House Prices up 5.2% on August last year

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The Halifax have just released their House Price index report for August with prices 5.2% higher than in the same month last year. However, there remains a great deal of uncertainty for the market in the coming year.

On a monthly basis

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LDC (existing) HMO C4 Application Rejected – What Next?

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I have a small property in Leytonstone which has been let to 4 Sharers since 2007 and Walthamstow brought in a regulation last year to apply for a change in class HMO (C4). On the website, it mentioned that if it can be proven that this was in occupation by 4 sharers before 2014 then the LDC (Lawful Development Certificate) will be given.

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Is the DWP fully complicit in ensuring evictions?

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I sent off a complaint to the DWP regarding them paying the rent direct to a (self declared) vulnerable tenant (drink and drugs, mental health issues, depression, severe medical issues, previous homelessness etc), where even before the tenancy began an MPTL was agreed and put into place.

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Covid heralds dramatic change for retail and office working

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The Covid pandemic has disrupted the way business works as much as it has disrupted life in general. As the number of infections grew governments and businesses across the globe shut down physical work sites in an attempt to reduce the spread of infection.

As with retail, so with office work, the pandemic has not actually brought a change in direction, just more of the same, it was heading that way before. Covid has merely accelerated existing trends by several years, and then some. From bricks and mortar to online shopping, and a shift to working from home, or working flexibly on the move, the change over the last 4 months has been staggering.

Around 40% of workers are still based working at home and online retail sales jumped from under 20% in February to 33% at the peak (ONS), before dropping back a little since. These swings have serious implications for landlords and property investors; whether they remain permanent or temporary, or what’s more likely, something in between, the direction of travel is evident and too stark to ignore:

1. City centres such as London, Manchester and Birmingham, plus the UK economy as a whole will suffer – a PwC study finds that £15bn (1% GDP) could be wiped from the UK economy with the loss of coffee shops, cleaning jobs, service workers etc, and the likes of Pret A Manger laying off 3,000 staff is just a start.
2. At the same time landlords in urban centres may benefit as smaller stores and “hub-offices”, where staff can meet-up in small teams, are returning to properties in demand.
3. Large commercial landlords are finding that their retail and some office property values are being decimated, with tenants in serious arrears with their rents. Write offs will be commonplace as overall less than half the rents due have been collected since lockdown, and as landlords realise a smaller amount collected is better than nothing at all.
4. Many commercial landlords are now contemplating turnover linked rents with all the problems that will bring in terms of landlord-tenant relationship trust, transparency, more administration and the uncertainty of property valuations – a major problem for pension funds that need certainty investing in property.

Retail & Leisure

Retail and leisure landlords are concerned that rent arrears will build-up to a level that not only puts their own loan covenants in peril, it will be impossible for their tenants to pay off the debt, even when payments are stretched-out over a long period of time.

Some landlords will be thinking about whether they want to forfeit leases after the business rates holiday and the eviction moratorium end, but this in itself is a trap: taking back a vacant commercial property, if there’s no prospect of re-letting in the short-term, becomes a liability for the owner.

Landlords could easily face a higher financial burden by taking back the property before the lease ends because they not only become liable for business rates, insurance rates usually double in cost with an empty unit, and there’s the added worry and cost of security and a lot more administration work for the landlord managing services and utilises etc.

Where there has been a lease assignment some previous occupiers may be in for a nasty shock if they are “on the hook” under an authorised guarantee agreement, which means they will find themselves liable to cover the rent if the new tenant defaults om payments.

As lock-down started and these changes became evident, the belief that large-scale adoption of online shopping, and working from home, signalled a dramatic and permanent shift is quite understandable. But the true long-term impact is as yet unknown, but likely to be somewhat less severe than feared.

Whilst few retailers are likely to survive online only, the so called omni-channel model is likely to catch on – a mixture of a bricks and mortar and online sales, giving customers the best of both worlds.

Officer Workers

Likewise, most office workers are unlikely to spend all their working lives at home as the effects of the virus recede. There are some real negatives that working from home presents, aside form the obvious ones of lack of social contact, office gossip and the productive networking effects of being with others in a team.

Homeworking tends to extend outside normal working hours and even into weekends, and many companies will want to employ “employee monitoring software” such as Time Doctor or Teramind to ensure that productivity is maintained, a scenario likely to lead to mental health issues in some.

So, in both cases – shopping and homeworking – a compromise is the most likely outcome. It is thought likely that long-term there will be a gradual drift back to the office, though that’s not to say there won’t be less need for offices housing thousands, as a hybrid model takes on a new life.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Covid heralds dramatic change for retail and office working | LandlordZONE.

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Invest now or wait for the crash?

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This is a hot topic on Social Media, especially for “gurus”.

