What to expect in the 2021 Budget?

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What’s coming up in the UK spring budget? And will it be good news for UK property investors?

In this video below, I am going to share with you my thoughts on what property investors can expect from Rishi Sunak come March the 3rd.

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44-year-old landlord faces £8,500 fine and costs after second HMO conviction

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A rogue Wolverhampton landlord has been fined £6,000 for failing to licence her HMO – her second conviction for the same crime in a decade.

Mrs Aunberin Saddique, of Maythorne Gardens, admitted the offence after it was discovered she hadn’t registered the property in Hordern Road (pictured).

The 44-year-old had previously been convicted of failing to licence another HMO in 2012. Several of her properties are managed through a company structure.

Dudley Magistrates Court have fined Saddique and ordered her to pay prosecution costs of £2,341 and a victim surcharge of £181.

City of Wolverhampton Council’s cabinet member for city assets and housing, councillor Jacqueline Sweetman (pictured below), says the council takes a strong stance on HMO licensing.

Stark reminder

She adds: “I hope this case will serve as a stark reminder to private sector landlords that they must comply with the HMO rules.

“Where properties are found to be operating without the required licence, the council will take steps to secure a licence application and ensure the HMO is safe to live in.

“Where unlicensed HMOs are identified, the council will consider legal action, which can involve prosecution in court and financial penalties of up to £30,000.”

The council’s private sector housing team encourages anyone operating an unlicensed HMO with five or more residents to contact the council to discuss applying for a licence.

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LATEST: Welsh tenant fees ban in disarray following blunder

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The Welsh government has admitted it made a blunder when introducing its tenants’ fees ban and needs to claim back £4.1m in service charges paid by 4,500 social housing tenants.

It unintentionally banned collecting the levies – for grounds maintenance, the upkeep of blocks of flats cleaning windows and other jobs – from social housing tenants with assured short-term tenancies.

Now, the government wants to legalise the fees that were charged by 33 registered social landlords and 18 third-sector providers of supported accommodation, but there are fears this could disrupt tenants’ benefits and threaten some landlords’ finances.

A majority of Senedd (pictured) members have passed an amendment to a Welsh housing bill to make the payments legal.

Under the terms, landlords will be barred for six months from issuing a no-fault eviction order on tenants who have been paying the unlawful fees.

This was agreed despite advice from the Welsh Parliament’s legal services – leaked by MS Neil McEvoy – which said the parliament could not make laws on the landlords concerned.

Breach of contract

It suggested this would not make it impossible to evict a tenant for not paying the prohibited fees, because they could still be in breach of contract.

The Welsh Government paper on the amendment says that if social housing providers stopped charging, tenants could face having their benefits reassessed, which could leave them without benefits while their claims are looked at.

Landlords might also be unable to continue providing accommodation if they have to hand the money back.

The tenants’ fees ban, which was introduced in June 2019, makes it illegal for letting agents and landlords to charge anything other than permitted payments including rent, security deposits, holding deposits, utilities, council tax, green deal charges, payment in default (when a tenant breaches a contract), and payments in respect of council tax, utilities, a television licence, or communication services.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Welsh tenant fees ban in disarray following blunder | LandlordZONE.

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LATEST: Property ‘guru’ declared bankrupt leaving creditors £4.9m out of pocket

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Property guru Glenn Armstrong, of Property Millionaire Academy, has been declared bankrupt, owing £4.9 million to dozens of creditors.

Armstrong, who has appeared on Channel 4’s How the Other Half Live and The Secret Millionaire, has spent years selling courses and home study programmes for people wanting to make cash out of property. He now has 21 days to appeal the decision.

His bank accounts will now been frozen and an insolvency practitioner will go through his affairs; 38 creditors are listed in the court papers, each looking to claim back huge amounts of up to £537,000.

Armstrong also has 10 unpaid county court judgements against his related companies dating back to 2017, totalling £566,987, as well as 10 unpaid personal county court judgements totalling £418,342.

Crimestoppers

In addition, Armstrong has been reported to the CrimeStoppers COVID Fraud Hotline by journalist Chris Mitchell, who says it has opened a file for investigating fraudulent Bounce Back loans.

