Home building figures pick up

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The number of homes being built since the lifting of the first period of national coronavirus restrictions continues to rise, latest housebuilding figures published show.

New data shows new housing starts were estimated to be 42,110 in the latest quarter (October – December 2020)

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LATEST: ‘Students will soon tire of remote learning and return to their accommodation’

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The Unite Group is Britain’s biggest student landlord with student accommodation in 22 towns and cities across the country, 170 student properties and around 74,000 beds. It has seen its occupancy rates drop to 65% during the pandemic.

But the company’s chief executive, Richard Smith, says he is optimistic that demand will return and his occupancy rates will return to between 95% and 98% in the 2021-2022 academic year, that’s the period from September 2021 onwards.

Mr Smith (pictured) does not see the trend to more remote learning – a necessary method of internet-based learning used by most universities and many schools during the pandemic – affecting demand long term; indeed he sees the demand for student accommodation in his properties returning as strong as ever.

Student life is about more that learning, says Mr Smith as he sees university education as also being about a “life experience”, though he acknowledges that remote learning may have a place post-pandemic. But this has a place in freeing up lecturers’ time from large impersonal lectures, allowing them the time to conduct more small tutorials, Mr Smith thinks.

Study areas

In line with this thinking, Mr Smith said that his company has been responding to student demand for more space for study over recent years by adapting its accommodation to provide more study areas.

The Unite company, which was started in Bristol in 1991, and is now a FTSE 250 listed company with a market capitalisation of around £4 billion, reported a pre-tax loss of £120.1 million for the year ending December 2020.

This follows a reported loss of £101.2 million loss for 2019, though this was largely as a result of Unite’s purchase of Liberty Living, one of its biggest UK rivals from the Canada Pension Plan Investment Board.

The company currently has between 1,500 and 2,000 new beds in its development pipeline, investing up to £200 million on new opportunities mainly in London. Smith sees his purpose-built student accommodation as being more affordable for students than university or private landlord provided accommodation.

Weekly rents charged by Unite range from, on average, £137 and £205 in London. This cost includes all utilities, WIFI and contents insurance. The company is budgeting for rental growth of 2% to3% over the coming academic year.

Read more about student renting.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: ‘Students will soon tire of remote learning and return to their accommodation’ | LandlordZONE.

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UC office assisting housing cost fraud?

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Dear members, On 16.03.21 I have emailed the following letter to, scotland.complaintsresolutionteam1 @dwp.gov.uk, for a new formal complaint to them regarding the UC housing cost of one of my tenant which is a situation I face regularly with tenants on UC during an end of the tenancy.

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Treat 300,000 Hong Kong arrivals with care when checking Right to Rent, Minister warns landlords

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The government appears to have admitted it has concerns about landlords discriminating against the potential influx of Hong Kong residents.

Home Office Minister Baroness Williams of Trafford advised landlords to be careful when doing Right to Rent checks on inbound Hong Kong residents, in response to a written question from Labour peer Lord Heath.

He asked what discussions the government had been having with landlord representatives to make sure they could access housing and wouldn’t face discrimination under the Right to Rent scheme by having to prove their immigration status.

“We are clear landlords must take extra care to ensure no-one is discriminated against when carrying out right to rent checks. Successful applicants for the BN(O) route will receive either a biometric residence permit or digital status, which will enable them to evidence their right to rent a property in the UK,” said Williams.

The government launched the new Hong Kong British National route in January to help local authorities and other services prepare for an estimated 300,000 who have been predicted to take up the offer of becoming a UK citizen over the next five years.

Right to Rent

Like any non-British would-be tenant, landlords will be responsible for checking their immigration status; any landlord found to have rented to someone who doesn’t have the required immigration status faces a fine of up to £3,000 or a criminal sentence.

The Joint Council for the Welfare of Immigrants believes the Right to Rent scheme should be immediately scrapped.

