Scotland puts brakes on cities’ short-term lets sector reopening

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Edinburgh Council hopes holiday lets landlords will quit the crowded market and convert their investments from rental to residential properties

Landlords in Scotland’s tenement blocks will have to wait even longer to rent out their homes after the Scottish Government ruled that those with shared facilities – including communal entrances, stairs and landings – can’t re-open in line with the rest of the holiday lets sector.

Reinforcing its reputation for cracking down on short-term lets, Edinburgh Council has welcomed the decision and is now calling on landlords to consider moving properties back into residential use or renting them to it instead.

Council leaders want landlords to help it tackle homelessness long-term and have also vowed to continue taking action against those who break the Scottish Government’s rules; even during lockdown it served planning enforcement notices against three properties – forcing them to be discontinued as short-term lets – and has a further five cases pending.

Council Leader Adam McVey says: “I want to see us work with rather than against landlords to make the rental market fairer on everybody who lives here. During lockdown, with our partners, we’ve successfully brought a number of short-term let properties back into residential use to help us house people experiencing homelessness.

“We face a huge challenge housing people who need it, and we’re saying strongly and clearly that landlords running short-term lets from residentials without permission should stop and move their property back into residential use. However, as lockdown restrictions begin to ease, we also need to be clear that we will take action if required.” Earlier this year, Edinburgh Old Town was found to have the highest incidence of Airbnbs, with 29 active listings for every 100 properties.

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Best way of Developing?

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I have a few buy to let properties and with the help of Property 118, I have taken advice from them and will be getting them to help me incorporate my property business – Thanks very much. Will be doing this soon.

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Government urged to rethink rules on insurance policy pay-outs

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Putting renters and homeowners on an equal footing would mean they wouldn’t rely so heavily on Government funding and could avoid problems with debt, a new report says

Shaking up the benefit rules for renters taking out private insurance policies would result in fewer getting into financial difficulty and would help them to pay their rent.

A new report from the Institute & Faculty of Actuaries (IFA) and Building Resilient Household Group suggests amending Universal Credit (UC) rules on pay-outs from policies (for Income Protection and Family Income Benefit), enabling renters to benefit from them – something which owner-occupiers can already do. It points to a growing gap created by the system between the rent that households have to pay and the amount of benefit they receive; in most of London and some other UK hotspots the gap can be very large and many end up in debt, which can then mean homelessness.

Under the current benefit rules, renters who receive income from insurance policies can’t use any of this money to cover the rent gap. Instead it simply reduces their UC entitlement. This means that it’s effectively impossible to insure against facing a rent gap while on benefits. However, recent changes to the rules have meant that any insurance payments that homeowners get to cover their mortgage are disregarded under UC rules.

The IFoA believes that if the amount paid out by an insurance policy was deducted from the actual rent payable by the tenant (gross rent) rather than the housing benefit (net rent) it would encourage more renters to take out cover for the gap between gross and net rent, giving them the ability to protect their accommodation.

Nick Reilly, IFoA chair of the health & care board, says: “The research suggests that this small change could dramatically improve the circumstances for many renters, protecting their homes at a time when they need them most. Under many circumstances the analysis shows that this change is also beneficial to the taxpayer, and so we urge Government to investigate this further as there are benefits for all.”

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A reminder that the new electrical safety regulations are now in force

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Until now landlords have only had to concern themselves with inspections and the issue of certificates for gas safety – when a gas supply is provided – but now, as from the 1^st of July, landlords or their agents must arrange for regular electrical safety checks (every 5 years) for electrical as well as for gas.

Note: Some companies provide a service where both the gas and the electrical checks can be completed together, saving inconvenience for tenants and simplifying the landlord’s management task.

The Electrical Safety Standards in the Private Sector (England) Regulations 2020 set out in detail the full requirements and the Government has provided a guide to these regulations for landlords, agents and tenants: Guide for landlords: electrical safety standards in the private rented sector

Briefly, the regulations mean that all residential landlords in England must ensure that the electrical installations in the property are safe and are inspected and tested at least every 5 years. The inspection must be carried out by a “competent person” and an Electrical Safety Certificate issued, a copy of which must be made available to the appropriate authorities if required, and copy given to the tenant/s.

The Certificate must be provided for the tenants within 28 days of receipt, and for new tenants the report must be provided before the start of the tenancy. Should the local authority request a copy of the report it must be provided within 7 days.

Initially, the Electrical Inspection Report is only requited for new tenancies agreements commencing on or after 1st July 2020.

For all existing residential tenancies an electrical safety inspection must now be carried out and an Electrical Safety Certificate issued within the 12 months ending 1st April 2021. Further inspections must then be carried out every 5 years.

The regulations apply to all tenancies including HMOs, with a few limited exceptions: for example, lodger arrangements where the lodger lives in the same house and shares facilities with the landlord, long leases of more than 7 years, hostels, hospitals, refuges, care homes and student halls.

The inspection and report (Electrical Safety Certificate) includes the testing of the fixed electrical system including all the wiring, plugs and sockets, consumer unit and fuse box, but it does not include electrical appliances such as washers, dryers, kettles and toasters etc.

The report should include the expert’s comments on the general safety of the system, any potential hazards, defective wiring or the standard of previous electrical work on the installation.

If works are required following the inspection these will be reported on and given a code depending on the urgency of the matter:

1 Danger Present
2 Risk of Injury
3 Potentially Dangerous
4 Further Investigation required
5 Improvement Recommended.

Remedial work must be undertaken for all of the codes except for number 5. Work must be undertaken and written confirmation of completion provided to the tenant and local authority within 28 days.

Failure to comply could result in the local authority issuing a penality notice and a civil penalty of up to £30,000 against the landlord. The local authority also has the powers to enforce these Regulations against the Landlord and if necessary undertake the works itself and recover the costs from the landlord.

Currently there appears not to be a requirement to provide evidence of the checks or the certificate in respect of a section 21 claim, as is the case with certain other prescribed information: the Gas Safety Certificate, the EPC, and the Government’s How to Rent Guide, as well as evidence of the deposit protection and licencing requirements.

It is possible that this latter point is in anticipation of the abolition of section 21 in the near future?

Advice for Private Landlords – Electrical Safety Council

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Mark Smith (Barrister-At-Law) – Partners in Property Mastermind Session

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Our Hon. Legal Counsel, Mark Smith, Head of Chambers at Cotswold Barristers will be asking if you are you paying too much tax on your property rental business and presenting a Mastermind session on tax-efficient structures for your business.

The Partners in Property online meeting will start at 9:30am Friday the 10th July until 3:30pm.

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Mortgage Market Post-Lockdown – Kate Faulkner and Jack Bertolone

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Jack Bertolone, Operations Director at Brooklands Commercial Finance, discusses with Kate Faulkner the impact of the pandemic on the UK housing market and the availability of mortgages.

Kate Faulkner is a UK property analyst and a regular commentator on BBC

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