BOOM! Rental market activity jumps as Covid rules relaxation prompts city revival

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UK rents outside London are up 3% since this time last year, signalling the highest level of growth in four and half years.

Rents are rising fastest in the North East (+5.5%) and the South West (+5.3%) – the strongest rates of growth in a decade amid increased demand and constrained supply – according to Zoopla’s quarterly Rental Market Report.

It reveals that rental performance outside London was driven by a 59% rise in demand during April compared to the same month in 2017-19.

It says Covid’s impact was felt most acutely in city centre rental markets where stock moved over from short-term lets and more rental stock came back to the market amid easing demand.

Rents are still down by 0.7% in Leeds, -1.1% in central Manchester, -3.2% in central Edinburgh and -9.9% in inner London.

Soaring demand

But the city centre downturn is starting to reverse as the economy opens up; renter demand was up 26% in central Edinburgh, 12% in central Leeds, 7% in inner London and 5% in central Manchester in the month after Easter.

Zoopla says demand in the capital is being fuelled partly by a sharp improvement to affordability, with rents down -9.4%.

Agents are reporting an increased number of longer-than-average tenancies – in excess of 12 months – being agreed.

Chestertons says demand is so strong that some properties are being let off-market, while those that have been listed, secured new tenants within two weeks and often after just one viewing. 

Rental property supply in most markets is failing to keep up with demand.

The number of properties bought using a buy-to-let mortgage was 45% lower in 2020 than in 2015, and the number of homes in the sector has fallen slightly since 2016 as landlords rationalise their portfolios in the face of tax changes and additional regulation.

Zoopla’s head of research, Gráinne Gilmore (left), says: “Demand will continue to rise in city centres as offices start to re-open and this, coupled with increased affordability levels in many cases, will start to counter the negative pressure on rents seen over the last 12 months.”

Read the report in full.

Read more: London’s rental market due a revivial.

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Landlord boiler service tackled by industry watchdog over misleading ad

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A boiler service and sales company that works with landlords has amended its advertising after a member of the public complained that the firm’s online price list was misleading.

The ad appeared on the website of Manchester-based firm 24/7 Home Assist Ltd, which trades as 24/7 Home Rescue. It included a price list which stated “£4.49/month Free Boiler Service” and “£9.45 Free Boiler Service”.

As part of the ad, landlords were told that the service included a “30 Day Rolling Contract* No more frustrating home care experience, like fixed contracts, unreliable engineers, and hidden plan charges”.

The member of the public, who understood that the plan automatically changed to an annual contract after an annual service, which included an £144 cancellation charge, challenged whether the claims “30 Day Rolling Contract*” and no more fixed contracts” were misleading.

Misleading claim

They also challenged whether the claims “Free Boiler Service” and that there were no more hidden plan charges were misleading.

The UK’s Advertising Standards Authority (ASA) code for advertisers says that: “Marketing communications must not mislead the consumer by omitting material information. They must not mislead by hiding material information or presenting it in an unclear, unintelligible, ambiguous or untimely manner.”

After being contacted by the ASA compliance team, 247 Home Assist agreed to amend the ad and assured the ASA that all future ads will include significant limitations and qualification.

On that basis, the case was resolved by the ASA without having to proceed to a full adjudication.

24/7 Home Rescue offers landlords and homeowners both a low-cost monthly boiler repair service and a ‘no up front cost’ boiler purchase and maintenance package.

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Covid, rent arrears and binning Section 21 – a lethal cocktail for the PRS

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The State Opening of Parliament took place today [11 May] and as expected, the Government has reconfirmed its commitment to reform in the private rental sector.

Although not mentioned specifically, Her Majesty the Queen promised to ‘enhance the rights of those who rent’. This undoubtedly means that the Renters’ Reform Bill, which will scrap the use of Section 21 evictions, will happen soon.

Even though this is inevitable and has been for some time, the scale at which the pandemic has accelerated rent arrears is really quite frightening and I am deeply concerned what this will do to the rental market if it goes ahead too early and without greater thought and detail into strengthening the Section 8 process.

