relief for buy-to-let landlords is now replaced by a tax credit of 20%.

This change applies to:

  • Landlords who are UK residents with residential rental properties, regardless of location
  • Non-UK resident landlord with residential rentals based in the UK
  • Partnerships and Trusts with residential rental properties

If these changes apply to you, click here for detailed information on CGT as it affects landlords and an explanation of the new rules

www.planetrent.co.uk

Why not READ our Property Blog: www.ringleypropertyblog.co.uk


Could a tax tribunal ruling mean BTL investors avoid 3% stamp duty surcharge?

Lesley Davis Leave a comment

Buy-to-let investors could soon fill the HMRC with stamp duty surcharge refund requests. This is following on from a potential precedent set at a recent tax tribunal that saw a couple acquire a neglected building and were able to refute the additional 3% stamp duty charge on purchases of second homes.

It was revealed at the tribunal, held in Bristol, that potentially, buy to let investors could avoid paying the 3% stamp duty surcharge. This instance could cause many more landlords who have already paid the surcharge, to demand a refund from HMRC and suggests that many property purchases could fall short of the additional 3% surcharge and just consist of the standard rate stamp duty.

Paul and Nikki Bewley acquired their uninhabitable bungalow in Western-super-Mare and made the decision to bulldoze the original build in order to make way for a new property, thinking they would not accountable for the 3% charge for Taking on the additional property.

HMRC argued this view, believing that the 3% charge was applicable, as the property was capable of being used as a dwelling sometime in the future.

However, a recent tax tribunal ruled against the HMRC and in favour of Paul and Nikki Bewley, stating that they are only able to charge the 3% if the home is in an acceptable living condition right away.

HMRC has yet to decide on an appeal, stating: “We’re considering the judgment carefully.”

But, this ruling suggests that many buy-to-let landlords could be exempt from the 3% surcharge, when buying a property that is uninhabitable at the time they purchased it.

Commercial Trust Limited, a specialist buy-to-let broker, considers that this ruling could represent an opportunity for past claims from buy-to-let investors who have paid the additional 3% charge on properties that were uninhabitable at the time of purchase.