Small-scale commercial landlords being shafted by big corporates

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Some big corporate retailers, many of them large-scale international businesses, that have the wherewithal to survive the pandemic relatively unscathed, it seems, are taking advantage, given the disparities in size, to ride roughshod over small-scale commercial landlords.

According to a recent report appearing in The Times, Subway, Nando’s, Mr Dentist and furniture chain SCS have been paying some of their small-scale landlords little or no rent since March.

Taking advantage of the government’s moratorium on debt collections and evictions, these businesses, and they are not alone, have used the legislation to save cash against their landlord creditors, many of whom are now struggling.

It has been estimated by commercial landlord groups that around £4.5billion is now owed to landlords by commercial tenants taking payment breaks, and this figure is only likely to increase by the time the moratorium ends on the 31^st of March next year.

Much publicity has been given to the failures of tenants such as the Arcadia Group including Debenhams and Top Shop. They occupy large department stores owned by corporate landlords and pension funds who are themselves owed millions, but many other retail chains such as Subway, Nado’s and others occupy small high street stores, many of which are owned by small-scale local commercial landlords.

One such landlord asked The Times newspaper, “…would I go into their branches (Nando’s) and demand free chicken? Of course I wouldn’t”

“This is a complete abuse of the relationship between landlord and tenant and ignores the fact that most smaller investors like us have significant debt facilities that still require servicing regardless of their difficult trading trading conditions. This moratorium seems to be being used by large multinational businesses while much smaller single-outlet businesses are behaving far more reasonably.”

Another tenant, My Dentist, with 625 dental practices throughout the UK, said one landlord, “…had not paid a single penny… and refused all attempts at contact or to explain why they have not paid.” This, despite the fact the majority of their income comes from the NHS.

What’s the legal position?

Commercial property landlords have been prevented from evicting tenants or terminating their leases on non-payment of rent grounds under the government’s moratorium scheme since March the 23^rd. Nor can landlords instigate winding up procedures. The measures, which were originally intended as a three month emergency safeguard for struggling tenants, are now extended until 31^st March 2021.

Landlords and tenants have been told to speak to each other, and for tenants to “pay what they can” and negotiate a repayment plan. Ultimately the money is still due to these landlords for the missed rent payments, and it is still theoretically possible for landlords to go to court and obtain a CCJ with costs against a landlord that fails to engage in discussions.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Small-scale commercial landlords being shafted by big corporates | LandlordZONE.

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30-day CGT rule on property and non-property disposals?

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I understand that disposal of a rental property must be reported and CGT paid within 30 days of the sale, but that reporting it is not required if there is no associated taxable gain. What I am not clear on is when a modest property profit combines with the profit on non-property disposal to exceed the capital gains allowance.

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Landlords join home buying rush to beat stamp duty deadline

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Landlords have been rushing to complete on properties ahead of the March 31^st stamp duty holiday cut-off date, a leading estate agent has revealed.

Anyone buying property for less than £500,000 has been exempt from stamp duty since Rishi Sunak announced the measure in July, although they have still had to pay the additional 3% second homes surcharge.

Hamptons says this means a typical investor who still pays a 3% surcharge will get a stamp duty bill of £5,400 if they complete before the holiday ends, which rises to £6,500 if they miss the deadline.

The firm’s Monthly Letting Index reports that 15% of all sales agreed in November went to landlords, the highest figure for four years.

More than half of these purchases were in cash, suggesting that many are larger investors expanding portfolios rather than new investors starting out. 

Across 2020, investors are set to buy about 134,000 homes, up slightly from the 133,000 bought in 2019.

Regional rush

This ‘rush’ has been concentrated in several regions; 22% of homes sold in the West Midlands were bought by investors, with 18% in both the North East and North West.

In London, it’s 15%, up 2% from three months ago. Landlords paid an average of £180,000 per property, about £80,000 less than that paid by an owner-occupier. 

But Hamptons says this increase in buying activity has yet to feed through into supply, and during November UK rents increased at an annual rate of 3%.

Aneisha Beveridge (pictured), head of research, says the rental market has shown signs that it’s shaking off its Covid-induced hangover. 

 “With nearly a fifth fewer new rental homes coming onto the market than last year, it has put upward pressure on the recovery in rental growth,” she says.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Landlords join home buying rush to beat stamp duty deadline | LandlordZONE.

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Rightmove forecast 4% house price growth in 2021

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Rightmove has forecasted an average 4% house price growth in 2021. The unexpectedly high market momentum of 2020 despite the pandemic and its economic fallout continues, and although uncertainties remain, demand for housing and buyer affordability appear to be strong enough to outweigh deflationary pressures.

