LATEST: Widespread ignorance of who pays for property repairs revealed

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Renters spend an average of £443 on repairs that should legally be paid for by their landlords, according to insurance search engine Confused.com.

One in five (19%) tenants admit they’re unsure about precisely who is responsible for repairing a rental property.

Its research found that 22% tenants had paid for the cost of repairs themselves, rising to 33% for those who had paid to fix plumbing issues and 23% who forked out to have electrical issues resolved. 

The study suggests that the most common problems experienced by tenants were often the most expensive to put right.

Damp and cold

The search engine found that 42% have suffered with damp, while 30% have had to cope with living in the cold when the heating broke down. More than a quarter reported having to go without the shower or toilet due to plumbing issues.

Jessica Willock (pictured), home expert at Confused.com, says: “It can be confusing to know where the responsibilities lie when landlords and tenants enter a contract, but getting clued up on who looks after what can save money, time and make for a smoother relationship in the long run.”

Landlords are legally responsible for repairs to the property’s structure and exterior, basins, sinks, baths and other sanitary fittings including pipes and drains, heating and hot water, gas appliances, pipes, flues and ventilation, electrical wiring and any damage they cause during repairs.

Adds Willock: “Importantly, you cannot be forced to carry out repairs that are your landlord’s legal responsibility, no matter what your tenancy agreement states.”

Read more about who is responsible for repairs.

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£6 billion housing agency accused of ‘putting numbers before quality’

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Homes England, the little-known agency set-up by the Con/Lib coalition as a ‘housing accelerator’ is be put under the spotlight by its own chairman, who has promised the government he’ll undertaken a root-band-branch re-appraisal of the organisation.

This follows a critical report by Create Streets founder Nicholas Boys Smith, who slammed the agency for ‘subsidising ugly, obsolescent, alienating homes and places’ or in other words, focussing on numbers at the expense of quality living.

In 2018 the agency was given a £70 billion five-year budget to focus on boosting housing supply in the least affordable areas. Its help-to-buy loans also helped fund they agency’s own expansion from 750 staff to 1100 over three years, now with offices in Liverpool, Leeds, Newcastle, Coventry, Bristol and London.

Although the agency exceeded its housebuilding targets in the last financial year, it has come under criticism in the report for its remit to purely promote affordable homes, and the degree of risk it has taken on with its heavy exposure to the housing market.

The Boys Smith report said that previous government housing agencies had sought to improve the quality of new homes, whereas the Homes England straddles the roles of a bank, a developer, a provider of affordable housing subsidies, and a numbers machine.

By focussing on the least affordable housing authorities, typically in the affluent southeast of England, it has meant that areas in the North of England and the Midlands, a particular concern of the current Conservative’s Red-Wall policy, was being neglected.

Levelling up?

Housebuilder Gleeson’s CEO, James Thomason (pictured) has said that: “There’s way greater need in the North of England and the Midlands. Is it really the job of Homes England to funnel quite a lot of cash into the south?”

The looming report signals a change of direction as the agency’s chief executive Nick Walkley leaves after four years at the helm, with rumours of a clash with housing minister Robert Kenrick.

The root and branch review of the agency’s role ordered by Kenrick, to be carried out by its chairman Peter Freeman, is likely to result in a change of emphasis, from boosting housing supply to regional regeneration.

However, outgoing Walkley had expressed concern about using the agency as a tool of the government’s “levelling up” agenda and that “One of the real successes of the agency has been to be really clear about what we do and what we don’t do. We have expertise, money, capability and capacity around housing and land”. But by widening the agency’s remit, he worries that this could lead to poor decision making in the future.

But it looks like politics will win out: the agency is likely to become a major contributor to the government’s “build back better” campaign, helping guide and fund regeneration in the Midlands and the North of England – the Tory Red Wall.

