BREAKING: Existing evictions to be given green light if more than nine months’ rent arrears

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The government has finally laid its updated lockdown regulations in front of parliament to clarify when landlords with existing possession orders can move to evict, revealing that one of the exemptions will be ‘substantial’ rent arrears, now to be classed as those over nine months.

As expected these regulations, which will come into force tomorrow and only relate to England, enable bailiffs to attend properties to execute a warrant of possession if it concerns trespassers, the death of a tenant, an unoccupied property and tenants involved in anti-social behaviour or, crucially, those who have built up substantial rent arrears.

It is this last point that many landlords and solicitors have been waiting for clarification on; how long can a tenant have not paid their rent before an existing possession order can proceed during the lockdown.

18 months’ wait

This may seem trivial when the lockdown is only a month long, but the way the law has been framed, landlords given the go-ahead to evict will now have been waiting at least 17/18 months before being able to deal with a tenant with substantial rent arrears.

This is because the eviction ban exemption only kicks in after nine or more months of unpaid rent, but any arrears accrued after March 23th are ignored – so another eight months on top of non-payment before an existing possession order can then proceed.

Today’s new regulations follow a sustained campaign by the industry to seek clarification, as well as efforts by leading PRS lawyer David Smith (pictured) who says his effort to point out that the the government ‘requesting’ bailiffs do not enforce legal evictions was in itself likely to be unlawful.

“This is a matter for Parliament and who gets evicted should not be at the whim of the Lord Chancellor,” he says.

Unfair

Ben Beadle, Chief Executive of the National Residential Landlords Association, says: “In trying to arrive at a compromise the Government has failed to help those in genuine need whilst rewarding those whose arrears have nothing to do with the pandemic, and in some cases are wilfully not paying their rent.

“This is doing nothing to help those tenants who are trying to do the right thing and seeking to pay off their debts.

“Instead of prolonging the problem with short-term fixes, the Government needs to urgently bring in a financial package to enable tenants to pay off rent arrears.”

Read the new regulation in full.

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Help for struggling tenants, Minister? Over to you, landlords!

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The government has indicated in a written parliamentary statement that it expects private landlords to shoulder the financial burden of helping students during the current lockdown in England.

Asked by Labour MP Zara Sultana if the government would offer students any financial support, Education minister Michelle Donelan (pictured) retorted that those in higher education can access hardship funds at their college or university but that otherwise students and landlords were on their own.

But these hardship funds are limited – for the 1.9 million students studying in England  there is a hardship fund of £135 per student or £256 million in total.

Donelan told Sultana that, if they are unable to access hardship funds, then students should agree a payment plan with their private landlord, and urged PBSA providers and universities to waive rents or release students from their contracts, as ‘many did during the Summer term lockdown’.

“We encourage landlords, letting agencies and tenants to adopt a pragmatic, common-sense approach to issues that may arise in the current circumstances,” said Donelan.

“In the first instance, a student should speak to their landlord if they think they will have difficulty meeting a rental payment. In this unique context, tenants and landlords are encouraged to work together to put in place a rent payment scheme.”

The Minister’s comments echoed those of NUS President Larissa Kennedy, who last week called on landlords to give student a rent holiday during the current lockdown if they are struggling to pay their rent or told to return home.

Back in April the NRLA wrote to the NUS during the first lockdown to point out that if landlords no longer felt student rentals were a secure form of income, the supply of properties would dwindle and rents would rise.

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Council told tenants to wait for court eviction?

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“You don’t have to leave the property when the notice period expires. You still have a legal right to occupy the property after this date and until your landlord obtains a possession order from the court. If you haven’t found alternative accommodation by the time your notice period expires

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Unfair Garage Rent Payment?

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I own a flat which has two leases. One for the flat itself, which is broadly fair and one for a garage, which is unfair and has to be taken on when the property is purchased and stays with the flat lease.

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The Private Rented Sector and buy-to-let remain resilient

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With private rents in Britain’s biggest cities falling by as much as 15% and with up to 50% of tenants now claiming housing benefit, one would have thought this new economic reality would have had a big impact on the buy-to-let market.

