Trading standards probe agency that collapsed owing landlords £466,000

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The financial mess left by the collapse of a West Midlands estate agency in February has prompted local trading standards to investigate how the company came to owe £1.3 million to over 300 creditors including £460,000 in missing rent owed to landlords.

As we reported in February, Homepoint Estate Agents Ltd, which until recently traded as Home Point run by Sutton Coldfield businessman Ajit Singh Pooni, is now being put into liquidation.

Trading standards officers in Dudley, where the firm also had a branch, are now looking into how deposits paid by tenants to the value of £118,145 were not put into a government-backed scheme, or that rents totalling £459,553 were not passed to landlords.

A report from the insolvency practice dealing with the company says that, although some rental deposits were lodged with a government-recognised scheme, a significant number were not.

Client money

Both of these creditor groups are lucky that Home Point was signed up to client money protection scheme CMP, which so far has received claims from 14 landlords and six tenants, LandlordZONE can reveal.

Local councillor Ian Kettle has taken up the case of the tenants, revealing that many are fuming that Pooni failed to lodge their deposits with an approved scheme as he was required by law to do.

Councillor Nicolas Barlow of Dudley Council told the Express & Star that his trading standards officers were currently investigating concerns “raised in regards to this company and we are therefore unable to add anything further at this stage”.

Pooni has been contacted for comment by the paper but has not responded.

His former company’s remaining clients have now been transferred to a new company run by his wife with a similar name operating out of the same premises, leaving behind several major creditor including £72,078 in unpaid VAT, £160,347 owed to his bank Lloyds, and a £50,000 Bounce Back loan.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Trading standards probe agency that collapsed owing landlords £466,000 | LandlordZONE.

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How secure are classified sites? Another tenant scammed by fake landlord via Gumtree

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A tenant has been scammed by a Gumtree advertiser who stole more than £2,000, leaving her facing homelessness.

Mum-of-four, Shirley Jones, from Coventry, fell for the flat rental scam after answering the advert for a three-bedroom home in Nuneaton that was available to rent on the classified site.

But after forking out £2,250 as a deposit and moving in, she found out her new landlord was a tenant at the property and had no right to lease it to her. The 46-year-old has now been left without enough savings to get a new home.

Shirley claims she contacted the purported owner of the property and after a few conversations agreed to pay £2,250 to secure it. She says: “I don’t know what’s going to happen now. I could be kicked out and made homeless. I’ve spent ages saving up to move and found this one on Gumtree and thought it would be perfect. Now I’ve been scammed.”

Fraud

Gumtree says it takes all allegations of fraud extremely seriously. A spokesman tells LandlordZONE that it requires property ads on the site to comply with government regulations for property advertising.

He says: “We also list safety advice for prospective tenants on our website, which recommends that all potential tenants check the relevant paperwork, ask to see proof of ownership, and ensure a tenancy agreement is in place before paying deposits or holding fees.”

He adds: “Whilst fraudulent adverts are uncommon, we urge anyone who thinks they may have come across a scam to report it to us immediately via the ‘Report this ad’ button so that our dedicated trust and safety team can take necessary action. This could include removing adverts and blocking offending users, as well as supporting law enforcement in their investigations.”

It is almost exactly a year to the day since another high profile scam was uncovered; when a young couple lost £800 in almost identical circumstances.

West Midlands Police are investigating the case. 

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REVEALED: Why not all EPCs are created equally

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Getting a good EPC rating is important for rentals to meet the MEES regulations, and in future even higher ratings will be demanded, but this can be a challenge for some landlords…

Since October 2008, rental properties in England and Wales have been required to have an Energy Performance Certificate (EPC).  On April 1^st 2018, the Minimum Energy Efficiency Standards (MEES) came into force. This required all rental properties of new tenancies and renewals to have a minimum EPC rating of ‘E’ or above. In the future this requirement is likely to may move to a “C”.

But for various reasons rental properties in particular may fail to meet these standards.

Ask any Domestic Energy Assessor dealing with rental properties and they will tell you that in most cases when doing an assessment, they find the property empty.

Because the owner (landlord) is usually not available to answer any queries the assessor must make certain assumptions and these will always assume the worst-case scenario.

