Removal of Section 21 Housing Act 1988

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The Government consultation on “A new deal for renting: resetting the balance of rights and responsibilities between landlords and tenants” closes on 12th October. I would urge all landlords to make a submission: Click here. You can also email your submission and any comments to TenancyReform@communities.gov.uk Below is an extract from my submission

1.

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Property funds face stricter checks from September 2020

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Property Funds:

Britain’s
Financial Conduct Authority (FCA), the financial markets regulator,
published tougher rules this week for funds that invest in
hard-to-sell assets, typically property.

Following a string
of instances where open ended funds* have been unable to pay out
money when investors have requested it because illiquid assets such
as property cannot be sold at short notice. In a market downturn this
often presents a major problem for funds with a high proportion of
illiquid assets when investors rush for the exit.

Some so called
“Built on a lie” funds, those sold to investors who are no
aware of the illiquid nature of the investment will now face tougher
rules starting in September 2020.

Some funds investing
in property had to be “gated”, in other words they had to suspend
redemptions during market stress in June 2016 immediately after the
“leave” result of Britain’s referendum to leave the European
Union.

When these funds
were unable to meet promises of daily redemptions, it prompted Bank
of England Governor Mark Carney to describe them as “built on a
lie”.

The FCA came under
more pressure to make a change following the high-profile fund run by
Neil Woodford when he suspended redemptions from his flagship Equity
Income Fund in June this year, a fund which had promised easy daily
redemptions.

It turned out that
Woodford was unable to make payouts after investors lost confidence,
panic set-in and a flood of redemption requests came in. This
situation came about because Woodford had breached a rule limiting
how much it could invest in illiquid assets. But with property funds,
unlike Woodford’s, often all the fund it invested in
illiquid assets.

A new category of
funds therefore, those investing in inherently illiquid assets, or
FIIA funds, from September 2020, will be subject to additional
requirements, including standard risk warnings in financial
promotions, enhanced depositary oversight, and a requirement to
produce liquidity risk contingency plans, says the FCA.

Christopher Woolard,
the FCA’s executive director for strategy and competition, had
said:

“The new rules and
guidance are designed to protect the interests of investors,
particularly during stressed market conditions. This includes those
wishing to redeem their holdings, as well as those wishing to remain
invested in the fund.”

Ryan Hughes, head of
active portfolios at investment platform AJ Bell has said:

“This means we’re
likely to see funds suspend dealing more frequently and sooner than
they would have done in the past”

Ironically, the new
rules will not apply to EU-regulated funds like the Woodford fund,
even though FCA Chief Executive Andrew Bailey has described the EU’s
rules as “flawed” – the Woodford fund breached the rule that no
more than 10% should be in illiquid assets.

Britain’s
Investment Association has said that the FCA’s approach with its
new rules is “pragmatic and measured” recognising the need to
enable investment in illiquid assets through open-ended funds, albeit
under stricter new rules.

The pool of
open-ended property funds subject to daily monitoring has been
widened by the FCA meaning that smaller property funds, as well as
larger funds that suffered following the 2016 Brexit referendum, will
need to publish daily cash-flow updates.

*Open-end funds
are collective investment schemes that issue and redeem shares direct
to investors, rather than they purchase shares from existing
shareholders on the stock market.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Property funds face stricter checks from September 2020 | LandlordZONE.

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Courts failing to follow rules in housing cases

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Courts across the country are failing to follow their own rules when it comes to the speed of dealing with repossession cases. According to the civil procedure rules which provide a code to ensure courts deal with cases justly, the courts are expected to ensure cases are “dealt with expeditiously and fairly”. The rules show […]

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Shelter do it again!

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Shelter do it again! Screw the vast majority of decent tenants that is, by their support for the Tenant Fees Act.

It is now not possible for a landlord to agree to a surrender of a tenancy without either:
a) breaking the law

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Landlord hopes to inspire schoolchildren

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Many landlords out there go above and beyond when it comes to their tenants and their local communities. Sarah Watt is a portfolio landlord with properties in Milton Keynes & in Australia. In her free time, she visits local schools and teaches children about how she balances her career and property, and raises awareness of […]

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Labour plans to end ‘rip-off’ leasehold ownership with sales ban on new homes

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Leasehold Sales:

Labour has said it
will bid to ban the sale of leasehold homes and “crack down” on
the controversial practice if it wins power. The Labour Party has
set-out its plans for a “leasehold revolution” to tackle
“rip-off” ground rents, contract terms and fees faced by millions
of households.

