#Coronavirus: 500 landlords attend webinar to hear latest pandemic advice

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Paul Shamplina gives landlords guidance on evictions, inspections, handling rent reduction requests, managing HMOs, mortgage arrears and Right to Rent changes.

Just how worried landlords are by the impact of Coronavirus on the ability of tenants to pay their rent was highlighted by a group of nearly 500 landlords and letting agents attending a webinar held by Paul Shamplina.

The star of Channel 5’s Nightmare Tenants, Slum Landlords TV show and founder of Landlord Action, who has over 20 years’ experience working with landlords, says the one-hour webinar was a lively affair during which participants fired nearly 100 questions at him.

Shamplina outlined best practice for landlords during the Coronavirus crisis including the knotty problems of mandatory property inspections, the new Right to Rent rules, renting properties during the crisis, what to do when tenants are struggling to pay the rent, and the key challenges of managing HMOs where tenants have self-isolated or caught the virus.

He also advised landlords on how to deal with their lender if they get into mortgage arrears, updated attendees on the latest changes to eviction regulations and how the crisis affects deposits.

But landlords has many other topics on their minds during the seminar and fired off many questions, which Shamplina is now working hard to answer.

A significant majority of these were about how to handle tenants who are struggling to pay their rent.

One landlord asked if it was possible to see a tenant’s last three months’ bank statements to assess their financial position, how to tell the difference between valid and invalid rent reduction requests, what happens if tenants quit a tenancy early but still want their deposit back and whether not paying rent now would validate a future evictions once the crisis is over.

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Tensions between landlord and tenants at Manchester development erupt over rent payments

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Landlord Manchester Life, which is part owned by an Abu Dhabi company, has clashed with tenants after many requested a rent reduction as the city’s economy contracts.

A leading North West landlord has moved to reassure
hundreds of tenants that it’s willing to be patient with those struggling to
pay rent but has stopped short of offering rent reductions.

Worried residents in Manchester Life’s developments in
Ancoats and New Islington wrote to the company about their current financial
problems, wanting to discover its position; many work in industries heavily
affected by the Coronavirus crisis such as hospitality.

In a letter to residents, the company, a joint venture
run by Manchester Council and the Abu Dhabi United Group, said it realised a loss of income might temporarily impact
their ability to pay rent, which added extra worry to an already stressful
situation.

It said: “The leasing team are here to help
understand your situation and work with you on a solution that allows you
enough time to get back on track as soon as possible. We absolutely know and
understand that we will need to be patient.”

It said it had halted all debt recovery procedures, even
for those who owed rent before the current emergency.

Tenants had also asked Manchester Life whether they were entitled to rent reductions as the services they pay for – including concierge, gym and communal areas – currently can’t be used.

Request refused

But the company refused, saying it had increased other
services such as cleaning, refuse management, hazardous waste management and
administration support provisions at no extra cost to residents.

After Manchester Life announced
that its 24/7 concierge service would no longer accept parcels, residents were
told to come and collect them outside the gates.

This led to large numbers
of residents gathering at the gates for multiple deliveries, so it has changed
the policy so these will now be accepted by the concierge who can call
residents to come and collect them.

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Landlords face huge learning curve as DWP reports million extra Universal Credit claims

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Hundreds of thousands of landlords across the UK who until now have not had to deal with Universal Credit must now learn quickly how to navigate the sometimes frustrating benefits system.

As the Department for Work and Pensions grapples with nearly one million new claimants, Caridon Landlord Solutions boss Sherrelle Collman reports that her firm has seen a surge of calls from landlords and letting agents asking advice about how the process works.

“Communicate with your tenant and support
them as much as you possibly can,” advises Collman.

“Where possible, consider a rent reduction to
meet the housing element of Universal Credit – some rent to help cover a
mortgage is better than nothing, or if at all possible, offer a rent holiday.”

She says tenants will need a letter verifying
their rent, address and tenancy dates, to help them qualify for the housing
element of Universal Credit.

“Many tenants prefer to have the housing
element of Universal Credit paid directly to the landlord. Landlords should
discuss this with their tenants and if in agreement, fill out a UC-47 form to
apply for this,” adds Collman.

She says many tenants starting to sign on will be anxious not just about the current situation, but because of the criticism the benefit has received.

“The good news is
that more resources have been deployed to local authorities to help claimants,
and measures such as immediate access to Advance Payments, increases to
Universal Credit and raising the Local Housing Allowance rate to the 30th
percentile of market rents from April, are being put in place.”

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Article 4 direction approved in Northampton

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Landlords in Northampton who want to covert houses into small HMOs will be required to obtain permission from the council to do so from November. An Article 4 direction is already in place in some parts of the town, and the new direction will apply to the areas not already covered by this. A consultation […]

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Reform proposals could trap leaseholders in their properties…

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Leasehold reform:

Following a couple of consultations the government has published its report on leasehold reform which is indicative of the flavour of the legislation due to be enacted soon, though understandably the current health crisis my delay this indefinitely.

One of the main
options suggested in the report is the adoption of the percentage
rule, that is ground rents must not exceed 0.2% of property value, or
0.1% for new build properties. Doubling ground rents would be
acceptable provided they do not double more frequently than every 20
years and this does not continue to double beyond 125 years. Fixed
increase ground rents would not be allowed to exceed more than
double.

However, writing for
Mortgage Finance Gazette, Geraint Evans, director at Bureau
Property Consultants says that adoption of this rule would result in
“the resurrection of the mortgage prisoner,” harking back to the
credit cunch of 2008.