For example, it is usually not possible to determine major structural features such as if cavity wall insulation is installed. If rendering or external cladding is insulated, if insulation has been installed through removing bricks as opposed to drilled holes. If under floor insulations exists etc.

Where the assessor cannot be sure that insulation techniques have been applied, either from the build time, which assigns the insulation and standards set out in the building regs at the time the property was built, or retrospectively. Any rating applied will be assigned “As built”. This same approach will be taken on several other aspects of a building.

Whatever work has been done to improve the property’s rating can easily be negated simply because there was no one there to explain to the assessor exactly what has been done. Providing photographic evidence and invoices to so show what has been done is advisable when it is impossible to see improvements, or exactly what work was carried out.

Cooking on gas

Another vital piece of information, and this problem occurs most in rural situations, is when non-standard fuel such as LPG is used for heating and cooking etc.

By some quirk of the standard assessment protocol used by the energy assessment computer algorithm, mains gas gets a high score, whereas oil will be marked down and LPG even more so.

LPG (Liquefied Petroleum Gas) which is used in many rural locations where mains gas is not available is a hydrocarbon gas that exists in a liquefied form. LPG is a colourless, low carbon and an efficient fuel, but it is more expensive and fuel cost is a factor taken into consideration by the energy assessment.  

Supplied in two main forms, propane (C3H8) and butane (C₄H₁₀), LPG has a range of uses – from providing fuel for leisure parks, crop-drying, BBQs, heating homes and much more.

If in doubt about the detail of assumptions made during an EPC assessment, take a look and the “summary of this homes energy performance related features” table on page 2 of the EPC. This will indicate a star rating given to the main energy features.  In general LPG will automatically be rated as “poor”.

Longstanding concerns

UKLPG, the trade association for the Liquefied Petroleum Gas (LPG) industry has raised longstanding concerns about the EPC calculation methodology used to measure energy efficiency, as it argues this places disproportionate focus on the cost of the input fuel rather than the building fabric.

The association showed to a BEIS Select Committee as part of their recent inquiry into Energy Efficiency that this policy directly impacts off-grid homeowners and the effective implementation of decarbonisation policy, with an unintended consequence being that homeowners are moving away from low carbon fuels such as LPG to higher carbon alternatives simply in order to gain a higher EPC rating on their property.

The EPC rating is supposed to be a measure of the energy efficiency of a building, but in reality argues UKLPG , the rating is actually a measure of energy cost per m2. This method is particularly distorting when comparing various fuel types between similar properties and creates a particular problem for off-gas grid properties where all fuel options (heating oil, electricity, solid fuel or LPG) are more expensive than natural gas, UKLPG says.

Off-grid properties are instantly disadvantaged as their location dictates their fuel options, which automatically results in lower EPC ratings than their mains gas counterparts. For example, an identical property built to the exact same standards will receive a much lower rating if it happens to be situated outside the coverage area of mains gas.

So no matter what efforts are made on the insulation from, heating fuels can bring down the rating and often there’s not a lot can be done about that.

Find out more about EPCs.

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Greatest excess of demand over supply in the last ten years

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The latest Rightmove House Price Index shows the Greatest excess of demand over supply over the past ten years, pushing up the average price of property coming to market by 0.8% (+£2,484) this month.

The Number of potential buyers enquiring about each available property on Rightmove in the month is at a record 34% higher than the same period a year ago

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Communal “garden grab”?

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Like many leaseholders up and down the land, the development I live in has a few parking issues (albeit manageable ones). These are caused by leaseholders owning more than X vehicles (contrary to the terms of the lease), and is a bit more of an issue currently due to the increase in people working from home.

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Sheffield to consider city-wide selective licensing after pressure from campaigners

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Sheffield council is to consider a city-wide selective licensing scheme, a move that has been hailed as a victory by fast-growing tenant advocacy organisation Acorn.

The campaign group has presented a list of 50 rogue landlords to council officers and also begun campaigning on the streets to highlight its calls for a city-wide scheme.

Like many other metropolitan areas around the UK, this would see all landlords required to register and licence their properties, usually for a fee of between £500 and £750 payable every five years.

The undertaking from the council was made by neighbourhoods and communities councillor Paul Wood following a question by an Acorn representative during the most recent full meeting of the council.

