Sadiq Khan awkwardly refuses to endorse tenant rent arrears being written off

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During a heated debate in the London Assembly, the mayor three times avoided giving a definitive answer after being grilled by Green Party leader Sian Berry.

Mayor of London Sadiq Khan has refused to back calls for struggling tenants to have their rent arrears written off when the Coronavirus crisis is over.

Although Khan cannot be described as landlord friendly, under close questioning by the Green party in the London Assembly he avoided at all costs committing to a rent ‘forgiveness’ programme, as it is known.

His comments came at the end of a debate about homelessness and were made during an excruciating few minutes of cat and mouse with Sian Berry, who heads up the Green Party in the London Assembly.

She repeatedly called for Khan to endorse rent forgiveness in the capital, but after three attempts gave up when the debate ran out of time.

“I asked you about extending the eviction proceedings ban and forgiving arrears that have been built up so far,” said Berry.

“As far as I can tell, your ‘triple lock’ merely extends the period of repayment for arrears.

“The principle here should be that renters should not be shouldering the burden of these arrears and that the Government should be helping small landlords in the way it helps any other small business.”

Khan again ignored her request for clarity on his approach to rent forgiveness, saying instead that the government should support both tenants and landlords.

“You are still saying [tenants] should pay [their rent arrears] back. I am not sure that that is the answer that I was hoping for, but hopefully we can persuade you to change your tune in future weeks,” said Berry.

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Is the policy of moving the housing market in favour of first time buyers failing?

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Successive governments have said they want to see fewer landlords and more first-time-buyers, using taxes and legislation to achieve their aims. But today’s lending figures show this may not be working.

The latest UK mortgage lending figures show heavy
taxes and red tape have failed to curb buy-to-let growth, much to the likely
annoyance of ministers.

Trade organisation UK Finance’s mortgage
lending analysis for the first quarter of 2020 shows buy-to-let (BTL) lending
up 7%, while lending to first time buyers continues to decline – despite the government’s
expensive Help to Buy scheme.

Its drive to reduce the private rental market
and free up stock for first-time buyers looks to be stalling, as the report
states: “While we had seen purchases within the BTL sector improve considerably
over the past year, following a decline due to tax and regulatory changes that
started in 2016, we had seen material growth in this sector from December 2019
onwards.

“This recent growth in BTL purchase has helped to offset first-time buyer numbers, which have been declining slightly since October 2019.”  

Buy-to-let market

John Goodall, CEO at Landbay, says his
company saw an even greater increase in the buy-to-let market.

“While the Coronavirus lockdown from
mid-March has hampered this, there is still a notable demand from landlords and
investors. The figures showed a drop in first-time buyers even before Covid-19
hit and following the pandemic it’s highly likely that people will be renting
for much longer, so the need for private buy-to-let will be greater than ever.”

However, the
National Residential Landlords Association warns that one set of figures
shouldn’t be taken out of the longer term context.

Deputy policy director John Stewart says: “According to the
Government’s data between March 2018 and 2019, the number of private rented
homes in England fell by 49,000.

“We need to end the approach of picking winners and losers in the housing market. The Government needs to develop pro-growth policies to boost the supply of homes in the owner occupied, private rented and social rented sectors.”

Use our buy-to-let jargon buster.

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No signs yet of rents sliding during the Coronavirus crisis as many areas experience RISES

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Research by lettings platform Homelet reveals extraordinary resilience within the rental market despite the lockdown.

Rents are holding up well around the UK
despite the market uncertainty created by Coronavirus, with some regions
showing hefty year-on-year increases.

Average rents for new
tenancies rose by 2.7% last
month to £959 compared with
May 2019, according to the latest Homelet Rental Index figures.

But rents in the capital
dropped by 0.2% in May compared
to the previous year; the average London rent now stands at £1,598 a month – 67% higher than the rest of the
UK.

Homelet reveals that rents rose in the last year in 10 out of 12 of the regions, with the North West seeing the largest annual change, up 7.5% to £758, followed by Wales, up 5.7% to £613.

Price movement

Chief
executive Martin Totty says the mixed findings are not easy to explain, which
makes it hard to predict rental price movement in the next few months.