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Welsh government must ‘get a grip’ on rent arrears crisis, warns landlord chief

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NRLA chief Ben Beadle has called on the Welsh government (main pic) to ‘get a grip’ on the rent arrears crisis threatening to engulf the country’s private rental market by improving financial support and ending the Covid restrictions that have plunged tenants and landlords into debt.

The trade association, which represents some 90,000 landlords across both England and Wales, says Ministers must revisit its separate evictions ban, which does not allow possession orders on grounds of extreme rent arrears.

It also says the Welsh Tenant Saver Loans scheme, which enables tenants to pay landlords rent arrears, must be widened to include tenants who at the moment don’t meet its narrow creditworthiness criteria.

Ministers are also being urged to let landlords know when they can expect to return to normal notice periods for evictions – since February this year they must give tenants up to six months’ notice before moving to an eviction.

“The Welsh Government needs to get a grip of the rent debt crisis that is engulfing renters and landlords,” says Beadle (pictured).

“If action is not taken now,  there will come a time when emergency measures are finally lifted when a failure to deal with rent debt will lead to tenants having to leave their homes, facing serious damage to their credit scores.

“It is time for the Welsh Government to recognise the scale of this crisis and take urgent action to help households and housing providers.”

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How will the spring budget affect landlords and investors? Belvoir CEO Dorian Gonsalves advises…

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Capital Gains Tax

Prior to the recent budget there was a great deal of speculation about whether Capital Gains Tax (CGT) would be increased to the same level as income tax. As we now know, CGT was not increased on budget day, BUT before landlords and investors breathe a sigh of relief, it is worth noting that on 23rd March the Government intends to publish a range of tax consultations, which may well include changes to CGT.

I believe it is likely that CGT will be increased, but I also think that any increase is likely to be phased in over a period of time, in much the same way that higher rate tax relief on mortgage and finance interest for higher rate taxpayers was reduced over a four-year period. This will give people the chance to plan their tax affairs. As CGT is a tax on profit resulting from the sale of an asset there will be many people, landlords included, who may be at the end of their investment cycle and will be particularly concerned if CGT is increased. Some sort of phased approach is certainly the lesser of two evils when compared to an immediate increase.

Corporation Tax

I think all of us of are expecting to pay more tax in the years to come, but it will be interesting to see whether Rishi Sunak uses ‘tax day’ on 23rd March to completely overhaul some elements of our tax system. This is definitely a day to look out for if you are a landlord or an investor!

In the budget Rishi Sunak said he was keen to protect small businesses with profits of £50,000 or less. To do this he has created a Small Profit Rate (SPR) of Corporation Tax, which will allow them to remain at the current rate of 19%. He claims that around 70% of all companies (1.4 million businesses) will be completely unaffected by a change in Corporation Tax. As most landlords in the UK own less than two properties (on average 1.8 properties) they are unlikely to be affected.

Although companies with profits of less than £50,000 are protected from a further increase, businesses with profits of more than £250,000 will be taxed at 25%, with a taper in between these two levels of profits. This may impact some landlords who became incorporated to take advantage of the tax benefits of a limited company. It seems clear to me that it is the Government’s intention that companies will be asked to pay the greater share of the Covid expenditure. Indeed, it may ultimately be Sunak’s intention to increase corporation tax across all companies regardless of level of profit – but this is yet to be seen.

Property prices

It is clear that property price and rents are going to increase over the next 12 months and beyond. As far as house prices are concerned, property website Rightmove reported that on the day of the budget there was an immediate spike in activity, with the number of visitors surpassing 9 million for the first time. The previous record was 8.5 million. There were two reasons for the record numbers of viewings – firstly Sunak announced that the stamp duty holiday would be extended for a further three months and would then only be applied to properties over £250,000 for another three months. In addition, first time buyers buying a property under £500,000 will be exempt from paying stamp duty.

