Readers’ Letter: Can I get around the six-month notice eviction rule?

admin    Uncategorized     agents

A LandlordZONE reader called Rebecca has been in touch to ask whether landlords like her can get around the Covid-related six-month minimum notice period required before possession hearings can be started to evict a tenant who has stopped paying their rent.

We asked evictions specialist Paul Shamplina to answer her two specific questions.

Question: Would landlords be within their rights to only accept tenants who are willing and able to pay six months’ rent up front?

Paul says: “Yes, you could ask a tenant to pay the rent up front but tenants apart from maybe international students are unlikely to be willing to do that, and most couldn’t afford to even if they were willing to.

“And while you wait until you find a tenant who will, you’re going to have your property sitting empty, which isn’t ideal.

“You’d be better off asking for your tenants to provide a guarantor, which many landlords suggest when a prospective tenant has a poor credit rating or references. Or landlords can take out rent guarantee insurance.

“You’ve got to be realistic and commercially-minded as a landlord; there are lots of decent tenants out there who prefer to pay monthly.”

Question: Could we serve six months’ notice at the same time as issuing a tenancy to ensure that, should it be necessary due to non-payment of rent, we are ahead of the game in terms of beginning the eviction process?

Paul says: No, not really. Under the current rules that came in during August last year, landlords can only serve a six-month notice period which is called a Form 6a after four months of a AST tenancy agreement so effectively the minimum term is now ten months.

“When I gave advice to the government on this, I made the point that giving notice to someone on the day they move in was poor practice – and judges will take a dim view of it plus it doesn’t put your relationship with a tenant on a good footing.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Readers’ Letter: Can I get around the six-month notice eviction rule? | LandlordZONE.

View Full Article: Readers’ Letter: Can I get around the six-month notice eviction rule?

Can I resolve noisy neighbour issue for my tenant?

admin    Uncategorized     agents

I have a Maisonette that has been let to the same tenant for three years, and she is the absolute perfect tenant. It is a two-level building in an affluent area and there have been a couple living above (not my Flat) for the last two years without any issue.

The post Can I resolve noisy neighbour issue for my tenant? appeared first on Property118.

View Full Article: Can I resolve noisy neighbour issue for my tenant?

Government: ‘No direct financial support for landlords during Covid’

admin    Uncategorized     agents

The government has once again refused to consider a financial support scheme for landlords who are suffering financial hardship due to the Covid pandemic.

Lord Greenhalgh made the comments yesterday in parliament, saying the package of indirect help for landlords was sufficient, kicking in the long grass hopes of financial support similar to those offered in Wales and Scotland.

But as we have highlighted in recent weeks and months, some landlords face grave financial problems as they struggle to evict tenants who are using the Covid pandemic as an excuse not to pay their rent, with landlords often ignored by the DWP and their plights deprioritised by the police, social services and courts.

Lord Taylor of Warwick asked Lord Greenhalgh, who is the government’s housing spokesperson in the House of Lords ‘what plans they have to introduce specific financial support for landlords who have lost rent as a direct result of the COVID-19 pandemic?’.

Furlough enough

The answer came that the government is supporting landlords by helping tenants keep their jobs via the ongoing furlough scheme, and that only 7% of tenants had rent arrears.

This claim is based on research within the English Housing Survey’s Household Resilience Study which, he omitted to mention, is nearly six months old or that rent arrears are rising – up from 3% before the pandemic to 7% by the end of July last year.

“This indicates our package of support is working and has prevented widespread arrears,” said Greenhalgh.

“Where landlords find themselves in coronavirus-related hardship, mortgage lenders have agreed to offer payment holidays of up to six months, including for buy-to-let mortgages.

“The application window is open until 31 March 2021.The FCA has been clear that for borrowers who have taken six months’ holiday and continue to face ongoing financial difficulties, firms should continue to provide support through tailored forbearance options.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Government: ‘No direct financial support for landlords during Covid’ | LandlordZONE.

