BREAKING: Home Office to bring in unlimited fines for landlords who break fire safety rules

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HMO landlords and their managing agents could face unlimited fines following new measures revealed by the Home Office today.

It says, once legislation is in place, the unlimited fines will be handed out to building owners who are caught obstructing or impersonating a fire inspector as well as to those who breach fire safety regulations under the soon-to-be upgraded Regulatory Reform (Fire Safety) Order 2005 legislation.

This excludes domestic properties but includes HMOs and some other multi-tenancy residential properties.

The announcement follows a consultation that began in July last year prompted by the Grenfell Tower tragedy, the results of which will be incorporated into the Building Safety Bill.

As well as unlimited fines, these measures will include mandatory fire risk assessments to be recorded for each building and improvements to how fire safety information is communicated to regulatory authorities throughout the lifetime of a building.

HMO landlords and agents will have to up their game; the new measures include improving the quality of fire risk assessments and competence of those who complete them.

Read more about the existing Fire Safety Order regulations.

Also, the government is to strengthen the guidance issued under the Fire Safety Order so that failure to follow it may be considered in court proceedings as evidence of a breach or of compliance. 

“Everyone should be safe in the buildings where they live, stay or work,” says Fire Minister Lord Greenhalgh (pictured).

“Our new measures will improve fire safety and help save lives, but will also take firm action against those who fail in their duty to keep people safe.”

Read the government’s consultation response.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – BREAKING: Home Office to bring in unlimited fines for landlords who break fire safety rules | LandlordZONE.

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ANALYSIS: London’s battered rental market could soon be in for a revival

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With rents falling in some locations by up to 30%, there are now early signs that the worst may be over, says Tom Entwistle

Abandoned offices, few returning foreign students or corporate moves, the flight to the suburbs and the countryside, all have contributed to the dearth of renters in parts of the capital that once thrived with activity.

Tourist flight has meant that many of the more profitable short term (Airbnb) type lets on the market have had to migrate to an already depressed long-term rental market. More vacant property chasing fewer renters inevitably means a drop in rent values.

In some parts of the capital, according to The Daily Telegraph, rents have fallen by as much as 22pc, but agents are now seeing renter registrations up 44pc year-on-year

Fastest drop

February saw the fastest drop in rental values for flats and homes in central London since the start of the pandemic last March, as hordes of working tenants moved out of the capital. But already, landlords and tenants are looking beyond the crisis and landlords and agents are anticipating a post-lockdown bounce.

The Economic Statistics Centre of Excellence (ESCoE) has estimated that around 700,000 people abandoned the capital during 2020 and early 2021, many of them returning to their families in their countries of origin, as the industries they we employed in were shut-down.

The result was a collapse in the demand from these workers, predominantly renters, who did not renew their rental contracts. The lack of a tourist trade, meanwhile, means that short-term lets have been moved to the longer-term rental market.

30% drops

Amelia Greene, of Savills estate agents told The Daily Telegraph that in some of the most expensive locations in London landlords were accepting drops as a much as 30% due to a glut of vacant residential space: “We saw really dizzy heights of supply,” in locations such as St John’s Wood, Chelsea and Mayfair, she said.

Another London agent, Richard Davies, of Chestertons estate agents, had said: “The number of available properties to rent is 83pc higher than this time last year.” But supply and demand are patchy, with big variations across the capital. In some central and eastern districts rental values have fallen by over 20% whereas southwest London has seen falls in the region of 7%.

Bargains

Some tenants are taking advantage of the situation by moving around for bargains, but this is not likely to last as agents such as Foxtons are reporting prospective tenant registrations up over 40% year-on-year. Currently tenants are moving simply to try and lock in a better deal. Foxton’s Ed Phillips has said that “Tenants are trying to lock in deals for as long as possible. They want three-year tenancies.”

Anticipating a revival most landlords are resisting the temptation to take on long-term low rent commitments. According to Mr Phillips the average length of a new tenancy signing is 12.2 months, which is down from 15 months before the pandemic, and in 2019, it was 18 months, he said.

Expectations are beginning to change. If the Government’s opening-up plans go as expected there the will be something of a bounce-back to work in central London offices. Many people have had enough of working entirely from home, and the home working / office working debate will perhaps see a conclusion – no doubt some sort of middle way will develop, a hybrid system of working.

Corporate slump

Corporate relocators made-up nearly 40% of the prime central London lettings market before the pandemic, and now this is only 10%, that’s according to Amelia Greene. So a return to offices will see a big jump in demand. London university intakes in the autumn could also see a rebound with foreign graduate students making up a large cohort of potential new renters.