Not so according to DJ Alexander, CEO of Apropos, a UK-wide letting firm which finds that the “attitudes and actions of landlords and tenants” have remained stable compared to the same period last year.

This year, in the ten months to the end of October, the firm saw 103 of its landlords serving notice on tenants compared to 107 in 2019, plus the number serving notice has fallen substantially since the ending of the first lockdown in July, a drop of 20, from 60 in 2019 to 40 this year.

The number of tenants serving notice on landlords has also fallen. Apropos figures show a drop of 18% since the end of the first lockdown. From July 2020 to October the figures were 741 this year compared to 875 over the same period last year.

However, this increase in tenant stability means that the number of new tenancies started by Apropos has been lower, a drop from 850 to 695 over the last four months.

David Alexander, joint Chief Executive Officer of apropos by DJ Alexander, says:

“These figures highlight a much greater stability and resilience in the PRS than might have been expected following the first lockdown. Both landlords and tenants have shown a much greater belief and enthusiasm for remaining within the sector.

“Landlords have been serving fewer notices and tenants have been happier to remain where they are rather than undertake the uncertainty of seeking a new home. There is little doubt that the pandemic has made people focus more on their homes and their living space. Where people live has become so much more important since the lockdown so that once people find a good home, they want to stay.

“The result has been many more people staying put. It is incumbent upon everyone in the PRS – landlords, tenants and agents – to ensure that homes are maintained to the highest standard so that individuals can feel safe and secure. Security of tenure has rarely been more prized, and many more tenants and landlords seem to hold this view and are staying where they are rather than moving on. Stability is a vital element in the housing market and these figures show just how important it has become in the last six months.”

Mr Alexander concluded:

“Landlords and tenants are continuing to show faith in the PRS. Given that England has now entered its second national lockdown it is essential that the Westminster government shows continued faith in the sector by ensuring that landlords are provided with financial support to continue providing homes for millions of people. Failing to financially support this vital sector at this time would be disastrous for landlords and tenants.”

Commenting on rumours that the chancellor, Rishi Sunak, is being urged to double capital gains tax rates while reducing the exemption limit Mr Alexander said it has triggered fears that buy-to-let landlords, investors, those with second homes, and small business owners could face significantly higher tax bills. He commented:

“The OTS (Office of Tax Simplification) review of CGT (Capital Gains Tax) suggesting a huge increase in the rate of taxation for landlords, second home owners and investors would have an enormously detrimental impact on the housing market.”

If the Chancellor targets the private rented sector it will be an “extremely risky” strategy, putting at risk the future of the second largest provider of homes in the UK. It would not be possible to fill this gap if there was a mass exodus of landlords and investors from the market over a short period, according to Alexander.

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LIVE interview with David Smith on proposed legal action against Lockdown evictions 10am Tuesday 17th

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A judicial review into the inability to evict non-paying tenants during lockdown is being launched by David Smith of JMW Solicitors. This tenant eviction ban during lockdown is causing many smaller landlords serious hardship.

In this Property Investors Coffee Morning special

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BREAKING: Half of all families living within the PRS are in receipt of housing benefit

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Latest government figures show that half of all the families who live within the private rented sector now receive support from the government either via housing benefit or Universal Credit (UC) to pay their landlord.

DWP figures show that 910,000 families are now in the position, an increase of 23% since the Covid pandemic arrived in the UK.

Tenant lobbying group Generation Rent says that a fifth of these families live in more expensive properties that fall outside the Local Housing Allowance system, which only pays out based on the cheapest 30% of homes in any area. This means 378,000 families face a rent shortfall and are having to cut down on essentials or get into debt to make up the difference.

Also, many families will not get the full LHA because of the benefit cap, which places an upper limit on the amount that working age claimants who are out of work can receive.

Generation Rent says that, although many UC claimants have been exempt from the benefit cap, this exception is due to expire just before Christmas.

The group is calling on Sunak to commit more support to private renters by raising Local Housing Allowance, scrapping the benefit cap, and clearing rent arrears brought about by the pandemic.

“With so many private renters now reliant on it, the Government must ensure the benefits system covers housing costs,” Alicia Kennedy (pictured), Director of Generation Rent, told inews.

