County Courts will not cope with ‘eviction avalanche’

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In 2020, as part of government restrictions to protect tenants during the pandemic, the number of residential evictions fell by an estimated 20,000 (74%). County Courts are facing an ‘eviction avalanche’ when the ban on bailiff-led evictions comes to an end on 31 May and courts are faced with processing and enforcing the backlog

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HMOs do not help spread Coronavirus, says health report

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HMOs have been given a clean bill of health by officials in the Northamptonshire town of Corby, which has the highest seven-day Covid rate in the country.

Councils around the UK have flagged up HMOs as a particular transmission risk, with many issuing strict guidance for tenants such as advising them to disinfectant toilet handles before and after use and to eat in their rooms when shared areas are too busy.

Corby is struggling to get its infection rates down and some have pointed the finger at the thousands of residents who work in factories and logistics warehouses and often live in cramped conditions in shared housing. However, Northamptonshire County Council data shows that HMOs aren’t a significant factor.

Consultant in public health, Rhosyn Harris, insists there is no evidence based on the 130 cases in the past week that HMOs are driving an increase in those case rates.

She adds: “We do know that there are challenges around managing transmission in HMOs, just as with any other busy household, and we produce a lot of guidance to support busy households in terms of reducing transmission – but there’s nothing to point to that being a driver of recent case rate increases.”

She says the town is facing factors that make their work more challenging such as being a particularly tight-knit community.

“You are less likely to want to get tested and to take up our offer of testing if you feel that you are in a low paid job or have insecure employment and you’re worried about what might happen if you have to isolate for two weeks,” adds Harris (pictured). “We know that more people in Corby than in other places around the country fall into that category.”

In a bid to curb cases, Public Health Northamptonshire has launched a new awareness campaign called ‘Take Care in the Open Air’ which includes reminders about reducing physical contact outdoors.

Read more about HMOs and Covid.

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Government must tackle looming ‘evictions avalanche’ says Shamplina

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Leading evictions firm Landlord Action is supporting today’s Lords constitutional committee report on court reforms, agreeing with one of its key findings that County Courts are likely to face an ‘evictions avalanche’ once restrictions end on 31^st May.

Its founder Paul Shamplina (pictured) says he estimates that there are 20,000 evictions waiting to go through, based on HMCTS figures, many of whom will have been waiting for over 12 months to win possession orders for their properties.

This is on top of those who have already won court orders or warrants and are waiting for the ban on bailiff evictions to be lifted.

“These figures are estimated based on what possessions in 2020 would have looked like without the pandemic,” he says.

“Unfortunately, we now have a situation where cases are backed up, new cases are arising all the time and the scale of the issue is impossible to predict because so many are still being cushioned by support such as furlough, business grants and/or mortgage holidays. 

Avalance

“When this package of measures comes to an end, and without government support to help tenants pay back accumulated arrears, I fear we could be heading for an evictions avalanche.”

According to Landlord Action, prior to the pandemic, cases with six months’ rent arrears were quite rare as the process to evict was much quicker and would usually be carried out prior to arrears reaching such levels.

Now, more than 60% of new instructions to Landlord Action have six months’ rent arrears, meaning all of these cases will meet the exemption criteria and require court action.

“Thousands of landlords have got court orders outstanding from a year ago and warrants due to expire, leaving them having to reapply to the courts. We don’t yet know if these landlords will be at the front or the back of the queue” adds Shamplina.

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FOI to assess noise complaints by city

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Confused.com has conducted Freedom of Information requests to the 100 biggest cities in the UK to find out the number of noise complaints over the last 12 months, to find out who has the loudest neighbours. The research also includes a survey of over 2,000 residents across the UK.

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BTL rates up but so is choice

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Moneyfacts.co.uk highlights a growth in choice of Buy-to-Let (BTL) product options, but warns that interest rates are on the rise.

For the fifth consecutive month, BTL availability has continued to improve; with 2,333 products available, the sector has recovered to 81% of pre-pandemic levels (compared to 68% recovery in the residential sector) and now offers the highest number of products seen since last March

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How are landlords to upgrade homes after scrapping of Green Homes Grant?

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Landlords have been left with a ‘green gap’ of finding up to £10,000 per property to meet new energy performance targets after the government scrapped its Green Homes Grant scheme.

Online mortgage broker Property Master acknowledges that the troubled scheme was difficult to access, made it hard to find the correctly registered tradespeople and suffered from a cumbersome process to redeem vouchers, however, it says landlords deserve a replacement. 

Chief executive Angus Stewart (pictured) adds: “Landlords could be forgiven for thinking the new energy regulations in the absence of government support is just an extra backdoor tax on the private rented sector.

“For many this will be a squeeze too far on their finances and they may well choose this moment to exit the market which will reduce the number of homes for rent.”

The government has set an ambitious target as part of its Net Zero greenhouse gases by 2050 programme of raising the energy performance certificate for all new tenancies in the private rented sector to a C or above by 2025. By 2028, this requirement will extend to all private rented sector properties. 

About 67% of private rented properties in England and Wales – 3.2 million in total – are currently a band D or below.

The £2 billion Green Homes Grant scheme was only launched in September 2020 but will close on Wednesday. Up to £5,000 per property was available, no more than two thirds of the cost of the work done. 