The return of tourists may be a longer-term prospect but as they do return more of the longer-term rental market will return to the more lucrative short-term (Airbnb style) holiday lets.

Questions still remain as to the speed of a recovery and a return to the central London offices. Will there be more spikes in the virus, will lockdown be lifted successfully, will some people continue to work from home outside of the capital? All these are legitimate questions and uncertainties, but the signs are that there is a determination and a commitment to gradually return to normal.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – ANALYSIS: London’s battered rental market could soon be in for a revival | LandlordZONE.

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LandlordZONE poll on rent arrears kicks off a Twitter storm

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A LandlordZONE Twitter poll asking if tenants should have their rent arrears written off by landlords has gone viral, sparking strong and even violent feeling among many radical tweeters.

The hot topic attracted nearly 2,000 votes and was evidently shared among many anti-landlord, pro-tenant groups, which meant the outcome was that a predictable 66% of respondents voted yes and only 37% disagreed.

While Twitter is no reflection of real life, many landlords came to the sector’s defence and questioned whether they should have to be responsible for supplying free housing, although the anti-landlord brigade was more outspoken.

One said: “Yes absolutely. Lots of us have lost income over the last year that isn’t going to come back. If you’re a landlord and struggling, get a proper job.”

Nationalisation call

However, the bile shown by some activists towards landlords was worrying, with one post insinuating that they should be shot and many others calling for housing to be nationalised as it was during Mao’s years in China.

One, going under the name Trotsky of the 21^st Century, said: “I answered no, because ‘landlords’ shouldn’t exist as an economic category.”

Another even started his own poll asking whether landlords should have their properties compulsorily purchased and handed to tenants, offering the sardonic option of only either ‘yes’ or ‘yes’. It managed to garner 137 votes.

Rent arrears

The more serious purpose of our poll was to highlight the looming rent arrears crisis that threatens to overwhelm the sector when the eviction ban ends.

Many charities and housing groups including the National Residential Landlords Association have called for the government to introduce tenant hardship loans for renters in England impacted by the pandemic, particularly as their counterparts in Scotland and Wales can already access them.

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Welsh Eviction Ban extended to end of June

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The Welsh government will extend the current restrictions on evictions, which are due to expire on 31 March, to the end of June 2021 although the restrictions will, as with other coronavirus restrictions, be subject to regular review during that time.

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Stolen white goods and furniture?

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The Tenant deposit protection scheme has turned down my claim for what the tenants have acknowledged being a missing brand-new fridge freezer and sofa. They reported it to the police as stolen.

The DPS has suggested I take legal advice.

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LATEST: Debenhams store’s rental conversion reveals high street ‘structural shift’

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A decision by shopping centre giant Hammerson to redevelop a former Debenhams store in Leicester into rental apartments has been heralded as a turning point for traditional high streets.

The announcement comes just five days after Hammerson posted its largest annual loss ever of £1.7 billion.

The firm’s UK and Ireland boss Mark Bourgeois says the landmark development follows huge changes to the shopping landscape as online shopping and Covid have impacted consumer behaviour.  

Hammerson has announced that it has applied to Leicester City Council for change of use permission for the former retail store at High Cross, St Peter’s Lane (pictured).

“While the structural shift in retail and changing consumer shopping habits have meant that destinations such as Highcross need to adapt their offer and mix of uses, well-connected city centre locations such as this will always be places where people want to be,” he says.

Hammerson is working with build-to-rent developer and management specialist Packaged Living, which already operates some 2,000 units across the UK to prepare its planning proposals (see main pic) and redevelop the site.

The Leicester site is to hold 300 apartments all of which will be rented out and follows a consultation with local residents which saw 80% support the new approach for the site.

This is because, it is understood, the green and also high-quality apartments will be targeted at ‘local residents’.

“We are delighted to submit this proposal for high-quality homes for local people to rent, which will support our brands at Highcross and contribute to the continued success of Leicester City Centre,” says Bourgeois (pictured).

Read more about build to rent.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Debenhams store’s rental conversion reveals high street ‘structural shift’ | LandlordZONE.

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YOUR forum questions answered: Early termination fees and invoices

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The hugely popular LandlordZONE forum is a friendly community where landlords share their experiences, exchange tips and ask for advice. Here we answer a recent question and ask the experts at Hamilton Fraser to give their best answer!