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Additional assistance for rough sleepers with drug and alcohol dependency

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Rough sleepers across England will receive extra support to help them recover from drug and alcohol misuse, Minister for Rough Sleeping and Housing, Kelly Tolhurst MP announced.

Forty-three areas across England will receive support from a £23 million government fund designed for those with drug and alcohol support needs to get the help they need to rebuild their lives.

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DWP have more holidays than Tamara Ecclestone and will delete your emails!

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Tenants, another reason why you are homeless – DWP have more holidays than Tamara Ecclestone.

More reasons below why Landlords/Letting Agents are refusing Benefits tenants. Shelter, please talk to us. With your help & force & Media on your side

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LATEST: Scots government considers ‘ill thought-through’ rent controls bill

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The Scottish government is working through hundreds of submissions to its consultation on Labour MSP Pauline McNeill’s Fair Rents (Scotland) Bill, which finished this week.

It received more than 200 responses, which McNeill says shows a real appetite to fight unfair and unaffordable rents.

The Scottish Labour housing spokesperson adds: “The pandemic has made an already bad situation worse in terms of housing affordability. It’s time that the other parties listened to Scottish Labour and the voices of these respondents and back the bill.”

The bill would cap rent rises at 1% above inflation and give renters protection against excessive or unfair rent increases. Private landlords would also be made to enter the monthly rent and other detailed information into the Scottish Landlord Register.

Halted

A previous attempt to get it through parliament was halted by the local government and communities committee in August, which blamed its failure on a heavy workload. The process was re-started in October.

The Scottish Association of Landlords believes the proposals could lead to higher and more frequent rent increases as well as a shortage in the supply of homes.

It fears the bill would act as a disincentive to landlords considering reducing the rent below the open market level in order to attract new tenants or help existing tenants who are in financial difficulty.

Chief executive John Blackwood (pictured) tells LandlordZONE it hasn’t been properly thought through. “We dispute the need for a rent increase cap as the majority of landlords don’t currently increase their tenants’ rent mid tenancy.”

He adds: “We are particularly concerned that it proposes preventing a landlord from increasing the rent within 12 months of an order from the rent officer setting the rent. The tenant would simply need to apply to the rent officer once a year for a determination of a fair rent.”

Rural business organisation Scottish Land & Estates has also opposed the bill.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Scots government considers ‘ill thought-through’ rent controls bill | LandlordZONE.

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Landlords, lettings and deposits – expert advice from Hamilton Fraser

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Eddie Hooker, CEO of Hamilton Fraser, Paul Shamplina, Founder of Landlord Action. Special guest Daniel Lee, Mortgage Broker at Total Landlord Mortgages.

Hamilton Fraser’s Property Podcast returns for another episode of the popular ‘Landlords, lettings and deposits’ series. Each episode offers expert advice on the key topics impacting landlords and features a special industry guest sharing their unique market insight.

In the latest episode of Hamilton Fraser’s Property Podcast, ‘Landlords, lenders and mortgages – how can you secure the best deal?’, Eddie Hooker, CEO of award winning Hamilton Fraser Total Landlord Insurance and Paul Shamplina, Founder of Landlord Action and Brand Ambassador at Hamilton Fraser, are joined by special guest Daniel Lee, a Mortgage Broker at Total Landlord Mortgages, Hamilton Fraser’s latest venture.

Total Landlord Mortgages, in partnership with financial advice firm Legacy Financial Consultants, is backed by Openwork, one of the largest financial advice networks in the UK and offers landlords exclusive mortgage rates.

With over 20 years’ experience in the industry, Daniel explains the importance of finding the right financial solution for your unique needs and how using a specialist insurance broker can help you to achieve this, as well as how to access the right lenders for you. He also discusses responsible lending and why having a long term, rather than short term, view of the property market can give you the edge.

Eddie, Paul and Daniel also explore the property market buoyancy in the wake of COVID-19 and how, despite some challenges caused by the pandemic in relation to lending, demand is still strong.

Don’t forget to listen out for brand new episodes of Hamilton Fraser’s Property Podcast with new special industry guests every episode!

Missed the previous podcasts in the series? Don’t worry, you can catch up with industry news here!

Previous guests include:
• Steve Bowen, Mediator at the Property Redress Scheme and experienced landlord
• Jonathan Schuman, established portfolio landlord and Owner of Magnet Properties
• Ben Beadle, Chief Executive of the National Residential Landlords Association (NRLA)
• Matt Hooker and Nick Hamatsos, Co-Founders of Ome, a new breed of deposit replacement scheme
• Sean Hooker, Head of Redress at the Property Redress Scheme
• Kate Faulkner, market analyst, commentator and co-author of ‘The Landlord’s Friend’
• Tessa Shepperson, residential property lawyer and Managing Director of Landlord Law

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Landlords, lettings and deposits – expert advice from Hamilton Fraser | LandlordZONE.