She said: “We believe this is a crisis that requires urgent action. We have seen landlords refusing to fix mould, not lodging deposits and executing revenge evictions. Acorn is calling on the council to introduce city-wide licensing for rental properties.”

Wood replied, saying that the council takes PRS landlords and the quality of their housing very seriously, and that his department had recently introduced a council-accredited landlord scheme and was about to invest heavily in enforcement after years of under-funding.

He said a working group was looking at extending the city’s selective licensing scheme, and would consider both the additional costs and establish which areas most needed selective licensing.

The promise by Sheffield to examine a city-wide scheme is an example of the growing influence of Acorn, which has expanded rapidly both geographically and in influence in recent years, moving from tackling individual cases of rogue landlord activity to wider policy-driven campaigning.

“After years of fighting for a crackdown on Sheffield’s rogue landlords, union power is finally getting big results from the council,” it said on Twitter.

Sheffield already has selective licensing in three areas of the city which were introduced in late 2018. Last year its landlords association was disbanded and became a district of the NRLA.

Predictably, Acorn make no mention of a recent survey of tenants in the UK published in January. It revealed that landlords in Sheffield were among some of the best in the UK.

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Government to make buying local authority-owned plots easier for property investors

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Property investors are being asked to have their say about plans to make it easier to free up unused or underused land owned by public bodies after a previous scheme led to just one plat being released.

The Ministry of Housing, Communities and Local Government has launched a consultation to help shape a reform of the Right to Contest, to make the process more efficient. 

Right to Contest currently allows people and businesses to request a disposal of unused or underused land, including vacant homes and garages, but it’s so little-known that only one direction to dispose has ever been issued.

Right to Regenerate

Following the consultation, it will be relaunched as the Right to Regenerate and should prove to be a quicker and easier way to identify, buy and redevelop land and bring it into better economic use. The aim is to regenerate local areas across England by providing new homes. 

Launched in 2014 with great fanfare by the then Conservative government as ‘opening up £330 billion of property, since then a paltry 192 requests have been submitted.

Of these, 145 were refused, 10 were withdrawn, nine are still pending, 27 were not a valid request and one direction to order disposal was issued. Many requests are refused because the public body declares that it has an intended use for the land. This can mean some sites are left unused or underused for long periods while those plans materialise.

The government is considering incentivising temporary uses by ordering sales. It could also introduce a ‘right of first refusal’ to those who make the request, recognising that they might need extra time to prepare a bid. This would usually be for market value and would be for a limited period. 

The consultation questionnaire, which closes on 20th March, can be done online.

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BREAKING: Rents rising at fastest rate for six years as supply dwindles

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Half of all landlords re-letting properties this year have been able to capitalise on the lack of available homes and increase their rent.

Research by Hamptons shows that would-be tenants are now faced with significantly less choice meaning that landlords have raised rents by an average of £60 per month. 

It reports that rental growth nationally has been fuelled by a lack of stock; 300,000 fewer properties have come onto the rental market since the onset of the pandemic, nearly a fifth less than during the preceding 12 months.

The urban-rural divide has also continued to deepen, with 16% more homes available to rent in cities in February 2021 than at the same time last year, while towns and country locations recorded falls of 28% and 52% respectively.  

Record rents

Rental growth outside London hit the highest figure on record since its monthly lettings index began in 2012; the average rent of a newly let property is now 8% or £68 per month higher than it was in February 2020. Across Great Britain, rents rose 5.6%, the fastest rate of growth since February 2015.

London is the only regional exception. Across Greater London rents fell 0.2% year-on-year, with the drop driven by falls in Inner London. In line with weak rental growth in the capital, fewer London landlords (37%) were able to secure higher rents, marking the lowest proportion recorded in any region.  

However, head of research Aneisha Beveridge (pictured) believes there are signs of change as landlords looking to beat the original stamp duty deadline of the end of March, made more buy-to-let purchases.

She adds: “Meanwhile, the government announced a new Mortgage Guarantee Scheme in the budget which is aimed at helping would-be buyers with small deposits, many of whom are currently renting. Both factors, alongside the ending of the eviction ban in April, mean rental stock levels may have bottomed out.”

Visit Hamptons.

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Budget 2021: More help for homebuyers

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Chancellor Rishi Sunak’s Budget 2021 seems too good to be true for homebuyers, so here’s a look at what 95 per cent mortgages and an even longer Stamp Duty holiday means to both landlords and residential homebuyers.