Properties sold as
leaseholds see occupiers buy the right to live in the homes for a
fixed period of time, most typically 60 to 120 years, while the
landlords, known as the freeholders, often charge the leaseholders a
rising annul ‘ground rent’. Occupants are also tied in to make
payments to contractors for the properties’ upkeep, with
alterations and sub-letting incurring further charges.

Ministers have been
accused of ‘kicking the can down the road’ on the leasehold
crackdown issue, but Conservative ministers have also vowed to end
‘feudal’ system of leasehold house sales in the modern era.

According to a
Labour Party report, six in ten leaseholders don’t fully understand
what being a leaseholder means until they have already purchased the
home, and nine out of ten regretted buying their leasehold
properties.

Shadow Housing
Secretary John Healey has said:

“Leasehold is a
symbol of our broken housing system, with millions of England’s
homeowners feeling like they’ve bought their home but still don’t
own it.

“The scale of the
problems faced by leaseholders, from rip-off ground rents to punitive
fees to onerous contract conditions stating what they can and can’t
do to their own homes, demands wholesale change.

“We need a
revolution in rights for leaseholders.

“This consultation
document sets out the next Labour government’s ambition end the
broken leasehold model for good.”

Under Labour’s
plans, the sale of leasehold flats and houses will be a thing of the
past by the end of its first term in office, and occupants
(leaseholders) will be able to buy the freehold of their homes for 1%
of the property’s value.

The party says it
wants to increase leaseholders’ rights, to empower them to
challenge unfair fees and poor repairs service.

Meanwhile the
Government has also vowed to curb the modern leasehold sales
practices, committing to ensure that new homes will be sold on a
freehold basis and to reduce ground rents to ‘peppercorn’ rates
on future properties.

However, Labour has
accused the government of lack of progress on the issue and says that
there is still no sign of change for home-buyers who have become
locked into unfair leasehold contracts, and there are still no plans
for the new legislation needed to release them.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Labour plans to end ‘rip-off’ leasehold ownership with sales ban on new homes | LandlordZONE.

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Storm Lorenzo: How to avoid damage to your property

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The Met Office has predicted strong winds throughout Friday, affecting the South West of England and South Wales in particular. Winds are expected to be quite strong, so it is important that landlords -especially in the areas where the storm is likely to hit- take action NOW to prevent potential damage further down the line. […]

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Forum Spotlight: Struggling to gain access for inspection

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Our landlord forum is a good way for members to share their experiences with each other and help each other out. Our Forum Spotlight this week shines the light on a question a landlord posted on our forum recently regarding gaining access to her property. The issue The landlord was very concerned because they needed […]

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Improve don’t lose Universal Credit

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Rarely does a week go by when the media doesn’t contain a story relating to Universal Credit and the impact it is having on claimants and landlords alike. It can be difficult to cut through the noise and know exactly what the truth is.

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Record high rents for 4th month in a row

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Rents:

ARLA Propertymark
reports record high rents for the 4^th month in a row

ARLA’s latest
Private Rented Sector (PRS) report, based on returns from their
letting agent members throughout the county, indicates that a record
number of tenants are having their rents increased – it will be to
the highest figure on record in the latest figures available for
August.

Sixty-four per cent
of ARLA Propertymark agents reported that their landlord clients were
actively increasing rents. This latest figure is only a marginal rise
sice the previous figure in July, where 63 per cent of agents
reported rent rises, but its a 4-month upward trend that gives not
sign of abating.

The year to date
figure given in the report is up considerably from 35 per cent of
agents reporting increases in August 2017 and 40 per cent in August
2018.

Those tenants living in Yorkshire and Humberside and the West Midlands were hit hardest, with 80 per cent of agents seeing rent increases.

Other

Other statistics
reproted by ARLA show:

• The number of
  properties managed per branch rose to 197 in August, from 184 in
  July.
• Year-on-year is
  the same, supply is up by 4 per cent from August 2017.
• Demand from
  prospective tenants also increased, with the number of house hunters
  registered per branch rising to 76 on average, compared to 73 in
  July.
• Landlords
  selling their buy-to-let – in August, the number of landlords
  exiting the market remained at four per branch.

The full report here

David Cox, Chief
Executive of ARLA Propertymark, said:

“Although it’s
positive to see that supply has risen, it is nowhere near enough to
counterbalance the rapid pace of rising rents, which have reached a
new record high for the fourth month running. Two thirds of agents
reported landlords raising rents last month, which is a significant
increase when compared with the two fifths of agents who witnessed
rises in August last year.

“Unfortunately,
the impact of the Tenant Fees Act will continue to be felt by
tenants, as in order to keep their heads above water landlords will
need to continue increasing rents to cover the additional costs they
now have to bear.�

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Record high rents for 4th month in a row | LandlordZONE.

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