The question:

The tenant wants to leave the rental property before the end of the tenancy and is questioning whether the early termination costs the agent is asking for are reasonable. The landlord is happy to agree to an early termination of the tenancy, providing another tenant can be found and the tenant carries on paying the rent in the meantime. The tenant intends to help find a replacement tenant themselves. Are the costs proposed by the agent for early termination reasonable?

The answer:

Suzy Hershman (pictured, below), Head of Dispute Resolution at mydeposits, part of the Hamilton Fraser family, explains:

We’ve been getting a lot of queries relating to the topic of early termination fees at mydeposits recently, highlighting that many tenants, landlords and agents don’t yet fully understand the importance of providing evidence in this type of scenario, following the implementation of the Tenant Fees Act (TFA).One of the changes the TFA introduced when it came into force in 2019, was changes to early termination fees. Although the TFA prohibited agents and landlords from charging fees to tenants, the act clearly lists early termination fees as a ‘permitted fee’ – one that can be charged to a tenant.

But, although early termination fees can be charged to a tenant, any early termination charges must be reasonable, clear and backed up by evidence of their actual costs. This is quite a significant change – before the TFA came into force, if a tenant disputed early termination fees and a case went to a mydeposits adjudicator, we would award if the tenant had simply been given a cost breakdown of the re-letting costs and any commission fees. The tenant could then choose whether to accept and move out or disagree and stay. If the tenant disputed the fees, we would have been unlikely to accept a dispute, although we might have taken a view in relation to the ‘reasonable’ test (which I’ll explain below).

The key change, following the TFA, is that agents and landlords must prove that they are out of pocket as a consequence of the tenant ending the tenancy early, by providing evidence in the form of invoices for the actual costs incurred. Before the TFA, we did not require invoices to make an award. Now, if the tenant disputes the proposed cost, the landlord or agent will only be able to charge fees if they have invoices to prove the loss.

Agents may generate their own invoices if the property is fully managed, or landlords and agents may have separate invoices for costs such as marketing the property or referencing prospective new tenants. All of this will be valuable evidence when it comes to proving reasonable costs.

We do have some discretion when making decisions, and this is where the ‘reasonable’ test comes in. This could apply to the specific question in the scenario outlined on the Forum, if the tenant is successful in finding a replacement tenant. It is likely to be unreasonable to award a claim of £750.00 for re-letting fees where a tenant has asked to leave early, disagreed with the proposed costs, and found the new tenant themselves before leaving. My view is that a landlord or agent would have difficulty proving this is their actual loss.

Likewise, with commission fees, it would be unreasonable to make an award where the evidence shows the agent has agreed to waive the outstanding commission in return for re-letting the property and fully managing it.

Although this approach adds more work for landlords and agents at the evidence gathering stage, ahead of a discussion or dispute, this more thorough way of doing things ties in with the transparency and clarity required by the Tenant Fees Act, and everyone knows where they stand, the tenant included.

At mydeposits, we’ve been getting a lot of questions recently on this topic in response to our new Early termination fees guide, which also provides more information on what you need to know about both re-letting and commission fees. You can read a more detailed article are sending out to our members on early termination fees and the importance of providing evidence and invoices here.

Join LandlordZONE’s forum here.

Hamilton Fraser supports landlords, letting agents and tenants by offering a range of solutions and thought leadership to help them navigate the private rented sector. Most recognised in the private rented sector for providing award winning landlord insurance, the Hamilton Fraser family includes Total Landlord Insurance, mydeposits, the Property Redress Scheme, Client Money Protect, Landlord Action, Ome, HF Assist and Total Landlord Mortgages.

Subscribe here for the latest landlord news and receive tips from industry experts.

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Selling a company with real estate portfolio?

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I’m a small incorporated landlord with a portfolio of 40 individual real estate units, namely garages. I am now considering liquidation of the company with an obvious route being selling the garages on an auction as individual lots.

Having a naturally inquisitive mind I’m trying to invent other options of achieving the same result.

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Are local authorities suppose to charge for giving Notices now?

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I am unfortunate to be given 2 Notices of improvement and a Prohibition notice because an enforcement officer decided to hand-deliver an Inspection Notice to my residential home. Incidentally, we were under self-isolation for none symptomatic covid -19.

The officer staked in his car until he saw my wife come out to put the rubbish in the wheely bin.

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Stamp Duty on Form 17 split?

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Quick query about stamp duty. My wife and I own 4 properties 50/50 as tenants in common. We have a partnership (not an LLP) i.e. our self-assessments show income from partnership to declare this property income.

We want to keep the ownerships as 50/50 but want to split the partnership to 80/20 so take advantage of my wife’s lower tax rate.

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