“Rents may go up or they may go down and
defaults may follow the same pattern. Nobody can be sure other than there is
one certainty…and that is there is now more uncertainty.” 

“It’s surprising that in
many regions of the country, especially away from London and the South East,
rents have generally held up well month on month and are commonly ahead over
the year.

“Not so surprising is
evidence of a softening in rents in the short term in the higher average rent
regions and, for the first time in almost three years, a negative movement in
London compared with a year ago.”

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LATEST: Pressure grows on government to make a decision on evictions ban extension

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Housing secretary Robert Jenrick has until June 25th to decide whether evictions can restart, but the mood music points to possession hearings recommencing with a robust pre-action protocol system in place.

Pressure is growing on the government as landlord, tenant and consumer groups call on ministers to make a decision on extending the current three-month evictions ban past June 25^th, when it expires.

The government has less than 14 working days to make the decision, but Shelter has already claimed that it has seen growing number of renters contact its helpline who are worried about paying their rent, and has called for evictions to be suspended until the economic situation stabilises.

Also, Shelter has been backed by the Chartered Institute of Housing, several leading Law Centres and Generation Rent, while four Labour MPs today wrote to housing secretary Robert Jenrick calling on him to write off tenant rent arrears and freeze rents.

“We can’t leave tenants to rely on the charity and good will of their landlords,” said one of the four, Bell Ribeiro-Addy. “We need binding legislation and stronger financial support to make sure people aren’t left facing homelessness or bankruptcy.”

Rent arrears

But the National Residential Landlords Association (NRLA) says it has yet to see hard figures on whether rent arrears are becoming more common, and is undertaking its own research into rent arrears, the results of which are due to be published soon.

As we reported last week, leading lettings agency Belvoir found that only 3% of its tenants had fallen behind with their rent.

The NRLA’s CEO Ben Beadle reckons that the most likely outcome on June 25^th is that the courts will be allowed to re-start possession hearings but that a robust pre-action protocol will be put in place to ensure that court action is the last, rather than first, resort.

This would not go down well Shelter, Citizens’ Advice, Generation Rent and Acorn, all of which are pushing for a heavier hand to be employed to control evictions.

This includes banning Section 21 notices, modifying Section 8 mandatory evictions to exclude non-payment of rent, or extending current ban extended until the end of September.

The Coronavirus legislation enables the government to do this, but the preparations under way at many county courts for a possession hearing re-start on June 29^th suggest an extension is unlikely.

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Who needs a holiday when you can rent in Liverpool for 3 months?

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The average person in the UK spends £826 on a week of sun, sea and sand each year, however, with many travel restrictions still in place, a trip abroad is looking increasingly unlikely in 2020.

With an average of 2.4 people living in each household

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TMW 1year 1% existing customer BTL switch product

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The Mortgage Works (TMW) yesterday launched a Buy to Let switch option for existing customers coming to the ending of their initial deal product terms.

To support their existing customers during the emergency lockdown they are also expanding the whole range of switcher products to offer landlords more options to manage their cashflow through the emergency

The product is:

• 1 Year 1.00% Fixed until 31/08/2021

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Council starts charm offensive to persuade landlords to help tenants ahead of evictions re-start

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As key courts prepare to hear possession hearings once more later this month, Hackney council has written to all its registered landlords to ask them to give tenants more time to pay and also consider rent reductions.

Landlords in Hackney are some of the first being asked to help their struggling tenants when possession hearings restart in three weeks’ time.

The local council has written to all its 2,500 registered private landlords
as it believes
Hackney’s high rents mean support through sick pay or Universal Credit is often
not enough to provide security due to the government’s benefits cap.

“We’re grateful to the many landlords in Hackney who are already
doing this, but the real challenge will come as the freeze on evictions ends
and the economic impact of the pandemic hits,” says councillor
Sem Moema, mayoral adviser for private renting and housing affordability.

“These are issues on which we need the Government to act, but
until then I’m asking landlords to do their bit to help prevent a homelessness
crisis in Hackney.”

Instead of beginning the evictions process, the letter asks landlords to offer time and flexibility where tenants are struggling financially, and to consider rent reductions where a tenant really can’t pay.

