Government consults on new EPC rules – have your say…

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There are plans to change the energy performance (EPC) minimum ratings of privately rented homes in England and Wales from band E, to EPC band C, which would apply for all new tenancies from 2025 and all existing tenancies from 2028.

The open consultation exercise closes 11:45pm on 30 December 2020

The proposed changes from the Department for Business, Energy & Industrial Strategy have raised concerns within the industry, given the significant number of properties involved and the impact of Cocid-19.

Originally introduced in 2007 as part of the now-defunct “Home Information Pack” for private residential homes, the Energy Performance Certificate (EPC) is intended to inform potential buyers and tenants about the energy efficiency level of a home, and therefore typical energy costs. It is also intended to highlight those aspects of a home affecting energy efficiency which may need to be improved.

Currently for anyone selling or renting a home in England, Wales and Northern Ireland, an EPC is compulsory. There are different rules for properties being sold or rented in Scotland.

In 2012, as part of the government’s Green Deal scheme (since abolished), EPCs were simplified and updated to improve their effectiveness, but still there has been criticism as to the reliability and variability of EPC scores.

Since 1 April 2018, landlords have not been permitted to let a residential property with an EPC rating below an E on a new tenancy (including an extension or renewal).

An EPC is valid for 10 years and the score achieved by a property is from A to F. It is based on a survey of the property which is meant to accurately determine its energy efficiency rating. The surveys are carried out by what is known as a Domestic Energy Assessor (DEA) at a typical cost of around £45 to £100., under the Energy Performance of Buildings Regulations 2012.

Tenancies in existence before 1 April 2018 with an EPC rating of F or G were given an extra two years to make appropriate improvements. From 1 April 2020, these properties will fall under the scope of the 2015 Regulations.

Given that many properties in the private rented sector are of older type construction, many with solid, as opposed to cavity walls, bringing them up to level C will have significant cost implications for landlords.

This in turn is even more significant given that many landlords are suffering financially given rent payment problems brought about by the Coronavirus pandemic, hence the importance of landlords contributing their views in this residential consultation process.

The government states that the consultation seeks views on the government’s proposal to amend the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 to “significantly improve the energy performance of private rented sector homes in the 2020s, in order to,”:

• Deliver significant emission reductions, which will contribute to Carbon Budgets 4 and 5 and support a decarbonisation pathway consistent with our Net Zero 2050 target;

• Decrease bills for low income and vulnerable tenants, in support of the government’s statutory fuel poverty target;

• Increase the quality, value and desirability of landlords’ assets;

• Reduce energy bills for tenants and ensure warmer homes;

• Support investment in high quality jobs and skills in the domestic retrofit supply chain across England and Wales;

• Provide greater energy security through lower energy demand on the grid and reduced fuel imports.

Open consultation – Improving the energy performance of privately rented homes

Respond online at the link above, or submit a response by emailing PRStrajectoryConsultation@beis.gov.uk.

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HM Treasury confirms it won’t chase landlords further over unpaid tax

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The Government has given another strong indication that it won’t be chasing landlords for non-payment of tax.

Labour MP Charlotte Nichols quizzed the Chancellor this week on whether he planned to increase the level of tax compliance among buy-to-let landlords.

But in a written response, Jesse Norman, the financial secretary to the Treasury, would only say that the Government was committed to reducing non-compliance in the tax system among all taxpayers, including landlords.

The parliamentary exchange follows reports from think-tank TaxWatch that unscrupulous landlords are dodging £1.73 billion a year in tax.

It believes the Government’s attempts to recoup payments – including the Let Property Campaign – are failing.

In 2013 the Government estimated that up to 1.5 million landlords had underpaid or failed to pay up to half a billion pounds in tax for the 2009-2010 financial year.

£540 million

It estimates the tax gap arising from those in employment who haven’t declared and therefore not paid tax on lettings income, at £540 million for 2018-19.

But TaxWatch says at least two thirds of tenancies in England are owned by those who don’t receive pay through PAYE.