Armstrong was one of many property gurus who posted videos discussing the loans, and although he was one of the more cautious advice givers, suggested these loans could be used in some circumstances to buy property.

Mitchell’s website – glennarmstrong.org.uk – asserts that over the last few years, hundreds of people say they have lost money when investing via his various businesses.

Mitchell says it’s the third time the high-profile investor has been declared bankrupt – once in 1992 and again in 2006 – and that creditors had previously found it hard to go to the police and explain what had happened to them because the financial circumstances were so complicated.

“It’s great that this will send the public a message,” says Mitchell. “I know many people who have given him money – one woman was an NHS worker who gave him £10,000. He won’t be able to do any property investment if he’s bankrupt as the insolvency practitioner will be hot on his heels.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Property ‘guru’ declared bankrupt leaving creditors £4.9m out of pocket | LandlordZONE.

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Can CVAs be used to rewrite lease agreements when a company is not insolvent?

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A company voluntary arrangement (CVA) is a procedure that allows a company to settle its debts by paying only a proportion of the amount that it owes to creditors, or to come to some other arrangement with its creditors over the payment of its debts.

The CVA is seen by many as the best rescue tool for a company that is viable going forward if it can unburden itself of some or all or its debt allowing the company directors to trade out of their current financial problems.

Increasing pressure is being placed on those retailers and those in hospitality as a result of the current pandemic which is bringing about an increasing use of CVAs in these sectors.

But a question that arose in the Irish Republic, and one that could have lessons for the UK, is, can retailers and other tenants legitimately use the CVA mechanism simply as a means of re-writing the terms of their leases?

The decision in the Irish Courts in the case of New Look Retailers (Ireland) Ltd v Companies Act 2014, goes as a warning to UK retailers and other companies not to use or to misuse the CVA process to try to force landlords into accepting changes to lease terms.

The Irish Court’s power to appoint an examiner, according to internationallawoffice.com, “is triggered both where a company cannot currently pay its debts and where it is unlikely to be able to pay its debts, at some (unspecified) point in future.”

At the time of its application in August 2020, New Look had cash reserves of €15.6 million. Its application was based on an assumption that the company could go bust in the future.

New Look Retailers (Ireland) Ltd (a subsidiary of the UK company) applied to enter into CVA “examinership” under Irish law to seek rent cuts from its landlords, despite the fact that the company was not insolvent. The Irish High Court however, refused to appoint an examiner. This was, it argued, on the basis that to do so would be “entirely premature”.

The Company has received strong criticism of its attempts to use the CVA insolvency procedure in order to secure rent reductions on its stores, without first trying to negotiate with its landlords.

Resulting from the case was guidance given from the Court that landlords must take steps to negotiate with their landlords and to try to resolve matters and reach a settlement of their differences before they resort to the legal protection afforded by a CVA – a CVA is not intended or designed as a legal mechanism to be used to beat down landlords into submission over a demand for a lower rent.

The New Look Company had been incorporated in 2003 and is a subsidiary of the UK-based New Look Retail Holdings Limited. It has 27 stores in Ireland all operating under long leases.

The company had been making profits over recent years but had suffered heavy losses following store closures during the pandemic. The Company argued in its application that with an estimated turnover down almost 60%, a reduction in its rents for its 27 stores was essential to its survival.

However, the Court rejected the Company’s argument that based on an independent expert’s report they would be insolvent by October 2020, and the Court took into account an opposing report prepared for the landlords by Grant Thornton that showed the Company would have the funds to pay its debts.

The Court used its discretion to refuse the petition to appoint an examiner, the Judge ruling that it would be premature to appoint an examiner as the alternative of negotiating with landlords had not been pursued

The Irish case has obvious implications for the use of CVAs England. According to internationallawoffice.com, CVAs are a tool for creditors and distressed companies to reach a genuine, negotiated compromise and should not be used opportunistically by tenants to rewrite tenancy agreements.

In the New Look case, the tenant’s failure to even attempt to negotiate with their landlords at the outset prevented the Court from allowing the application to appoint an examiner. Given that the country has gone into further lock-down restrictions, and these issues are likely to persist for some time, the outcome of this case should be borne in mind by retailers and other commercial tenants.

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Council tax per room for HMO in Nottingham!

