BREAKING: Housing minister refuses to bring forward Section 21 ban during crisis

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In a rare piece of good news for landlords, housing minister Chris Pincher has today refused to commit bring forward the abolition of Section 21 eviction notices not help protect tenants during the crisis.

Pincher was speaking in Parliament in response to questions from Labour MPs DR Rupa Huq and shadow housing secretary Thangam Debbonaire.

He dismissed calls from Huq to bring forward the abolition of Section 21 notices and said the government would only do it in a ‘safe, sustained and sensible’ way and that he had been working with the National Residential Landlords Association.

The previous Conservative government launched a consultation on whether to abolish Section 21 in July 2019 which ran until mid-October. Since then a decision has been expected but has yet to materialise.

Pincher also said the NRLA had told Ministers that rents are falling – currently at a rate of 1%.

This implies that he believes market forces rather than government intervention are a better way to make rented homes more affordable.

And in reply to Debbonaire, who quoted Shelter figures that a million people are struggling to pay their rent and that they face an eviction crisis in the autumn when the ban ends, said such a move would only ‘kick the can down the street’.

“Piling up costs for people who may not be able to afford would not be the right decision, and I think she should go away and think again.”

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Following toppling of statue, Bristol debates whether to change name of student rental block

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Bristol University is debating whether to bow to pressure from Black Lives Matter campaigners and rename one of its student rental blocks.

Following the toppling of Edward Colston’s statue last week, the university has promised to review the name of Colston Street University Accommodation – the latest in the long list of buildings and landmarks in the city to be tainted by association with the slave trader.

An editorial in student newspaper Epigram says academics should take it upon themselves to rid the campus of figures who profited from the slave trade.

It adds: “The Colston Street University Accommodation does nothing to educate us. Instead, for the students living there, including BAME and international students, it rings out with a name that’s linked to an appalling past.”

Recently refurbished in 2017, Colston Street houses 100 students in en-suite self-catered accommodation. It’s been suggested that the block could be renamed to honour Princess Campbell who became the UK’s first black ward sister in 1962.

Public anger

Vice-Chancellor Professor Hugh Brady says he understands many people’s anger. He says: “We know that the Black Lives Matter campaign has served to amplify existing concerns about the university’s history and whether we should rename the Wills Memorial Building and other buildings named after families with links to the slave trade. 

“We commit to reviewing the names of these buildings and will also review our university logo, which carries the Colston, Wills and Fry crests.” 

A petition on Change.org to change the name has gathered more than 780 signatures, while a new name would have the support of at least half of the Bristol population, according to a recent survey by Bristol Live, which found that 53% said everything named after Colston and other slave traders should be renamed.

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Using a Guarantor: how to minimise your losses if things go wrong.

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The guarantor is the landlord’s insurance policy against tenant default. The guarantor pays the landlord the rent if the tenant defaults, he pays the landlord all his losses, expenses or damages where the tenant fails to carry out his of her full obligations under the lease.

This article is general guidance only and should not be relied upon when making or not making decisions: always seek professional advice. 

With residential tenancies it now quite is common for the landlord or agent to ask for a guarantor, particularly when a tenant has a low credit score. There are many reasons why a tenant may have a low credit score when credit checks are carried out. These include:

• Never having borrowed money or used credit cards
• No fixed address and/or not listed on the electoral role
• Lived at current address less than 6 months
• Lived abroad and returned to home country
• Worked for less than 6 months
• Student or job with low earnings
• History of debts, late payments or Count Court Judgements (CCJs)

With commercial tenancies it is also common for a guarantor to be required. Similar reasons apply here as with residential lettings, but commercial lettings may also include asking Directors of companies to act as guarantors where the tenant is a limited company. This is particularly important with new businesses.

One alternative to having a guarantor with a commercial tenancy is to have the person who is willing to act as guarantor become a joint tenant on the lease. It is very likely that with a company, especially if it is newly formed, with few assets, the lease will be in the directors’ names as tenants, not in the company name.

Guarantors should be checked out – verified: credit checked and referenced just as would a prospective tenant.