Legal policy director Chai Patel tells LandlordZONE: “Both the High Court and the Court of Appeal have found that it causes racial discrimination in the housing market and that the government issuing guidance doesn’t stop it. It’s totally unacceptable that Priti Patel supports a government scheme that encourages more racism, when she should be doing everything she can to stamp it out.”

Read more about recent changes to Right to Rent checks.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Treat 300,000 Hong Kong arrivals with care when checking Right to Rent, Minister warns landlords | LandlordZONE.

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EXCLUSIVE: Up to 750,000 landlords are caught up in cladding scandal, new data shows

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Up to 750,000 landlords could be affected by the cladding scandal, a much larger figure than previously claimed, according to new research.

About 1.5 million flats are thought to have flammable building cladding or other fire safety-related issues and face huge repair bills or difficulties moving their mortgage to a different lender.

Credit ratings firm DBRS Morningstar’s study of 64 UK mortgage portfolios found that of 670,000 mortgages, 106,000 loans were on flats, with 49,000 of these on BTL properties.

Extrapolating these figures points to half of the cladding affected flats being owned by landlords.

DBRS found that due to the reduced resale value or the increased burden of funding fire safety repairs, borrowers potentially face higher monthly mortgage payments when re-mortgaging.

£140 a month

The increase in most cases ranges from £15 to £140 per month but could be much higher, for example if owners have to pay the lender’s standard variable rate.

However, it says fire safety repair bills are unlikely to vary as much as property values.

It reckons borrowers in North England with lower value properties could face large bills relative to their property’s value; a £35,000 repair bill works out to about 36% of the average property value for a flat in Newcastle but would be only 7% of the average West London apartment value.

If property values were reduced by £35,000 due to fire safety defects, only 0.3% of West London flat mortgages would be in negative equity compared with 56% of flat mortgages in Newcastle.

Last month, leaseholders in buildings under 18 metres were told they would have to stump up the full remediation cost to fix the cladding crisis. Government grants only cover buildings over 18 metres – a move the Leasehold Knowledge Partnership has labelled shameful.

Read more about fire safety changes.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – EXCLUSIVE: Up to 750,000 landlords are caught up in cladding scandal, new data shows | LandlordZONE.

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SHOCK REPORT: Eviction ban’s 21,000 ‘in-limbo’ Section 21 notice landlords

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Ministry of Justice data shows that there are approximately 21,000 landlords who have permission from the courts to evict tenants after serving Section 21 ‘no fault’ notices, but who are now stuck in limbo due to Covid.

These landlords, who have been ‘forgotten’ during the multiple extensions to the eviction ban over the past year since the pandemic started, are unable to sell properties, move back onto them or evict extreme rental arrears tenants until bailiff evictions are given the green light again.

The earliest that is likely to happen will the 31st May when the current ban ends, meaning many landlords will have been waiting 14 months or more since serving Section 21 notices either before the first evictions ban in March last year.

But while attention has been focussed on rent arrears and the financial problems it is causing for both tenants and their landlords, these 20,000 or so landlords are stuck.

Tim Frome of Landlord Action estimates that 25% of his firm’s current claims were initiated through Section 21 notices.

The problem with the government’s evictions ban is that it ‘blanket’ ban on all Section 21 evictions, even when a landlord may have a pressing financial need to repossess a property, and the tenant is not in financial distress.

30-month wait

We talked to one landlord, who wishes to remain anonymous after threats from the tenant involved, who served a Section 21 notice after he stopped paying rent in October 2018 and is still waiting for him to leave nearly 30 months later.

After it became clear that the tenant was intent on using every legal trick in the book to evade paying rent including refusing property inspections or maintenance requests, she issued a Section 21 ‘no fault’ notice and was granted a possession order in November 2019, with a bailiff date set for mid-April 2020.

Just before that date the government introduced its evictions ban, which has been in place ever since and is now set to finish at the end of May. This leaves the landlord’s case in limbo and the tenancy £30,000 in rent arrears plus costs and counting.