With some delight, the Chancellor echoed the sentiments of Prime Minister Boris Johnson when he explained the Government’s goal of turning generation rent into generation buy.

What he said did not really come as a surprise as both measures were extensively leaked to the media some days earlier. However, papers published alongside the Budget 2021 speech added more information about what his plans mean for homebuyers.

Stamp Duty holiday extended

The Land Duty Stamp Tax – better known as Stamp Duty – holiday has been extended for house buyers in England from 31 March 2021 to June 2021.

“Extending the Stamp Duty holiday will help many landlords who would not have met the original deadline and I predict this will stimulate further sales” said Daniel Lee, Principal at Hamilton Fraser Total Landlord Mortgages.

Landlords should act sooner rather than later if they want the best Stamp Duty deal as the Chancellor plans to raise the bar again at the end of June before taking the rate back to pre-holiday levels in October.

The Stamp Duty holiday rates below apply to homebuyers in England and Northern Ireland. Scotland and Wales set their own taxes with different rates and thresholds from those in England.

The additional home rates for landlords and second homeowners remain unaffected by the Stamp Duty holiday.

These are the key dates and figures you need to keep in mind:

Stamp Duty rates until 30 June 2021 – If you buy a home valued at no more than £500,000, there’s no Stamp Duty to pay

                    Source: HM Revenue & Customs

Example

In March 2021 you buy a house for £625,000. Stamp Duty is calculated as:

• Zero per cent on the first £500,000 =                      £0
• Five per cent on the remaining £125,000 =           £6,250
• Total stamp duty =                                                       £6,250

Stamp Duty rates from 1 July to 30 September 2021 – The zero rate threshold drops to £250,000.

First-time buyers pick up an extra discount from 1 July 2021 which keeps their zero rate threshold at £500,000 if they are genuine first time buyers and the property is valued at £500,000 or less.

Source: HM Revenue & Customs

Stamp Duty rates from 1 October  – The zero rate threshold drops again to £125,000, which is the same as before the stamp duty holiday started on 8 July, 2020.

Source: HM Revenue & Customs

What is the 95 per cent mortgage scheme?

When the property market in England reopened last spring, only a handful of low deposit mortgage deals remained, as banks and building societies reined in 95 per cent mortgage offers in the wake of the coronavirus pandemic.

Although nearly a year on from the outbreak of the pandemic, lenders are starting to offer low deposit deals again, the number of high loan to value loans plunged from nearly 400 a year ago to just five last month. And these were mostly special deals that were not available to every customer.

To free up house sales, the Chancellor needs to give cash-strapped buyers who can’t afford large deposits an incentive to borrow. He also needs to sweeten the deal for banks and building societies.

This is where the 95 per cent mortgage guarantee scheme comes in, as an attempt to appease both sides and bring back the low deposit mortgages that he previously said had ‘virtually disappeared’.

The guarantee is straightforward.

The Government will guarantee the high loan to value portion of the mortgage, which ranges from 80 per cent to 95 per cent of a property’s value. The buyer stakes five per cent and the mortgage lender covers the rest.

If the borrower defaults and the property is repossessed, the Government will settle the guarantee.

Most of the big lenders have already signed up, including the high street banks Lloyds, HSBC, NatWest, Santander and Barclays.

However, there are some conditions:

• The borrower must have a good credit rating

• The home must cost no more than £600,000

• The property must be the borrower’s main home – no holiday lets, second homes or rental properties are allowed

• First-time buyers and movers can apply for the guarantee

Details about interest rates are still awaited, but the rate is expected to be around 3.5 per cent to 4 per cent and the Government is demanding lenders offer a five-year fix without any expensive product fees.

Affordability will be assessed in the same way as standard mortgages.

What we think about Budget 2021 for homebuyers

“Although landlords don’t stand to benefit directly from the 95 per cent mortgage scheme, both these announcements are evidence of how in times of financial strain the Government will step in to keep the property market strong.

“With the Bank of England interest rate staying low, the Stamp Duty holiday extension and the 95 per cent mortgage scheme, along with the hope of coming out of this difficult period in history this is another sign of why people put their faith in bricks and mortar.” Daniel Lee, Principal of Total Landlord Mortgages.

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