Where a guarantor enters into an agreement he or she normally agrees to meet the full obligations under the tenancy agreement on the tenant’s behalf, should things go wrong.

This may include rent arrears, damage to the property, or other liabilities and obligations arising from the tenant’s failure to comply with the lease covenants. The guarantor is contractually bound to accept the legal liabilities.

As with most types of legal action, claims against guarantors have been on the increase in recent years so the role of guarantor is quite an onerous one and not one to be entered into lightly.

The guarantor would usually need to be a home owner with steady long-term employment if he or she is to satisfy the requirements of a good guarantor.

Parents of young people or students are often asked to guarantee their son’s or daughter’s rent and other tenancy obligations. This, hopefully, is less risky for the parent, as they know that their relative can be trusted?

However, parents need to be cautious here because joint residential tenancies for students or groups usually carry joint and several liability – this means that the parent is, in effect, guaranteeing all the other residents as well, not just their child! It has become more common of late for parents to limit (in the guarantor agreement) their obligations to those of their relative alone.

A guarantor will be required to do two things:

• Complete a Guarantor’s Application form
• Sign a Guarantor’s Agreement

The guarantor’s application form is similar to the tenancy application. Credit searches and references will be checked and all of the following:

• The individual’s identity
• The property to be let
• Guarantor’s personal details
• Residency information
• Legal history and any CCJ’s
• Employment history
• Accountants, solicitors, character referee
• Bank and trade references for businesses
• Declaration allowing credit search & signature

The second part is the guarantor’s agreement with the landlord. This states:

• The date of the agreement
• The term to which it applies, when and how the obligation ends
• The signatures and names of the parties to the agreement
• The property
• The names of the tenant/s

All the necessary forms can be obtained here: https://www.tenantverify.co.uk/

Points to watch:

The wording of the Guarantor Agreement is crucial. This is a legal contract and will be strictly enforced by the courts according to how it is worded – there is no standard form or statutory Guarantor Agreement.

Is the agreement confined to the original lease term, or will the obligation continue into subsequent terms or a periodic tenancy? Both parties need to be clear on this.

If the agreement states that the guarantor is a primary obligator the guarantor will be obliged to carry on paying until the end of the term certain, or when the tenant leaves if the tenancy has become a periodic one.

On the other hand, should the agreement state that the guarantor indemnifies the landlord against losses due to the tenant’s default or failure to observe the agreement terms, then the landlord is obliged to minimise her losses.

For example, she may be expected to use possession proceeding or re-let as soon as possible if the tenant leaves within the term certain, leaving the guarantor to pay his rent.

However, the guarantee agreement may state that the landlord is not obliged to minimise his losses, in which case he could sue, and the guarantor would have to keep paying.

In extreme cases the guarantor may be forced to sue the tenant for damages and apply to take over his tenancy, thus making it possible for her to terminate the tenancy agreement.

Particular care needs to be taken by guarantors of commercial leases where obligations can be for many years. Here, guarantors could find themselves guaranteeing the lease of a failed business, or where the tenant has varied the lease terms to the detriment of the guarantor.

Guarantors can therefore find themselves completely taking over the obligations of the original tenant, taking on more onerous terms or continuing to underwrite the lease for subsequent tenants.

Varying the lease and its effect on a guarantor: landlords and tenants should seek the agreement of any guarantors to any proposed changes to the terms of the lease, even minor changes which could increase the guarantor’s liability.

It is very important that residential landlords communicate to guarantors any and all changes in the tenancy, such as missed rent payments or damage issues which may result in a claim.

So, holding former tenants and their guarantors liable means: in commercial leases where previous tenants or their guarantors are liable to a landlord for default by the current tenant, landlords should at all times keep everyone in the picture, notifying them before the current tenant accumulates excessive liabilities.

Assignors who have ongoing liabilities under a commercial tenancy guarantee should be kept in touch and the landlord should provide all the necessary information.

Guarantors and Assignors should take professional advice on what methods are open to them to minimise their losses created by tenant defaults.