“The irony is that he’s not even living there and is illegally sub-letting the property so it’s not like we’re making him homeless,” she says.

“We’re not greedy landlords – we’re reasonable about tenants who are in financial distress and who we are happy to help out, but at the moment the law protects tenants intent on ripping us off too as well as the vulnerable.”

Read more about Section 21 notice evictions.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – SHOCK REPORT: Eviction ban’s 21,000 ‘in-limbo’ Section 21 notice landlords | LandlordZONE.

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MINISTER: Landlords can reject pets if ‘demonstrably poorly behaved’

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The government has hardened its position on the hurdles that tenants will have to clear before a landlord needs to allow pets into their property.

Answering a written question from MP Rachael Maskell (pictured) about what constitutes a good reason for landlords to decline a pet ownership request from a tenant, Housing Minister Christopher Pincher (pictured training a police dog, main pic) provided a more detailed explanation using the revised Model Tenancy Agreement, that should give landlords a little more leeway.

He replied: “A good reason for a landlord to decline a pet ownership request would be where a pet is demonstrably poorly behaved or unsuited for the premises in question, for example, a large dog in a small flat, or where other tenants have allergies to animals.”

The minister has gone further than the agreement, which instead notes that, ‘The landlord should accept such a request where they are satisfied the tenant is a responsible pet owner and the pet is of a kind that is suitable in relation to the nature of the premises at which it will be kept.’

Revised agreement

Pincher added: “The revised agreement provides that a private landlord who chooses to use the agreement should accept a request from a tenant to keep pets where they are satisfied the tenant is a responsible pet owner and the pet is of a kind that is suitable in relation to the nature of the premises at which it will be kept.

“It aims to remove restrictions on responsible tenants with pets, encouraging landlords who use the agreement to offer greater flexibility in their approach to pet ownership.”

Many landlords are concerned that the new guidelines force them to accept pets, however, the new terms and conditions are voluntary.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – MINISTER: Landlords can reject pets if ‘demonstrably poorly behaved’ | LandlordZONE.

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LATEST: Speculation rises over how taxing CGT changes will be for landlords next week

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Speculation is rife that the Chancellor is set to announce a long-term tax-raising plan that would include a Capital Gains Tax (CGT) rise next year.

Rishi Sunak didn’t change the rates in his recent budget as many had feared – instead he promised to maintain the current level until April 2026; 18% for basic rate taxpayers and 28% for those in the higher rate threshold, with tax exempt on the initial £12,300.

But before the budget, Sunak’s office released a statement explaining how more details of a planned tax regime would follow on 23^rd March.

Although it promised the announcement wouldn’t affect government finances this year, it leaves the door open to tax rises in 2022.

The Office of Tax Simplification has previously called for CGT to increase in line with income tax rates of 20% at the basic rate and 40% at the higher rate, while also lowering the initial amount exempt to just £2,000.

If these changes are adopted by the government, research by lettings and estate agent, Benham and Reeves based on the average capital gain of a buy-to-let investment of £82,798, shows how it would hit landlords hard.

Higher CGT?

Selling in the current market would see a lower rate taxpayer pay £12,690 in CGT, while a higher rate taxpayer would pay £19,739.

But if these changes take effect, the tax owed would climb to £14,100 for a basic tax rate payer, while those in the higher threshold would see it increase to £28,199, a jump of £8,460.

Beham and Reeves director Marc von Grundherr (pictured) believes the proposed changes would be another nail in the coffin of the buy-to-let sector.

He says: “A further increase in capital gains rates is nothing more than a blatant attack on landlords. The government seems intent on targeting landlords and second homeowners as the cause of the current housing crisis. The reality is, their failure to build enough homes is the driving cause.”

Read more about the proposed CGT ‘tax raid’.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Speculation rises over how taxing CGT changes will be for landlords next week | LandlordZONE.

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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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