Norman (left) said the Let Property campaign had prompted about 55,000 additional disclosures and raised an estimated £226 million.

He added that from April 2023, landlords with business or property income over £10,000 per year which are liable for income tax will need to keep digital records and use software to update HMRC quarterly through Making Tax Digital.

“It will also make it easier for landlords to get their tax right, saving time and enabling them to see, close to real time, the health of their finances,” said Norman.

A spokesperson for the National Residential Landlords Association tells LandlordZONE that it fully supports HMRC’s Let Property campaign, adding: “Those who evade the taxes they should be paying serve only to undercut responsible landlords and tarnish the reputation of the sector.”

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EXCLUSIVE: How evictions ban and rogue agency cost landlord duo £40,000… and counting

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A shocking story of illegal sub-letting in central London has highlighted the problems facing many landlords as a mixture of unchecked rogue letting agents and the unintended consequences of the evictions ban continue to cause havoc.

The case has cost the landlords involved over £40,000 in lost rent and costs so far with both facing many months due process before they can take possession of their properties.

What happened?

Late last year a leading lettings agency was approached by a TV production company based in Manchester which sought two apartments in London for staff who were working temporarily in the capital. The agency wishes to remain anonymous over staff safety worries.

Properties in Pimlico and Vauxhall (at St George’s Wharf, pictured) were secured and tenancies agreed but after several months the rent stopped being paid.

The agency discovered that both apartments were being sub-let without permission to new tenants via a Knightsbridge agency called Blackstone Properties.

Despite both email and face-to-face meetings at their offices, Blackstone has so far failed to return the keys to either of the flats to the agency. The rent continues unpaid for both apartments.

Fobbed off

A spokesperson from the company says that on visiting Blackstone they were fobbed off with excuses but believes they know the law is on their side and that evicting the tenants they have sub-let to will take months.

“We managed to talk to one of the tenants and once they realised what they had become caught up in, left the property but new tenants almost immediately,” they say.

Although the evictions ban does enable illegal sub-letting cases to be prioritised ahead of most other types of evictions, rogue operators are fully aware that it will take months to get a preliminary hearing date as the courts struggle to cope with huge volumes of cases.

And until the government implements the findings of the RoPA report, rogue letting agents are free to operate in the market unchecked or policed.

Ballooning

Paul Shamplina, whose company Landlord Action has been involved in the case, says: “Since Covid has struck we’ve have been extremely busy dealing with cases like this where rogue agents have failed to pay rent to landlords and been involved in illegal sub-letting,” says Paul Shamplina.

“This kind of problem has ballooned alongside increasing levels of dodgy rent-to-rent agreements, which employ similar tactics and – like this case – lead to landlords losing tens of thousands of pounds.

“Part of the problem here is the blanket approach the government has taken to evictions during the Covid pandemic – forcing agents and landlords to give six months’ notice of possession action means rogue agents have the upper hand at the moment – they know their fraudulent activities are difficult to stop or police.

“The Government needs to look at the Guaranteed Rent and Rent to Rent industries separately within the PRS and introduce tougher enforcement through Trading Standards; it’s so easy to take the rent, not pass it onto the landlord during which the landlord loses control of their property and remains liable for enforcement of overcrowding or breaches of HMO regulations, for example.”

LandlordZONE have asked both the TV production company involved, Rami News, and Blackstone Properties, for comment.

Read this guide to protecting yourself from sub-letting scams.
Paul Shamplina will soon be appearing in the next series of Nightmare Tenants, Slum Landlord during which he’ll be highlighting two more rogue agencies and their activities.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – EXCLUSIVE: How evictions ban and rogue agency cost landlord duo £40,000… and counting | LandlordZONE.

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In the frame: Agents must realise it’s now all about communication not location

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It’s been two weeks since the housing courts reopened and over six months since landlords were last able to go to court to get a possession order.

During this time many tenants have seen a dramatic change to their previously normal lives, some have lost jobs, been furloughed and found themselves navigating the minefield that is the benefits system for the first time.