These changes to the stamp duty holiday will help any deal that may have otherwise fallen through, or that may be in the pipeline, as buyers now have a further three to six months to complete on the deal. It may also benefit a small number of new deals on properties that are worth less than £250,000 as long as they get the deal through by the final date of 30th September 2021. The average time it takes from a property first appearing on a property portal to eventually completing is currently six months. It is therefore unlikely that a new swathe of buyers will suddenly benefit from this tapering tax in stamp duty, although some of them certainly will.

The second reason for a spike in activity is the first-time buyer incentive of the return of the 95% mortgage. This, combined with the stamp duty extension, means there will be a cohort of new buyers over the new 12 months, and it is highly likely this will lead to increased prices in most areas of the UK outside of London.

Rents

I am a landlord myself, and my ears pricked up during the budget when Sunak and Johnson made it clear that they wanted to see generation rent become generation buy. This is an admirable goal for the many renters would like to become homeowners, however property stock is limited and there are around 13 million people renting in the UK, with many of them entirely happy to stay in the PRS for life.

Due to the constant shortage of properties being built and the Government’s assault on landlords over the last five years, I think it is likely that rents outside of London will increase by between 3-5% each year for the next two to three years.

In summary, if you are a landlord and you are in this for the long-term, not only will you see your assets increase in value, but you are also likely to receive healthier returns in the short to medium term.

To find your nearest Belvoir office to receive free advice, visit: www.belvoir.co.uk

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Oxford pushing through revenue generating licensing scheme

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Labour-controlled Oxford council says it’s confident a huge new Revenue Generating licensing scheme for one of Britain’s most high-profile cities will be voted through today, but it admits there’s a big clash of opinions between landlords and agents on the one hand

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Management Company has got involved with the EICR?

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Hi Everyone, Last May I engaged an electrician to investigate a fault in my tenanted London flat. After many visits and tests, it became clear to him that there were problems with the old wiring systems, beginning outside the flat in the courtyard where the electricity supply enters the whole building.

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Eviction ban extended to 31st May

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Residential tenants will be supported as the ban on bailiff-enforced evictions in all but the most serious circumstances, such as incidents of fraud or domestic abuse, and the requirement for landlords to provide 6-month notice periods to tenants before they evict will also be extended until at least 31 May.

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BREAKING: Government extends eviction ban AGAIN, this time by two months

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The government has extended the evictions ban by two months until at least 31^st May, the housing ministry has revealed.

The ban is an extension of the stay on bailiff eviction that has been repeated several times during the Covid pandemic and was due to expire on March 31st.

Also, as well as the bailiff evictions ban, landlords will still have to give tenants six months’ notice of their intention to evict as they do now, but also until May 31^st.

This mans in effect, a landlord who gives notice of eviction on 31^st May will not be able to physically evict the tenant until November.

Two month wait

But the bailiff eviction extension is potentially the most disappointing news for the thousands of landlords waiting to evict tenants and who already have warrants lined up, who must now wait a further two months to evict.

As before, there will still be circumstances under which tenants can be evicted (see full list at bottom) including anti-social behaviour, domestic violence, trespass and extreme rent arrears.

Housing secretary Robert Jenrick (pictured) says: “It is right that as we move through the roadmap, we ensure that businesses and renters continue to be supported.

“We have taken unprecedented action to support both commercial and residential tenants throughout the pandemic – with a £280 billion economic package to keep businesses running and people in jobs and able to meet their outgoings, such as rent.

“These measures build on the government’s action to provide financial support as restrictions are lifted over the coming months – extending the furlough scheme, business rates holiday and the Universal Credit uplift.”

Reactions

Ben Beadle, Chief Executive of the National Residential Landlords Association.

“We welcome clarification that emergency measures in the rental market will be phased out in tandem with the overall roadmap out of lockdown restrictions.

“That said, the further extension to the repossessions ban will do nothing to help those landlords and tenants financially hit due to the pandemic. Given the cross-sector consensus for the need to address the rent debt crisis, it suggests the Government are unwilling to listen to the voices of those most affected.