To date, only about 60,0000 of the 600,000 available vouchers have been taken up to fund improvements such as cavity wall insulation and draught proofing. 

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WARNING: Landlords face rental arrears ‘cliff-face’ as restrictions ease

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The Chartered Institute of Housing has warned landlords that a a cliff edge of evictions is very likely later this year as Ministers continue to ignore calls for financial measures to help clear the rent arrears backlog.

Its major annual look at the housing market covering all tenures praises the government for both its early move to halt evictions and housing minister Christopher Pincher’s promise to do ‘whatever it takes’ to stop people losing their homes during Covid.

But the CIH report is less kind about the government’s subsequent actions including its refusal to help landlords or tenants clear the rent arrears backlog, which were highlighted by the ‘Ride Out Recession Alliance’.

As LandlordZONE reported at the time, this was a coalition of homelessness charities, tenant lobbying groups and the NRLA – whose recommendations have so far been ignored.

“There is also considerable uncertainty about what will happen when the pandemic ends,” the CIH says.

Summer rebound?

“The government’s apparent expectation of a ‘return to normal’ in financial terms in the Summer is viewed sceptically by many who expect the crisis in household incomes and their ability to meet housing costs to be much longer lived and potentially to get worse before it gets better.”

“Unfortunately, none of these has happened and the pandemic is now continuing well into 2021, reinforcing the impression that a ‘cliff edge’ is very much in prospect later in the year.”

The report also says that although there is varying data and different views as to the extent of the pressures building up in the PRS regarding arrears and how landlords are handling them, the situation is getting ever more difficult as household incomes and savings continue to be eroded by the ongoing pandemic and its consequences.

“The options for delving into savings, cutting other expenses or borrowing privately to pay the rent become exhausted,” it says.

The full CIH report is available for £35 via its bookshop.

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Student rental demand returning?

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As students look to secure a place to live ahead of the new academic year UniHomes researches which areas are showing the highest level of tenant demand. The Student Rental Hotspots Index looks at the UK’s top 100 universities

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Best for revaluation – vacant possession or sitting tenant?

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We need to revalue our properties as we are planning to change our business structure. So we are trying to plan ahead before a final decision is made on what to do next.

Should the properties be valued as vacant possession

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ANALYSIS: £50k cladding repair bills push flats into negative equity

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The average repair bill for those flat owners with fire risk cladding is in the region of £50,000 per flat.

This means that for those properties in the North and the Midlands, where property prices are lower, owners face repair bills which are a bigger in proportion of the flat’s value than is the case in the south.

It means that on any view of a flat’s valuation in these affected blocks, the prospective remediation costs could easily push the value into negative equity.

Fire safety repair bills will cost roughly the same whether the property is in Clapham or Clacton, but in proportion to property values the variation means a lot. It means that flat owners in the cheaper parts of the country face far higher bills in proportion to the value of their homes.

According to the managing agents’ trade body, The Association of Residential Managing Agents (ARMA), the average remediation bill is £49,500, so with a flat worth £100,000 in Newcastle, this represents half its value.

On the other hand, a typical London flat with a valuation of over £300,000 the remediation costs represent a much lower proportion, in this case just 17%.

Serious issue

It’s a serious issue for many flat owners, especially those in the cheaper areas where purchase prices initially looked like a bargain. Given the cost of remediation, a good proportion of landlords’ properties could be worth less than their outstanding mortgages. In this case, if forced to sell, some owners could easily be pushed into bankruptcy.

The Daily Telegraph puts 50% of flat owners in Manchester in negative equity if values were to fall by the same amount, and in Newcastle this figure could reach over 70%. However, in the East London, where the median flat price is £335,038, the share would be no more that around 3%.

These stark figures underline the North/South divide and the impact the tower block remediation and fire watch costs are having on flat owners. It also emphasises the mountain the government still has to climb with their “levelling up” agenda.  

Case study: Daniel Guirguis

Daniel Guirguis, 39, owner of two buy-to-let flats in Manchester, told The Daily Telegraph that he purchased them for £80,000 and £85,000. Unfortunately for him, both the blocks have been condemned because they failed the external wall safety (EWS1) assessments and will now require remediation works.

One of the blocks involved has just had its application to the Government’s building safety fund (BSF) rejected. It means that all the leaseholders are now facing repair bills of around £50,000 each, that’s equivalent to 60pc of Mr Guirguis’ purchase price.

His BSF application for the second flat is still underway, but he says: “If the application is approved, each leaseholder will still need to pay £10,000. If everything gets rejected, the cost will be £42,000,” he told The Telegraph.

Mr Guirguis’ total liability could potentially be around £92,000, whereas he paid less than that for each of his flats. Mr Guirguis speculates whether it would be cheaper to demolish and rebuild the flats altogether?

Turned down flat

Landlords are finding it impossible to re-mortgage flats subject to these charges and many are now trying to increase rents to cover some of these costs. Some are struggling even when they do get Government funding.

The cost of remediation does also vary according to the difficulty of carrying out the works. Site access and permission requirements, plus building heights are big factors which significantly affect costs.

In general, cheaper properties are the ones more likely to be affected by these complications, so again more likely to be disproportionately affected on costs. In addition, in many cases the initial applications to the building safety fund, based on surveyors’ calculations, do not take these complications and additional costs into account.

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