It’s no secret that some landlords have experienced tenants who have either not been able to pay their rent or in a minority of cases those who just decided not to pay and used Covid as the perfect excuse.

For many self managing landlords, the recent increase in legislation and taxes coupled with the issues Covid has brought, has seen many return to or start using a letting agent to manage the property and the tenants. This gives landlords the peace of mind that with a professional in place they will ensure compliance and remove risk and stress.

Heads in sand

Sadly, the opposite seems to be the case, with some landlords reporting that letting agents are not managing their properties well and have failed to cope with the temporary legislation as well as burying their heads in the sand when it comes to tenants not paying rent.

Many agents don’t have a detailed rent arrears policy that includes all levels of communication, it seems that a minimal number of text and emails are the only methods swiftly followed by a notice seeking possession.

This can leave an already worried tenant, defensive, scared and very unwilling to engage, a basic level of personal communication can work miracles in this current climate.

Arrears

My experience has shown that there are many ways to communicate with people, but it seems managing agents fail to communicate from the start, leaving many landlords facing thousands of built up arrears and months and months of wading through the court process.

With all the technology available at our fingertips, why do the majority of letting agents still fail to communicate and still fail to manage properties to a good standard? Surely as the professionals in the industry letting agents should have the upper hand of both knowledge and skill when it comes to managing a landlords property.

Housing knowledge

I have worked with a number of landlords who use consultants like myself to help with damage limitation and I have been shocked and saddened at the poor level of service landlords are receiving from their agents, but also the lack of any housing law knowledge whatsoever.

One landlord has been left with over £6,000 of rent arrears and unable to evict the tenant, due to the letting agent serving three separate invalid Section 21 notices, meaning the landlord must now start from scratch and serve a new notice.

My intervention in this situation, discovered the tenant was a freelance photographer, so all his work had dried up, he was not aware he could apply for Universal credit as he was self employed, so felt shamed and embarrassed.

I picked up the phone and invited the tenant into the office, got to know him, we then did the following:

• Helped him apply for UC and request direct payment to the landlord
• Contacted Local council and secured a ‘Financial Inclusion grant’ which paid £3000 off the arrears
• Contacted two independent funds which support freelance workers, between these two organisations, they paid the remaining £3000 to clear the arrears

Mother figure

Now, I do not expect a property manager to be a qualified debt adviser nor do I expect them to be a councillor or a mother figure to a tenant, but I do expect property managers to have high levels of communication skills and a good understanding of their tenants and the support available with an ability to sign post them to this support.

If the last decade of change within the PRS has taught us anything it is that Property management is now more complex than ever, this change means property manager now need to be a different breed with very different skills to what we would expect.

Knee jerk

Since the tenant fee ban came into force in 2019 there has been a knee-jerk reaction from letting agents to increase their fees to Landlord to help cover the loss that they were going to see from not being able to charge tenants.

But with the increase in fees sadly we did not see an increase in service.

Statistics released by The Property Ombudsman in their last annual report showed that communication and property management were the highest source of the complaints and this is only set to increase.

In addition, most reported illegal evictions are actually carried out by letting agents and not, as the media would have you believe, rogue landlords.

Bread and butter

It would seem that many agency owners do not put as much value in the role of a property manager as they do their negotiators, even though property management is the bread and butter of many agents who would undoubtedly fold without it.

Qualifications and training of property managers do not seem high on many directors to do lists, yet those same agencies pride themselves on shiny window sticker proclaiming they are a member of a number of voluntary industry bodies.

Agency owners need to understand what issues the industry now pose and what skill set a good property manager requires.

Take pride

Implement a structured and comprehensive ongoing training programme for property managers, start to take pride in the fundamental service that a Landlord relies on and this in turn will bring a high staff retention, better continuity for both landlords and tenants as well as an improved level of customer service.