View Full Article: Government: ‘No direct financial support for landlords during Covid’

LATEST: Number of EU renters in UK has dropped by 620,000 since Referendum

admin    Uncategorized     agents

Changes created by Brexit for fishermen and other food as well as manufacturing and retail businesses has been well documented in recent weeks, but now it’s the turn of the private rental market.

Analysis of 300,000 transactions completed since the referendum has revealed a dramatic drop in the number of EU nationals taking up tenancies across the country over the past four years as the UK has waited to exit the EU.

Completed by lettings platform Goodlord, the research shows a steady decline in the number of EU tenants; from January 2017 to November 2020 the proportion fell from 20% to 14% of all tenants, an overall decrease of 6%. Based on the 10 million people who rent in the UK, that’s 620,000 fewer.

International tenants from non-EU countries also fell; from 13% to 11%. As a result, the proportion of renters with UK citizenship rose from 66% to 74%.

Rental drop

The most dramatic drop in the proportion of rental arrivals from the EU took place from 2019 onwards, during which landlords saw a 2% drop. 

London, which has always had the largest EU population, saw its proportion of EU tenants drop from 29% to 22%. British nationals now account for 61% of all London tenants, up from 48% in 2017. 

“There was no mass exodus of EU citizens following the Brexit vote,” says Tom Mundy (pictured), COO of Goodlord.

“Instead, we’ve seen a steady but marked decrease in the number of people from the EU moving to England over the last four years.

“This trend has borne out across the whole of England, but particularly so in London, which had a higher number of EU tenants to start with.”

Read more: Hurdles EU citizens must clear to rent in the UK now.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Number of EU renters in UK has dropped by 620,000 since Referendum | LandlordZONE.

View Full Article: LATEST: Number of EU renters in UK has dropped by 620,000 since Referendum

EXCLUSIVE: PRS faces growing safety assessment scandal, claims consultancy

admin    Uncategorized     agents

Unscrupulous managing agents are cutting corners on safety assessments to save money, putting landlords’ insurance claims in jeopardy and their tenants’ lives at risk.

Property compliance firm Tac Property Consultants warns that contractors are being used to carry out works which they’re not qualified or accredited to do, making any issued document non-compliant.

Director David Rogers has recently uncovered several dodgy contractors while carrying out due diligence checks and believes that nationwide, firms have issued a “frightening” number of non-compliant documents.

“It’s getting worse because there are more HMOs out there – and some agents don’t want to fork out for reputable companies, they just pull the wool over landlords’ eyes,” he tells LandlordZONE.

One landlord paid £150 for a fire risk assessment, only for Rogers to discover that it had been carried out by a rogue company which had even tried to forge training documents when challenged.

“If he hadn’t found that out and there’d been a problem at the property, he wouldn’t have been able to claim on the insurance, while it could also have put tenants at risk if the assessment hadn’t been done properly.”

A good fire risk assessment from a reliable company costs between £250 and £300, he says.

Rogers (pictured) has also taken issue with Safeagent and London Property Licensing who recently called for the government to pause routine electrical inspections for six months or risk increasing the spread of Covid.

“Delaying carrying out essential works on properties can endanger lives which will not be Covid-19 related,” he insists. “If they delay carrying out routine electrical inspections, what are they proposing to do about the gas servicing, fire alarm servicing and emergency lighting inspections all of which need to be regularly serviced and maintained to ensure that the property is compliant and safe for the tenants?”

He says managing agents just need to put thought into arranging these checks, by ensuring tenants stay in their rooms, or even accompanying the contractor to make sure they are wearing the right PPE.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – EXCLUSIVE: PRS faces growing safety assessment scandal, claims consultancy | LandlordZONE.

View Full Article: EXCLUSIVE: PRS faces growing safety assessment scandal, claims consultancy

Landlord calls for help after DWP blanks her over rogue tenant

admin    Uncategorized     agents

A landlord in London has contacted LandlordZONE to plead with DWP ministers to tackle the failings of the Universal Credit (UC) system as her tenant racks up rent arrears of over £19,000.