My long held view, having been in property finance and tax law and a portfolio landlord for over 30 years, is that the best time to buy is when the general consensus is that property values will crash

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Landlord’s poor response to a mouldy request goes viral on Twitter

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A tenant who called out his landlord’s poor behaviour on Twitter has racked up more than 150,000 likes from sympathetic social media users.

Jacques Lachetta (pictured), from Manchester, posted his exchange with the landlord from earlier this year when he asked him to sort out the mould in his flat that was covering his clothes, possessions and furniture.

When Lachetta sent him a photograph of a black cap covered in white mould, asking, “Hi, the mould in my flat is now making my own clothes and possessions mouldy. Please can this be sorted ASAP, I’ve asked so many times now”, the reply came back: “Are you sure that’s not an acid wash effect?”

Lachetta claims that the mould had caused him to end up in A&E because of his asthma, and while he eventually moved out of the property in August, he was still forced to pay rent for five months to cover the rest of the contract.

He says that he had asked for the mould – which was coating the walls – to be removed on several occasions.

A recent tweet adds: “They still haven’t ‘charged’ me for the quoted works but they’ve said they’re getting quotations, so I know I’ll have to fight it as soon as they get back to me.”

The original post gained 155,000 likes and more than 13,500 retweets, with many Twitter users shocked by the landlord’s reaction, and several sharing similar experiences. 

One commented: “Did the landlord acid wash the entire apartment then? Ref. to your pics of the place… SUE HIS/HERS A**! I’m so sorry for this horrible person being a landlord!”

Read more about social media posts goes viral.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Landlord’s poor response to a mouldy request goes viral on Twitter | LandlordZONE.

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SPOTLIGHT: How EPC enforcement should start online if sector wants to stamp out rogue landlords

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Letting agents have been in touch with LandlordZONE to allege that Rightmove is turning a blind eye to rental listings that feature fake or inaccurate EPC documents, part of a larger problem of sometimes weak compliance among agents, landlords and portals.

As we reported on Wednesday, the lax way property listings are regulated in the UK means fraudsters and criminal landlords are using gaps in EPC and other regulatory systems to make their properties look legitimate online when they are not.

Rightmove told LandlordZONE: “All agents advertising on Rightmove must adhere to all relevant legislation.”

It has also undertaken to look into any examples of fake or inaccurate EPCs within its listings.

Providing an EPC has been a legal requirement since 2013 and a landlord must commission an EPC for a property or provide a valid existing EPC.

It also stipulates that their letting agent – if they use one – has to be ‘satisfied that an EPC has been commissioned for the building before it is put on the market’.

Landlords then have seven days to provide a valid EPC and a further 21 days is allowed in exceptional circumstances.

Low priority

But the regulation and oversight of the EPC system is weak. The policing of EPCs is a low priority for most local authorities and/or Trading Standards, both of whom are under pressure to cut costs – while portals struggle to police their correct use within listings given the huge volumes involved.

The most high-profile example is online agency OpenRent, the largest lettings firm in the UK by volume of listings, popular because it’s inexpensive to use. Many other traditional and online agencies are part of the problem, nevertheless.

Landlords on OpenRent create their own listings and, instead of providing physical EPCs, are asked to declare what band of EPC they hold via a menu ‘drop-down’.

“This means landlords who use OpenRent don’t have to bother getting an EPC, leaving the door open for unscrupulous or criminal behaviour,” said one agent who contacted LandlordZONE.

Inaccurate EPC

But one example of an OpenRent listing in London’s SW16 postcode shown to LandlordZONE reveals an A-rating EPC for an apartment, even though none of the EPCs on the public register for the building show any A-ratings.

OpenRent checked this example and agreed the ‘A’ rating supplied by the landlord should have been a ‘B’ but said it still believed such examples were ‘rare’. Its spokesperson also said the company was keen to improve its processes.

OpenRent told LandlordZONE: “EPC ratings are something we take very seriously. There’s no legal requirement to provide physical proof of EPCs at the point of advertising – and so we don’t supply a copy to the portals in all cases.

“Agents who are “irate because they have to track down the EPCs for their properties” should already be aware of this. The legal requirement is for landlords to supply a copy to tenants at viewing/enquiry stage or before they move in. 

“Indeed, a quick look on Rightmove reveals a bunch of high street agents who don’t mention the EPC at all in their advertising for example this one: https://www.rightmove.co.uk/property-to-rent/property-96897290.html.

“In terms of compliance, there are fines for not having EPCs. Eviction notices can also be invalidated if an EPC is not in place. If this isn’t working that’s a matter for MHCLG to comment on however we aren’t aware of any particular issue among OpenRent landlords.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – SPOTLIGHT: How EPC enforcement should start online if sector wants to stamp out rogue landlords | LandlordZONE.