“Everyone deserves the security of a home they can afford while we recover from the economic impact of coronavirus.”

Read more about Universal Credit and landlords.

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CGT proposals to cost higher rate tax landlords £10,000 on average

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A leading lettings agency has revealed how much landlords will pay if the Capital Gains Tax (CGT) changes proposed by the Office of Tax Simplification (OTS) last week are implemented by Chancellor Rishi Sunak.

These would bring CGT – currently 28% on residential property and 20% on other assets – into line with income tax so that higher rate taxpayers face a flat rate of 40% or more.

It also suggests reducing the annual CGT allowance threshold from £12,300 to £5,000 or less.
Hamptons International has crunched the data based on the average equity held by a landlord within a property of £69,000.

For a lower rate tax payer, this would mean paying an extra £1,130 in CGT (or a total of £11,300) but for higher rate tax payers it would mean an extra £6,800 (or a total of £22,680).

“If the annual CGT exemption is also reduced from £12,300 (2020/21) to £5,000, a higher tax rate landlord’s tax bill would rise to £25,600, nearly £10k or 61% more than the existing situation,” Aneisha Beveridge, Head of Research at Hamptons International tells LandlordZONE.

Allowable expenses

These figures exclude allowable expenses, which vary significantly depending on whether and how long a landlord lived in a property before renting it out and how much money was spent doing it up.

But Beveridge says that the OTS’s  proposals would force more landlords to put their properties within a limited company structure because they still able to offset mortgage interest, and their profit is taxed at corporation tax, currently 19%. 

Mitch Young (pictured), co-founder of tax consultancy Fusion says the uproar about such radical changes caused by the proposals within the tax and property world might temper the Chancellor’s appetite for change.

“Nevertheless, there is no doubt that Sunak is going to execute some kind of tax raid in his next budget, so landlords need to get their houses in order before this happens next Spring.”

Read more: CGT proposals will drive more landlords out of the market.

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1.3 million private tenants worried about paying rent, says Rowntree foundation

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Millions of tenants are anxious about paying rent over the winter and 350,000 have already had discussions with their landlords about eviction, new research by The Joseph Rowntree Foundation (JRF) has found.

It has warned that without immediate targeted support, both private and social renters who’ve seen their incomes drop, will be at risk of real hardship and could lose their homes.

Some 2.5 million households are worried about paying rent in the next three months (1.3 million in the private sector), it says, with 700,000 already in arrears.

The social change group’s survey of nearly 3,000 tenants reveals that large numbers who have reduced spending to offset shrinking incomes are cutting back on essentials such as food (70%), heating and electricity (49%), and for renters with children, food for children and nappies (39%).

Legally binding

It says despite Government guidance not to employ the use of bailiffs before 11th January in England, this protection might not be legally binding or be properly understood by households vulnerable to eviction, who could feel they have no option but to leave their home if they get an eviction notice.

It’s calling for a watertight ban on evictions, together with targeted support for rent arrears to prevent a surge of evictions in the spring.

JRF also recommends a targeted grant programme designed to address rent arrears as director Helen Barnard says hard-pushed renters are running out of options.

“Without action which seeks to address growing arrears, any ban on eviction or enforcement only kicks the can down the road, with renters vulnerable to losing their homes again as restrictions are lifted,” says Barnard (pictured).

“A targeted package of support to address high rent arrears will give renters and landlords much needed breathing space as we continue to weather the storm.”

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Webinar: How to avoid underinsurance

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Watch our free webinar featuring Steve Barnes, Associate Director and Melissa Choules, Senior Claims Technician at Hamilton Fraser Total Landlord Insurance who are joined by Will Molland, Director of RebuildCostASSESSMENT.com. The latest data from RebuildCostASSESSMENT.com reveals that nine out of 10 properties in the UK are underinsured. This is a truly staggering statistic and our experts cover everything you need to know on the topic of underinsurance, from calculating your rebuild value to the true cost of underinsuring, to help you understand how to avoid underinsurance.

For additional information on underinsurance, read Hamilton Fraser Total Landlord Insurance’s comprehensive guide on the topic ‘How to avoid underinsurance: A landlord’s guide’.

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