We’re now more than a year on from the start of the pandemic and the strain on the private rented sector is starting to show. In a recent poll carried out by Client Money Protect (CMP), nearly a third of letting agents (32 per cent) said that more than 50 per cent of their portfolio of tenants have fallen into rent arrears:

• 21 per cent said between 30 and 50 per cent are affected
• 19 per cent of agents said it is 15-30 per cent of their portfolio
• 28 per cent have between 0-15 per cent of tenants affected by rent arrears.

Obviously, the pandemic and the current eviction ban is playing a huge part in these rising rent arrears, but it does not bode well for when things start to go back to normal, only for tenants to be faced with the end of furlough and landlords to be hampered by the removal of Section 21.

The vast majority of landlords and letting agents are working hard to keep the lines of communication with their tenants open and be accommodating wherever they can.

In some instances, mediation has helped to successfully reach a way forward, whether that involves the tenant looking for another property, being offered a rent reduction or implementing a repayment agreement. 

In my view, there needs to be a significant amount of time, post-pandemic, for the market to readjust. 

Back to normal

Landlords and tenants need time to get back to normal and see if they want to remain in their current tenancy contracts, courts need time to clear the backlog of repossession cases, which are currently stacked up, and significant consideration and alterations must be put into making Section 8 fit for purpose. 

Reporting on the extent to which tenants are in arrears, 21 per cent of letting agents reported to CMP that arrears have reached six months or more. A further 18 per cent reported tenants being between three and six months in arrears.

If this is a taste of what landlords can expect, then it is inevitable that more landlords will start to leave the market, particularly at a time when prices in the sales market are at record highs.

Many landlords will be looking at this right now and considering their options. We even know of landlords selling their properties with tenants in situ just because they want out.

Devastating

I know there are many tenants who have been badly affected by the pandemic, unable to work or had their wages/hours cut and for these people building rent arrears has been unavoidable, which is devastating for all involved. 

Unfortunately, there are also a lot of tenants who have played the system to their advantage and avoided paying rent simply because they know there is nothing their landlord can do about it.  No landlord wants to make someone homeless, but more has to be done to check the tenants’ viability to pay rent.

Without Section 21, landlords will be much more exposed to these kinds of serial rogue tenants who know how to use the system’s loopholes to remain in properties for free.  This will also have a dramatic knock-on effect to referencing, making it even more difficult for honest hard-working tenants to find properties.

Affordability problems

Affordable rental properties are difficult to come by and many agents are already inundated with enquiries every time a new property comes available. All that is going to happen, is the majority of tenants won’t even get a look in, as landlords and agents will be forced to cherry-pick only those in the very strongest and proven financial position.

In Bristol, for example, 30 percent of households are privately rented, and rents have gone up 52 per cent since 2011, but wages have only risen 24 per cent. This is only going to get worse if the pool of rented properties is reduced because landlords do not feel supported in the sector.

Tenant charities are calling for the Renters’ Reform Bill to be brought forward but I would urge government to consider such a move very carefully whilst there is so much uncertainty following the pandemic.

As I have said before, when it comes to tenants and landlords, one does not work without the other, so we need a PRS which is fair for all.  

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Queen’s Speech 2021 – Landlord Reactions

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My Government will help more people to own their own home whilst enhancing the rights of those who rent.

Laws to modernise the planning system, so that more homes can be built, will be brought forward, along with measures to end the practice of ground rents for new leasehold properties [Planning Bill

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UC advances available with 24 months to pay back

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Around six million people across the UK are currently receiving Universal Credit, a financial benefit payment provided by the Department for Work and Pensions (DWP) intended to help those out of work or on a low income with daily living costs.

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CLADDING: Landlord reveals nightmare of being caught up in building safety scandal

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A landlord caught up in the ongoing cladding scandal faces the agonising decision of whether to take a huge hit on the sale of his flat or evict his tenants and move back in and live without his partner.

He can’t re-mortgage the one-bed flat in Colindale, London, as he’s unable to get an EWS1 form due to the large amount of HPL and timber cladding, timber balconies and missing cavity barriers on the sub-18m block.