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Hello all, I wanted to make fellow landlords and agents aware of a situation we are facing in Long Eaton, Nottingham. A recent ruling by the Valuations Office has ruled that a newly converted building providing 8 luxury ensuite bedrooms (HMO) is to be classed as separate dwellings and each tenant will be liable for council tax.

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Cold Weather Payments

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What are Cold Weather Payments?

Tenants facing financial hardship due to Covid-19 may be eligible for Cold Weather Payments. The Cold Weather Payment scheme runs from 1st November 2020 to 31st March 2021.

Tenants will get a payment of £25 if the average temperature in their area is recorded as

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Shelter and NRLA say both landlords and tenants must get Covid funding soon

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Shelter and the National Residential Landlords Association (NRLA) have appeared on BBC R4’s You & Yours programme, making a united call for the government to support landlords and tenants during the pandemic.

While the organisation and charity don’t always see eye-to-eye, they’re both demanding financial support to help tenants clear Covid-related arrears.

On the programme, they responded to Ian’s story, a tenant from Worthing interviewed about his £2,700 debt, who has been served with a notice to quit.

After losing his job in events last March, Ian admitted that he’d had different conversations with his landlord and letting agent.

“The landlord tried to give me some assurance that if I managed to get up to date with rent by April then he may reconsider moving forward with the eviction process,” said Ian.

Hard-faced

“However, the lettings agent was more hard-faced – they want the money paid immediately which is not possible when you can’t work.”

The NRLA’s deputy director of campaigns, public affairs and policy, Meera Chindooroy (pictured, above) explained to listeners that most landlords who have faced a reduction in rent due to the pandemic had covered losses from their own savings – but that the situation wasn’t sustainable.

“Government support hasn’t reached landlords – they haven’t been eligible for Bounce Back Loans or self-employment support,” said Chindooroy.

“We are calling for the government to provide financial support for landlords and tenants to help to sustain tenancies in the long term.”

Shelter’s policy manager Ruth Ehrlich (pictured) agreed that most tenants and landlords were trying to do all they could to work through the crisis.

She added: “We completely agree that the government now needs to step in to help renters like Ian to clear his arrears. It’s not right that right now, when the virus is running rampant, that people are losing their homes.”

Watch the BBC Radio 4 show.
Read more about Shelter.

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Repossession claims down since lifting of ban

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Warnings of a surge of evictions following the partial lifting of the repossessions ban in September last year have proved to be unfounded according to government figures released today.

Data published by the Ministry of Justice shows that in the fourth quarter of 2020

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BREAKING: DOJ’s own figures show evictions ‘tsunami’ has failed to materialise during Covid

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Warnings by many tenant charities that there would be a surge of evictions following the partial lifting of the repossessions ban in September last year have proved to be unfounded, government figures released today show.

Ministry of Justice figures reveal that during the final three months of last year the number of claims made by private landlords in England and Wales to repossess properties fell by 37 per cent compared to the same period in 2019.

This is despite the courts beginning to hear possession cases again following a six month stay on proceedings in response to the COVID-19 pandemic.

The number of possession claims made under the accelerated procedure, used by both private and social landlords, also fell by just under 43 per cent in the fourth quarter of 2020 compared to the same period in 2019.

Overall, across the whole of 2020, the number of claims by private landlords to repossess properties fell by 48 per cent, with the number of claims made under the accelerated procedure fell by just over 52 per cent.

Rent debt crisis

Despite these positive figures, the NRLA says the scale of the rent debt crisis now engulfing the sector means that without further government support, landlords cannot continue that support indefinitely.

Its research shows that over 800,000 renters in England and Wales have built arrears since lockdown measures started in March last year.

The NRLA is calling for a package of hardship loans and grants for affected tenants to pay off arrears built since March last year, ensuring tenancies are sustained and preventing many renters facing the consequences of damaged credit scores.

“Today’s figures show that despite fears to the contrary, landlords have prioritised sustaining tenancies and supporting renters during the pandemic,” says Ben Beadle, its chief executive.

“That said, landlords cannot continue indefinitely going without receiving rent.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – BREAKING: DOJ’s own figures show evictions ‘tsunami’ has failed to materialise during Covid | LandlordZONE.

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