“The adoption of
the 0.1% ground rent rule by lenders for leasehold properties could
pave the way for a new class of mortgage prisoner, trapped in a home
they cannot sell or remortgage, says Mr Evans.

“Pointing to the
discontinuity caused by the continuous change in housing minister’s
(we are now on the 10^th minister in 10 years) Mrn Evans
thinks it’s no “wonder certain proposals are having an unruly
impact on consumers and the market.” he states.

For a long time now,
more and more developers have been incorporating increasingly higher
ground rent payments into their leases when they sold new build flats
and houses, often to unsuspecting first-time buyers who now find
themselves trapped in homes they cannot sell.

Ground rent payments
were subject to frequent reviews and increases, often doubling or
linked to inflation, so whilst this was very attractive to long-term
ground rent investors, leasehold homes became more difficult to sell
or finance.

In addition, buyers
then found that high service charges, one-off and unexpected bills,
permission charges and high enfranchisement or lease extension
charges where not unusual. This and the uncertainty surrounding the
pending reforms brought caution and uncertainty surrounding both
property leasehold and ground-rent sale valuations.

It now looks like
the government’s intentions surrounding the future of ground rents
and leasehold reform are becoming clearer. The Law Commission review
and a House of Commons Select Committee has clarified the position
somewhat on the potential legislative changes. This would include
plans to ban future leases on new build houses, a legal clamp down on
unjustified costs, provide rights for leaseholders to challenge
payments and implement regulation to review charges faced by
leaseholders and freeholders.

The government has
said it plans to create a compulsory new homes property ombudsman
service which will include a code of practice to deal with
leaseholds, service charges and mixed tenure estates.

Its not clear
whether the legislation will include existing leases retrospectively,
especially those with “onerous ground rents,” though currently
this is said to be unlikely.

Many lenders
currently have a ground rent lending policy for individual flats,
which Mr Evans’ warning is addressing. Nationwide is one of the
toughest lenders is this market, stating they will not lend where the
ground rent is more than 0.1% of the value.

The Law Commission’s
report aims to simplify the way in which premiums are calculated and
reduce these, and is amongst a number of what Mr Evans calls “very
sensible conclusions,” but, he says, there are some unworkable
suggestions that must be addressed.

“Its specific
assertion on ground rents that surpass 0.1% of the freehold value of
properties being onerous is extremely problematic for leaseholders
trying to sell their homes. Lenders are simply not approving
mortgages on such properties because of this onerous label.

“The creation of
mortgage prisoners was one of the lesser-known consequences of the
2008 financial crisis. After the crash, regulators and banks scaled
back their lending criteria, which meant those trying to get a
mortgage would be faced with tougher affordability tests,” Mr Evans
states.

“Fast forward to
today and the adoption of the 0.1% ground rent rule could pave the
way for a new class of mortgage prisoner. The report outlines that it
is “widely considered” that any ground rent which exceeds 0.1% is
“generally considered onerous”; an assumption that appears to be
based entirely on a single factor: that Nationwide Building Society
will not lend on new-build properties where the ground rent exceeds
this rate.”

2019 Government report on Leasehold Reform: the future of ground rents, service charges and selling practices

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Plans to reform Wales possession process paused due to coronavirus

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The Welsh Government has announced it will pause legislation that would have seen the creation of six-month notice periods and, in effect, year-long tenancies. In a written statement, First Minister Mark Drakeford AM said the Welsh Government has had to prioritise which Bills it wants to pass the legislative process of the Senedd due the […]

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Coronavirus loans scheme for SME landlords beefed up after criticism

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HM Treasury’s Coronavirus Business Interruption Loans Scheme is to be offered to a much wider range of SME businesses and its lending criteria relaxed, the Chancellor has announced.

Landlords who run their portfolios as small or medium size businesses are to be given more help accessing commercial loans following an announcement by Chancellor Rishi Sunak this morning.

His recently-announced Coronavirus Business Interruption Loans Scheme (CBILS) was criticised after it transpired that the system, which offers SMEs business loans backed by the government through 40 approved lenders, was only open to businesses who aren’t normally eligible for commercial loans.

Lenders were also asking landlords for personal guarantees to back the loans, and in some cases charging very high interest rates.

In answer to this criticism, Sunak has now widened the scheme to include all SME businesses, asked lenders to charge ‘reasonable’ rates of interest and business owners will now only have to offer guarantees to cover 20% of loans under £250,000.

Interest paid

HM Treasury had already prevented lenders from insisting that company owners put up their homes to guarantee loans and instead can offer up other assets, and it will continue to cover the first twelve months of interest and fees.

The changes to CBILS will go live on Monday, 6^th April and, as before, includes loans of up to £5 million.

“We’re pleased that the Chancellor is listening and responding to the real-world concerns posed by firms across the UK who are urgently trying to access financial support,” says Adam Marshall, Director-General, British Chambers of Commerce.

Mike Cherry, Chair of the Federation of Small Businesses, says: “Taking on debt at the current time is a daunting prospect for many small businesses and the self-employed. “We look forward to continuing our constructive engagement with government to ensure that debt can be repaid in an affordable way that allows small businesses to recover from this crisis and to thrive again.”

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Meet Mark Smith (Barrister-At-Law) Landlord tax planning strategies – Online

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Our Hon. Legal Counsel, Mark Smith, Head of Chambers at Cotswold Barristers will be presenting an overview of several landlords tax strategies at the pin Chester, Hull, Sutton (Surrey) and Watford Meetings property networking event Thursday 9th April.

The event will be held Online and Attendees can expect first class speakers and great networking opportunities.

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