Landlords should be aware that a separate guarantor agreement needs to be signed as a deed and witnessed as there’s no consideration, otherwise the guarantor should be made a party to the tenancy agreement (contract) – seek legal advice on this because if you get it wrong the agreement with the guarantor is not enforceable.

If you have any questions about any of the issues here, post your question to the LandlordZONE® Forums – these are the busiest Rental Property Forums in the UK – you will have an answer in no time at all.

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£78,100 – average landlord property capital gain revealed

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Buy-to-let landlords selling properties last year pocketed an average profit of £78,100 – 3% down on 2018. Despite the drop, this still equates to a 42% gross gain on their initial investment.

The latest monthly rental market research from Hamptons International show that 84% of landlords who sold their buy-to-let property in England and Wales made a gross capital gain, while 16% made a loss.

But there’s a sharp divide in the country, with those in the capital making the biggest gains of £253,580 – more than 20 times the profit seen by sellers in the North East, where the average gain was just £11,710.

Investors selling up in Kensington and Chelsea had the largest average pay-day when they sold their buy-to-lets, earning a staggering £924,010 more than they paid for them.

Hamptons International’s index estimates that at least 150,000 properties were sold by landlords in England and Wales last year, after they’d owned them for an average of 9.1 years. 

Price growth

Head of research Aneisha Beveridge says that with house price growth expected to stay lower than in the past, more landlords are having to switch their focus to maximise rental income, rather than rely on capital growth. 

She adds: “The profitability of the buy-to-let market has been questioned in recent years and is one of the main reasons why some landlords have chosen to sell up. 

“But one of the biggest bonuses from cashing in comes from the capital gain on a property. Over a third of landlords’ total return comes from capital growth rather than rental income in Great Britain.” 

Read about recent CGT rule changes.

Read a complete guide to tax for 2020/21

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Local Housing Allowance and rent increase?

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Is there anything that prevents a landlord from charging the full Local Housing Allowance (LHA) to DSS claimants?

The LHA is the amount that the DSS will pay in rent for a benefit claimant in a particular area

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Can I charge for wasted Gas Certificate visit?

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I know I can’t charge for an annual Gas Cert to be carried out, BUT …

What if after having given adequate notice to the tenant that the engineer is coming, but when he gets there there is no actual credit on the gas meter?

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Need to abolish Section 21 more pressing following Covid, says Age UK

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Age UK has joined the chorus of charities and
housing groups calling for Section 21 eviction notices to be abolished.

With the Government’s decision expected soon following
its consultation, the later life charity hopes it will keep its promise to
protect more than
750,000 people over 60 who rent privately. 

Age UK says ‘skyrocketing
rents’ leave one in three older renters in poverty after paying rent.

It believes
that they’re often too scared of what their landlord might do if they cause a
fuss and says landlords can evict older renters at short notice even when
they’ve done nothing wrong – which could leave some homeless.

Caroline Abrahams, Age UK’s charity director, tells LandlordZONE: “Before the pandemic Age UK was firmly of the view that abolishing Section 21 was the right thing to do and, if anything, the really difficult circumstances that many older renters now find themselves in further strengthen our support for it.

Older renters

“Older renters have a lot to worry about already, without the risk
of having to leave against their wishes and at a time when finding somewhere
else to live is likely to be hard, once the Government lifts its prohibition on
evictions.

“Doing away with Section 21 would create a fairer relationship
between them and their older tenants and we hope it will press ahead soon.”

The current stay in possession proceedings has been extended until
23^rd August, while notice periods have been extended to 30^th
September.

The Government has yet to confirm whether it’s going to follow the Housing, Communities and Local Government Committee recommendation that once the courts re-open, they should be given discretion to dismiss Section 21 notices until 31^st December.

Read our guide to Section 21 notices.

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BREAKING: Universities quietly withdraw rent guarantor services for students in private properties

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UCL is the latest university to quietly end its rent guarantor scheme, suggesting students should contact commercial organisations for support instead.

The London university’s move has prompted
fears from students that those on a
low-income or from overseas will find it tougher to arrange private rentals.

Students without a
parent or relative to help, or non-UK residents, have historically relied on
the university to help it secure accommodation in the capital, by acting as
guarantor, providing they had no outstanding debts to the university and were
only living with other UCL students.