Michelle Dighton says her tenant, who in receipt of housing benefit via UC, stopped paying the rent 18 months ago well before Covid struck but is still in receipt of housing benefit.

But she says it’s not so much the defaulting tenant or the glacial eviction process she has beef with, but rather her frustrating dealings with the DWP to resolve the situation.

Dighton rented out her property to a woman in January 2019 after receiving references and payslips both of which she claims turned out to be false.

The tenant then moved her partner and daughter into the £1,050-a-month property in Thornton Heath, South London (pictured), without consulting Dighton and stopped paying the rent in October 2019 even though she is in receipt of housing benefit.

Universal Credit

But the biggest challenge is that the Universal Credit team refuses to communicate with her about the case or help her set up an Alternative Payment System (APA).

Her tenant claims to have moved out of the property despite clear evidence to the contrary, including a refusal to allow anyone into the property to do basic safety checks, and Dighton has now fallen between the ever widening cracks of the UC bureaucracy.

The landlord, who has started proceedings to regain possession of the house but which have been delayed by the Covid eviction ban, has a mortgage on the property and a second charge against her existing home.

Consequently, she says her family are very likely to lose their own home soon unless she can get the tenant out or sort out payments with UC.

“What I find frustrating is that the system ignores landlords while knowingly helping tenants like mine game the system and live in properties for free – my tenant’s non-payment has nothing to do with Covid,” she says.

“I am at my wits end over this but there is no one you can turn to – DWP won’t talk to me, the local council and Police won’t help and simply I don’t know where else to turn to.”

This case is a familiar story for UC specialist Bill Irvine, who recently told LandlordZONE that the usually helpful DWP landlord telephone helpline has stopped working, that emails to case managers with ‘meritorious’ APA requests are ignored or are taking weeks to be answered, and that overall the “system is not delivering landlords’ and Parliament’s expectations”.

How to do it better

Irvine says he wrote to the DWP last week setting out how the system could be improved to help landlords like Michelle Dighton. It says the system of setting up an Alternative Payment Arrangements (APA) to enable a tenant’s rent to be paid direct to the landlord would be much less likely to be abused by tenants if DWP staff would:

1. Acknowledge each application;
2. Suspend payment of the housing costs element (HCE), pending a decision on the merits of the landlord/agent’s application, especially where the application provides evidence of earlier misuse of funds;
3. Once a decision is made, provide a written outcome that allows the landlord applicant to discern what’s actually happened;
4. Provide PRS landlords with a dedicated email address and/or telephone number where they can chase outstanding APA requests and thus avoid having to make referrals to Complaints & Resolution Teams and District Management staff.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Landlord calls for help after DWP blanks her over rogue tenant | LandlordZONE.

View Full Article: Landlord calls for help after DWP blanks her over rogue tenant

No Respite for Landlords

admin    Uncategorized     agents

The Debt Respite Scheme (Breathing Space) guidance was a shock to landlords when we heard about it this week. It is a truly atrocious bit of legislation, heaping even more worry and misery on landlords and also likely to have a very damaging effect on the prospects of any potential tenants looking for private accommodation who have any experience of mental health problems.

The post No Respite for Landlords appeared first on Property118.

View Full Article: No Respite for Landlords

Covid year – 2020 – has resulted in a boom in buy-to-let businesses

admin    Uncategorized     agents

The Covid pandemic did not dampen the enthusiasm for investing in buy-to-let properties, quite the contrary; according to figures released by Hamptons International, a leading estate agency, landlords created 41,700 buy-to-let firms last year. That represents a 23% increase over 2019.

Registering buy-to-let businesses through limited companies has grown considerably since the introduction of new regulations in the industry which changed the basis on which rental income is taxed for individual landlord, restricting a landlords’ ability to claim tax relief on mortgage interest payments.