But the crux of the issue here is, no matter how inexperienced or how monumental the mistake an agent makes, the law states the responsibility lies with the landlord, so when your property manager doesn’t serve your Gas certificate on the correct date or fails to register a deposit and you find you can’t evict your tenant, ultimately the buck stops with the landlord, it is the Landlord who gets the hefty fine it is the landlord who is stuck with thousands of pounds of court fees.

But until the industry starts to take this area of its own business more seriously and understands that as agents they have a client (the landlord) AND a customer (the tenant), we will continue to see complaints rise and more landlords fall foul of a glossy window sticker.

Julie Ford runs the Hemel & St Albans Property Network

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BofE writes to CEOs to gauge readiness for zero or negative interest rates

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There is no indication it is likely, or that the Bank of England will reduce the Base Rate to zero or a negative figure. However, a letter has been sent by Sam Woods on behalf of the Bank of England to selected firms’

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Tenants who give notice but stay – Double rent?

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A lawyer recently told me that he thought there was a law whereby, if a tenant gives notice, but then does not move out at the end of their notice period, they can be charged double rent.

Has anyone heard of this please or know what my position is under the Covid-19 emergency rules?

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Landlords ask for help as confidence in rental market collapses

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Landlords are justified in their calls for a rent arrears loan scheme in England as research shows that confidence within the sector is plummeting, it has been claimed.

A survey of over 2,000 landlords by the NRLA has revealed that two thirds believe they face a tougher operating environment as the economic affects of Covid hits the private rental sector, with 18% saying this was likely to be severe.

Consequently, 56% said they were less confident about the future compared to three months ago, particularly when it came to achieving their goals.

And 30% now say they want to sell one or more of their properties compared to 16% who expect to expand their portfolios.

Rent arrears

Given the mounting financial pressure on both tenants and landlords alike, the NRLA has once again said Ministers should follow their Welsh and Scottish counterparts and introduce low-interest loans for the most vulnerable tenants, paid direct to their landlord, to help them repay significant rent arrears.

The NRLA’s says 78 per cent of landlords would support such a scheme and one of the UK’s leading housing campaigners Lord Best has said the cost would be negligible to the government.

Ben Beadle, Chief Executive of the NRLA says: “Providing the financial support needed to help tenants pay off rent arrears built since lockdown started would cost the government less than the Eat Out to Help Out scheme.

“As we head into more local lockdowns, it is even more important that tenants don’t have to worry about meeting their rent bill.”

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Shops needs a ‘normal Christmas’ to get through Covid warns report

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Shops and restaurants are hurting from a high street slump across almost every city and large town in the country – and there are fears the festive season could be the last straw for some.

According to the latest data from the Centre for Cities, the economic recovery stalled in September, when consumer spending in city and town centres fell by an average of 9%.

It’s hit some towns particularly hard; while Bournemouth had the biggest increase in visitors this summer, last month the amount of money spent there fell by 46%.

The south coast town and many other tourist spots including Blackpool, Brighton, York and Edinburgh, saw large drops in the numbers of visitors in September, raising concerns that their initial recovery from Covid-19 may have been short lived. 

Centre for Cities’ High Streets Recovery Tracker recorded overall footfall in the centres of cities and large towns up by just 1% last month – 17% lower than the increase seen in July and August.

Land Commercial MD Adam Diamant says the retail sector has been helped by the Government’s recent changes to the use classes system which means buildings can now become restaurants, retail or offices without applying for planning permission.

“Shops can be used for a much wider variety of uses, changing from a betting shop to a restaurant or doctor’s surgery, and retail has been quite busy for us,” he tells LandlordZONE.

One highlight from the survey is the fact that there’s little indication that the 10pm curfew on pubs and restaurants has had an effect on footfall, which overall hasn’t fallen as a result of the measures. 

However, Diamant worries about the impact of the next few months on the sector.

He says: “If we can’t have a ‘normal’ Christmas in terms of hospitality and retail – with no office parties for example – that will be the real killer to a lot of businesses. I think it will hit people a lot harder than the loss of the summer.”

Visit the Centre for Cities website.

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