She tells LandlordZONE that private renters are among those least protected from the coronavirus pandemic, which is why it’s vital that landlords go beyond the requirements set by Government and give their tenants protection and flexibility where it’s needed.

Hackney Council has also written to Housing Secretary Robert Jenrick asking for a long-term plan to provide continued protection for private renters as it says their security is at risk while the Government has yet to announce whether it’s extending the ban on evictions. It is still waiting for a response.

The council also recently refused to back a London ‘rent strike’.

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Private tenants twice as likely to be behind in rent as their mortgage paying counterparts

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New report reveals how tenants are less likely to be financially secure, and what Ministers should do to prevent a huge debt pile of housing arrears accumulating.

A radical change in Government policy is urgently needed to respond to the plight of private tenants as new research shows renters are twice as likely to default on their rent as mortgage holders.

The Resolution Foundation has reported on levels of housing stress and says the Coronavirus crisis has highlighted inequalities between renters and homeowners, with renters up to twice as likely to have fallen behind with their housing payments compared to mortgaged home owners.

Its survey of more than 6,000 people found that renters in lower paid jobs, as well as the oldest and youngest renters, were more likely than mortgaged owners to have lost their job or been furloughed.

While 8% of home owners with a mortgage have failed to cover their housing costs in recent weeks, the rate rises to 13% of private renters. And of those renters who are unable to cover housing costs, 25% were claiming Universal Credit or Housing Benefit before the crisis, while 37% have made a claim for Universal Credit since then.

Twice as likely

Lindsay Judge, principal research and policy analyst, says renters who’ve made a benefit claim since the Coronavirus crisis began are almost three times as likely to be struggling with their housing costs as the average person, and experiencing significantly more strain than those who receiving housing support beforehand.

Judge says: “We argue that policy needs to respond to the plight of private renters. If families – and indeed landlords – are to be protected from housing arrears, the system needs to be as all-encompassing as possible, by suspending capital rules, for example and by lifting the benefit cap.”

The foundation believes that renters have suffered disproportionately when it to comes to covering housing costs because 13% of mortgaged home owners held no savings before the pandemic, compared to 23% of private renters

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Are tenants still being charged illegal fees by some agents and landlords?

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LandlordZONE looks at claims made in an article with The Times yesterday that tenants continue to be charged illegal fees including check-out fees, deposits of more than five weeks’ rent and excessive charges to replace lost keys.

A national newspaper article has claimed that renters are still being hit with illegal fees a year after the Tenant Fees Act went live.

Industry figures back this up, revealing that the practice is on the rise, while both Generation Rent and Shelter say they have anecdotal evidence to back this up.

Sean Hooker of the Property Redress Scheme says that, while the numbers remain very small, he says they are likely to be larger due to under-reporting by tenants, and that until Monday only new or renewed tenancies were covered. As we reported on Monday, the Tenant Fees Ban now covers all ASTs regardless of when they started.

Research by The Property Ombudsman shows that out of 5,106 complaints it received last year, 341 involved illegal fees. This is up from 110 the year before, but out of the 341 only 21 cases were verified and 14 upheld. The PRS, on the other hand, says it received 146 initial enquiries of which 43 (totalling £35,052) were resolved and 11 accepted but later closed.

Under reporting

Hooker says the reasons for under-reporting are varied. This includes tenant ignorance of both the act and what to do if they are charged an illegal fee, while others opt for a refund and apology, rather than report the agent involved to Trading Standards.

Redress schemes like the TPO and the PRS, on the other hand, only get involved if an agent will not return a contested fee and are only obliged to report ‘systematic breaches’ to Trading Standards.

But while landlords may consider this all a storm in a teacup, if they or their letting agent charges a tenant a prohibited fee, it then makes evicting a tenant extremely difficult further down the line, in the same way failing to provide a valid gas safety certificate or EPC does, and fines for first offences can reach £5,000 while for multiple breaches of the law it’s £30,000.

Read The Times articles (requires subscription).

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Rent to Rent lease termination?

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I signed a 5 year rent to Rent lease for a large property consisting of several flats. I decided to terminate the rent to Rent agreement and gave one years notice, even though the contract was silent on termination, to expire on the contract end date.

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