Polly Neate, chief executive of Shelter

“These extensions will come as a relief to the frightened renters who’ve been flooding our helpline with calls. While the threat level from the virus is still high, it’s right that renters can stay safe in their homes. 

“But as we follow the roadmap out of lockdown, the destination for renters remains unknown. The pandemic has repeatedly exposed just how broken private renting is, leaving many people hanging onto their homes by a thread. And, although the ban and longer notice periods are keeping renters safe for now, they won’t last forever. 

Exemptions list

• Anti-social behaviour (4 weeks’ notice)
• False statements provided by the tenant (2 to 4 weeks’ notice)
• Over 6 months’ accumulated rent arrears (4 weeks’ notice)
• Breach of immigration rules under the ‘Right to Rent’ policy (3 months’ notice)

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Chancellor’s tax rises will hit largest landlords the hardest, experts warn

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Most landlords won’t be affected by a future increase in corporation tax, according to property tax experts.

The tax change from 19 to 25% – announced in the budget and due to take effect in 2023 – will hit rental profits made by limited company landlords with larger portfolios or those making large profits.

Businesses with annual profits of less than £50,000 will see the tax rate held at 19%, rising until it reaches 25% for those with profits of more than £250,000. 

Calculating the effect, Hamptons International found each percentage point rise reduced rental profits by £510, meaning that landlords’ tax bills would go up from £9,684 to £12,743. 

£50,000 and above

The average company landlord owns about three properties but would have to own ten buy-to-let properties worth £190,000 each, with mortgages at 75% loan-to-value, to earn a profit above £50,000.

Research director Aneisha Beveridge (pictured) says landlords holding properties through companies are unlikely to change their ownership arrangements.

But she adds that incorporation is still worthwhile for higher rate taxpayers: “Even at corporation tax of 25%, you would probably still be paying less tax than you would if you held it in your personal name as a higher-rate taxpayer.” 

Cornerstone principal consultant David Hannah (pictured) adds that some landlords might think all they need to do is split their business into several associated companies to gain the benefit of the 19% rate, keeping each of their profits below the £50,000 threshold.

He says: “The proposal anticipates this and will simply aggregate all associated businesses such as companies under common control and reduce the thresholds for each company so that they are effectively taxed as a single entity.” 

Managing Corporation Tax is going to be difficult, says Hannah, who suggests that instead, they could consider maximising available deductions. “For example, the 100% deduction for electric vehicles like vans for carrying out maintenance works if the company does this work in house or maximizing borrowing to increase deductible interest,” he adds. 

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CLAIM: Evictions ban ‘restricting supply’ as tenants opt to stay put

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A leading estate agency has said what most landlords have suspected for some time now, namely that the government’s long-standing evictions ban is beginning to significantly restrict supply within the private rental sector.

The comments have been made by one of Cornwall’s largest estate agencies, 12-branch firm Millerson.

One of its senior director, Jeremy Miller, whose family have run the firm for over three generations, says demand is significantly outstripping supply on his patch with 70 applicants per rental property at the moment.

Miller has told local media that he pins this imbalance on two key reasons – the evictions ban and a wave of city folk escaping London and Bristol for a more bucolic lifestyle during Covid.

He says tenants who might otherwise move home and free up stock are staying put, aware that during challenging economic times – particularly in an area of the UK like Cornwall – staying put gives them greater stability than moving home within the PRS.

“There is currently a colossal demand for rental properties and added to that is the fact there is not a lot of rental properties coming to the market,” Miller (pictured) told Cornwall Live.

“Part of that at the moment is that tenants know that they have protection from eviction.

“The rental market is very strong at the moment. One of my colleagues put a property in St Austell on the market to rent and by the time they’d returned to their desk they had 68 emails before the property came off the market again within hours.”

He also said the SW rental market faced a ‘perfect supply/demand storm’ driven by the evictions ban, high prices tempting landlords to sell up and increased demand from outsiders looking to escape from cities.

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