Now they say this stressful change will be difficult when students are dealing with the current restrictions preventing free movement.

Terry Mason, group operations director at Housing Hand, tells LandlordZONE that while the cost of the guarantor service is higher, it’s been working with UCL and covering these students for years, so the cost to them remains the same.

He adds that several universities have closed their guarantee services in exactly the way that UCL has.

Liability and loss

“I
can only assume it is down to liability and loss,” says Mason. “If UCL stood as
guarantor for 400 students this year and 200 of those have left their accommodation
without paying for the final four months, with a London rent of £1,000 per
month, the rent debt would be as high as £800,000.”

The change seems to have happened relatively quietly, with many
students only becoming aware it through a social media post.

A university spokesperson says: “UCL is advising students to use
external rent guarantor schemes, which are also recognised by landlords and
will still ensure their tenancy applications are approved.

“Moving forward, we will be monitoring this carefully. Students are advised to contact us if they are experiencing any issues so we can offer our support.”

Read about rent strikes at UCL accommodation.

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Landlord Hero of the Week #7: Philip Hillman

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“As soon as my employer’s London office closed in March and I moved back to the family home in Cheshire, I knew I wouldn’t be using my flat in Chelsea,” explains landlord Philip Hillman, “so I called the managing agent and asked if they could offer it to someone deserving for free.”

Managing agent Altido had just become involved in the Homes for NHS scheme and, within 48 hours, had found Philip an NHS tenant – a medical researcher at one of the London hospitals who wasn’t able to stay at home with her vulnerable parent.

He, like many of Altido’sclients, is part of the initiative, hooking
up
medical staff with free accommodation so they can stay nearer hospitals during the
COVID-19 outbreak.

A
chartered surveyor, Philip has rented out his one-bedroom Chelsea mews flat for
the last three years, spending a few days there each week.

But during
the lockdown he’s been working and joining in with community groups, delivering
meals and shopping for those isolating in his village.

He
says: “In the village there’s a direct way of helping people and coming
together as a community, but it’s harder to do that in London.

“To have this set-up was great and made me feel I was part of something – I could help someone focus their energies on getting an important job done.”

Utility bills

He
waived his NHS tenant’s utility bills during her stay where she was free to use
his Amazon TV and Netflix accounts.

“She
sent me two emails saying how grateful she was, which was nice, but I felt it
was only fair to keep to the spirit of the enterprise.”

And
although he was happy for her to stay on, after two months, the researcher is
moving out this weekend, and a commercial tenant is moving in. He adds: “It’s
been an easy experience and I’d be happy to do the same again if there’s ever a
need.”

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Northern Ireland market to reopen on Monday, but will Wales and Scotland follow?

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The rest of the UK’s housing markets are now set to open this month after Northern Ireland’s First Minister Arlene Foster yesterday announced that home moving could restart on Monday morning, making it the second country to open after England.

In a statement, she said that: “The real estate industry has the highest multiplier effect in the economy and I’m therefore pleased to announce that our Coronavirus Regulations will be amended to permit house moves for the sale of homes from Monday 15 June.

“This will incorporate the full end-to-end process from viewing to securing a mortgage and the house move itself. Guidance has been provided on all aspects of the house moving process and the Department for Communities plan to engage further with stakeholders.”

Northern Ireland’s decision to reopen now puts pressure on Wales and Scotland to follow suit.

England re-started four weeks ago and the next opportunity Wales and Scotland have to re-open their property markets will on the 18^th June when both their First Ministers are scheduled to make their latest Covid update announcements.

The Scottish government has been the most transparent about its plans. On 21^st May First Minister Nicola Sturgeon revealed that home moving restrictions were likely to be relaxed on June 18^th if the spread of the virus had been checked sufficiently. If not, the next review date will be August 11^th.

Industry trade association Propertymark says it has been working with the Northern Ireland Executive in recent months to “set the foundations for the reopening of the housing market”.

“We have supported the Executive to ensure they appreciate the economic significance and implement workable guidance, designed to protect the safety of the public and the professionals.”

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