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US eviction ban differs markedly from the UK version

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From today, Friday, September 4th until the 31^st of December, the US government has ordered an expanded “eviction moratorium” which has the aim of preventing tenants from being evicted due to financial hardship cause by the coronavirus pandemic.

The order has been introduced by the federal government as a number of US states have continued to evict tenants in arrears with rent payments. It is said that as many as 40 million people across America face eviction due to their inability to pay rent.

The 2008 foreclosure crisis in the US saw 10m families lose their homes, while now millions more face homelessness. Eviction in the US lands disproportionately across the demographic, falling overwhelmingly on Black women and people of colour, deepening racial tensions.

The legal protections afforded tenants under this eviction moratorium are qualified by both parties meeting certain specific requirements: Qualifying tenants must meet these five (summarised) stipulations to be eligible:

1. Tenants must use their “best efforts” to first obtain all available government assistance for rent or housing subject to the same or better protection at state or federal level.
2. They expect to make less than $99,000 in income as an individual or $198,000 for a married couple when filing a joint tax return in the 2020 calendar year.
3. They are unable to pay the full amount of rent due to loss of income, or because they were laid off or had to pay “extraordinary” medical expenses.
4. They are using their “best efforts” to continue making at least partial rent payments as close to the full amount as possible, taking into account other non discretionary expenses.
5. Eviction would “likely” make them either homeless or force them to move into a shared living situation, where they could get sick or spread the virus to others.

These requirements being subjective would if necessary be decided on by a housing court judge.

Those tenants in default of their rental agreement are required to sign a declaration outlining these five qualifications. They have to present this to their landlord, where upon the landlord would then not be legally allowed to evict the tenant, failing which the US federal government could impose criminal penalties on the landlord.

So, as long as renters are making partial payments to the best of their ability, US landlords can’t legally evict tenants before Dec. 31 for financial reasons. But landlords could still evict a tenant for other reasons such as physical damage to the property or criminal and anti-social behaviour.

Landlords violating the order would be subject to heavy fines and a one-year prison sentence, a penalty which would escalated much further should a forced eviction against these rules result in the death of a tenant.

If the landlord complies with the order they can still collect some rent as outlined under fourth provision for those tenants pledging to make best efforts to pay at least partially the amount of rent. Also, the order does not prevent landlords from charging fees or accruing interest, if those are included under the tenancy agreement.

The order is expected to face legal challenges from US landlords. Landlord associations have sued in multiple states to halt previous Coronavirus eviction moratoriums, claiming they are unconstitutional. If this happens again, the courts will have the final decision.

Temporary Halt in Residential Evictions to Prevent the Further Spread of COVID-19

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – US eviction ban differs markedly from the UK version | LandlordZONE.

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Beta Users Wanted for new Landlord App – Alphaletz!

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Richard Jackson, a long-time landlord and client of Property118 Tax, has developed a new App specifically for residential landlords, and is looking for BETA users to try the app before launch. The App is called Alphabetz.

Landlords are having to become much more professional in their approach to running their property businesses.

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Right to Rent is burdening landlords and pushing genuine tenants into destitution

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Radical reform of immigration policies is needed to tackle the injustice of a ‘hostile environment’ that burdens landlords with unnecessary responsibilities, says a new report.

Research Access Denied: The Human Impact of the Hostile Environment believes this environment has forced many people into destitution, has helped to foster racism and discrimination, and badly affected those with the legal right to live and work in the UK.

It points to the Right to Rent scheme as one of the Government’s “systematic flaws” in its approach to immigration enforcement.

Authors at The Institute for Public Policy (IPPR) write: “Inherent in the design of the hostile environment is the targeting of individuals on the basis of their lack of documentation, the deterring of people from accessing public services, and the transfer of responsibilities away from immigration officials and towards untrained professionals such as landlords.”

Earlier this summer, MPs voted not to exempt landlords from doing Right to Rent checks on EU nationals as the Immigration and Social Security Co-ordination Bill passed its third reading in the Commons.

Supreme Court

The Joint Council for the Welfare of Immigrants plans to challenge a Court of Appeal ruling which found that the scheme was ‘proportionate’ in meeting its objectives by taking a further appeal to the Supreme Court.

The report says this has introduced new forms of discrimination into the private rental sector and adds that restrictions on access to benefits can force people without immigration status into destitution.

It says: “There is evidence of malnutrition, cramped and substandard accommodation, and mental ill-health among undocumented migrant families unable to access public funds.”

IPPR believes the current situation doesn’t appear to be working for anyone and points to its study of 133 people without immigration status that found that, in spite of the increasingly harsh conditions associated with the hostile environment, nearly 40% planned to stay permanently and less than 10% intended to leave within the year.

Read the full report.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Right to Rent is burdening landlords and pushing genuine tenants into destitution | LandlordZONE.

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