The result has been a doubling of the number of buy-to-let rental companies since 2016, after the tax changes where introduced, preventing landlords from being able to claim relief on their mortgage interest payments, on a phased-in basis.

What some call a tax perk – though others have call it a right to interest relief, like on any other business loan – was reduced gradually and removed altogether in April.

However, if a buy-to-let business is operated under the umbrella of a limited company, landlord owners are still able to claim full tax relief on their mortgage interest payments – it’s the driving force behind the surge in the formation of these limited companies holding buy-to-let properties.

The table below shows how the tax changes impacted on a high-rate taxpaying landlord receiving £950 rent a month and paying £600 towards their mortgage, courtesy of consumer champion Which?

Three other spurs to the continued growth of investing in buy-to-let properties have been:

One, the intra-low interest rate environment where investors with cash are given few other opportunities to invest their money in alternatives which give anything near the modestly respectable, usually around 4 to 6%, return of a buy-to-let, at such low risk;

Secondly, the stamp duty holiday which currently, unless the Chancellor decides to extend the deadline, ends on the 31^st of March, means that on properties worth up to £500,000 gives landlords a potential £15,000 when buying. They still need to pay the 3 per cent buy-to-let SDLT surcharge, but £15,000 is not to be sniffed at;

Three, the opening up of mortgage offers to the buy-to-let market of around 728 limited company mortgages for landlords, that’s according to the data provided by Moneyfacts. These offers are said to make up about a third of all buy-to-let deals.

There are still quite a few high street lenders that don’t offer these types of company mortgages for buy-to-let as they don’t think there’s enough demand, or because they cautiously demand personal guarantees from landlords for their company loans.

However, by December 2020 there existed a record 228,743 buy-to-let companies and Hamptons have estimated that around 50% of all buy-to-let purchases are put into a limited company, compared to just 20% in 2016.

Limited company mortgages do tend to cost more, on average around 3.71% for a two-year fixed deal, which compared to around 2.91% for an individual taking out a buy-to-let mortgage.

Because of the specialist nature of lending to buy-to-let companies, mortgage lenders in this field will be more expensive in their fees and rates and this may off-set some of the benefits of the tax savings. Some accountants even doubt the overall benefits of incorporation for small-scale buy-to-let landlords owning just one or perhaps two properties.

For individual landlords wishing to move existing investments into a buy-to-let company the economics of the change can be debatable as it in-effect means a sale and buy-back into the company, which triggers both capital gains and stamp duty liabilities. This of course depends on the circumstances involved, the amount of any gain and the size of the translations.

Within a company structure the income is subject to corporation tax, capital gains tax when properties are sold, and the landlord is subject to income tax when earnings are drawn out as dividends. Generally, if a company structure is beneficial, it is best set this up from the outset.

Anyone considering investing in this way should seek financial advice first.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Covid year – 2020 – has resulted in a boom in buy-to-let businesses | LandlordZONE.

View Full Article: Covid year – 2020 – has resulted in a boom in buy-to-let businesses

Am I being unreasonable?

admin    Uncategorized     agents

As readers of Property 118 are professionals, what opinions and advice can you offer on whether I’m being unreasonable in holding a widow to the terms of the tenancy agreement.

I own a modern retirement (over 55s) flat and for the last 5 years it has been rented to a lovely couple – model tenants in fact.

The post Am I being unreasonable? appeared first on Property118.

View Full Article: Am I being unreasonable?

Could your buy-to-let company share structure be better?

admin    Uncategorized     agents

99% of the 228,743 UK Property Investment Companies in existence at the end of 2020 had sub-optimal share structures.

Is yours one of them?

A sub-optimal share structure in your buy-to-let Limited Company could cost you a fortune in tax.

The post Could your buy-to-let company share structure be better? appeared first on Property118.

View Full Article: Could your buy-to-let company share structure be better?