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LAUNCH: New app transfers whole renting process to tenants’ smartphones

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Tenants can read their tenancy agreement and request repairs using a trailblazing new app.

Automated lettings platform PlanetRent’s native tenant app aims to simplify the lettings process as well as cut costs and reduce admin time by connecting landlords, tenants, agents, contractors and accountants, and letting them access information.

Tenants can find important documents on it, including their tenancy agreement and inventory checklist, along with the floorplan and utility records.

They can also log repairs and maintenance requests directly through the app rather than contacting their agent or landlord, who can then use it to notify the tenant when they’ve finished any work.

The app was developed by residential property consultancy, Ringley Group, which believes it’s the first of its kind. The firm has invested more than £2m in creating tech products for the property market and aimed to help agents and landlords meet social distancing requirements when it launched PlanetRent in March.

The platform allows documents to be accessed virtually and enables contracts to be generated in seconds so they can be e-signed by landlords, tenants and agents.

Mary-Anne Bowring, Ringley Group MD (pictured), says this new tenant app helps renters do everything on the move.

She adds: “With another lockdown or further social distancing restrictions imminent, the ability to work remotely and seamlessly while minimising human contact will be crucial and PlanetRent will help landlords, agents, contractors and tenants do exactly that.”

Read about other property management smartphone apps.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LAUNCH: New app transfers whole renting process to tenants’ smartphones | LandlordZONE.

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The Christmas hazards for landlords…

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Especially this year, when people are confirmed to their homes, there is less chance to socialise and “let off steam” in pubs and restaurants, families are confined, and coming together over Christmas can easily degenerate in to family arguments.

The best case means that these are soon patched up, and all is forgotten, but in the worst case it means family break-ups, separation and divorces.

Any experienced landlord will tell you that January means couples split up, which brings with it complications with their tenancies. Either both parties leaving, or one leaving and one staying. If it’s a joint tenancy, then it ends when one party leaves. The landlord must decide whether to grant a new tenancy to the one remaining party – can that party afford the rent on it’s own is the big question?

Where the tenancy is in the name of one party, then further complications arise when a remaining tenant is not on the tenancy agreement. Again the landlord is faced with a similar decision; does the landlord issue a new tenancy and can that party afford the rent?

On the other hand, when families split opportunities arise for landlords, as a single household now becomes two, and twice as many properties are needed. I have rented out many a flat after Christmas to a single splitter, even had one case where a tenancy was signed and it was never fulfilled or the property occupied throughout the six month term, because the couple got reconciled and moved back in together.

The second concerning issue with Christmas, for landlords, is money. People get carried away with their spending, they simply throw caution to the wind to buy what they think family deserve in terms of presents or booze. It’s not until those credit card bills start hitting the mat in January that the real hangover begins, the pain of realising just how much has to be paid back.

It’s then that rent arrears can start to rack-up. The first the landlord knows about it is when that rent payment does not appear on their bank statement, or the cheque fails to arrive, but as Neil Cobbold, Chief Sales Officer at automated payments provider PayProp, says:

“Since March, increasing limitations on property possession claims through the courts have made 2020 a difficult year for landlords and letting agencies to deal effectively with serious issues such as rent arrears.

“The scant supply of repossession options will continue over the coming weeks due to an extended Christmas evictions truce between December 11 and January 11 2021, with no enforcement action allowed in England until January 25.”

The tendency during the festive period for rent arrears to build-up pushes many landlords into pursuing eviction through the courts, but this year their options are more limited than usual.

Landlords need to look to alternatives to eviction. Communication is the key wherever possible, and though there is a distinct tendency for tenants to “go to ground” when in arrears, a big effort should be made by landlords to offer help and reassure, after first investigating and perhaps using an independent intermediary resource, such a professional letting agent or mediation.

Letting agents can help by effectively and proactively managing communication between landlords and tenants, either preventing or reducing arrears through effective reminders or organising affordable repayment plans.

By digitally recording all payments and automating arrears chasing and employing the services of a dedicated eviction expert, agents and landlords can better navigate the changing rules during this trying period.

Next year, the prospect of a successful COVID-19 vaccine rollout and the financial support provided by an extension to the furlough scheme could improve the situation and pave the way for more normal eviction avenues to resume, says PayProp.

“However, there will still be challenges ahead as the minimum notice period for evictions (except for the most serious cases) remains at six months until March at the earliest. Meanwhile, there will also be the renewed prospect of Section 21 being scrapped as part of the Renters’ Reform Bill, further curtailing options.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – The Christmas hazards for landlords… | LandlordZONE.

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