His two-year fixed rate residential mortgage with Principality Building Society is up at the end of next month but it has told him he can’t get a buy-to-let mortgage without an EWS1.

“I was given a ‘consent to let’ before renting the flat out,” he tells LandlordZONE, “and this added 1% to my interest rate. They’ve now told me they’re unable to continue with the current arrangement but when I raised the point that the property is already on their books anyway they refused to proceed with my BTL application.”

Difficult choice

The landlord – a member of UK Cladding Action Group – has since tried more than 10 other mortgage brokers without success. He’s now stuck with a difficult choice: settle the remaining balance of £165,000 by 30^th June, evict his tenants, sell to a cash buyer at a huge discount or allow Principality to repossess the flat and walk away from years of equity he has built up over the last four years.

“I can’t afford to pay the balance,” he explains. “My tenants are a young hardworking couple who have been absolutely golden.

“If I moved back into the flat to get a residential mortgage it would mean living apart from my long-term partner, so breaking up a family and doubling the cost of living for us as a couple.”

Like thousands of others hit by the cladding scandal, he has no idea when the remedial works will be carried out or how he’ll pay for it. He adds: “In the meantime, I’m staring at losing my financial security I worked so hard to achieve, having done nothing wrong.”

The government has trebled the fund to fix dangerous cladding to £5 billion but there is no support for hundreds of sites like these with non-cladding related defects, such as defective cavity barriers.

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Queen’s Speech: Government commits to banning Section 21 evictions once more

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The government has promised to enhance renters’ rights in the Queen’s Speech – 18 months after she first announced the Renters Reform Bill.

It will mean the demise of Section 21 ‘no fault’ evictions and a stronger Section 8 notice process, and should usher in a national scheme of ‘lifetime deposits’ for tenants and reform or abolish Assured Shorthold Tenancies.

Many housing groups hope the proposed legislation will be introduced in this parliamentary session, however there’s still no timeline; in March, Housing Minister Christopher Pincher said the government would “implement the reforms at the appropriate time, once the urgencies of responding to the pandemic have passed”.

Paul Shamplina of Landlord Action, says: “It was expected that the Queen would make reference to the Renters Reform Bill; I’ve been predicting for a while that Section 21 will be abolished in the next 12-18 months, but there has to be reforms of the Section 8 Grounds and major investment made in the Court System coupled to bailiff reforms, especially in the wake of Covid and the lengthy evictions ban”.

The Queen’s Speech also included a promise to end the practice of ground rents for new leasehold properties.

Many leaseholders face high charges increased by freeholders over the years, making selling a leasehold property with these conditions attached extremely difficult.

Grenfell

In reference to the Grenfell fire, the government announced a new building safety regulator to ensure that the tragedies of the past are never repeated.

It also vowed to modernise the planning system so that more homes can be built and – following on from the Budget which offered incentives for house buyers – will help more people to own their own home.

It plans to spread opportunity across the UK and deliver a national recovery from the pandemic.

The Queen said: “To achieve this, my government will level up opportunities across all parts of the United Kingdom, supporting jobs, businesses and economic growth and addressing the impact of the pandemic on public services.”

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EXPERT VIEW: Has Covid changed the student lets market?

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It has been a difficult year for many students, with limited contact hours on campus from the outset, followed by the strict January lock down, which will keep many away from in-person lectures until September.

While some students are disappointed and are turning their attention to securing tuition fee refunds, the student housing market remains robust, particularly for landlords and agents specialising in shared student housing.

They’re back!

Students can return to campus from the 17^th of May, however, the majority of students anticipate being back on campus this September, with our recent research revealing that almost 90% are of this view.  

Furthermore, there is confidence that the strong vaccine programme and well organised Universities will mean students can enjoy a relatively normal academic year from this autumn.

As a result, accommodationforstudents.com has experienced a 37% increase in website visitors and a 59% increase in page views in the first four months of 2021.

This positive trend is supported by a 15% increase in enquiries through the site, as confident student populations seek to secure their accommodation for next academic year.

Students willing to commit  

One of the main features of 2021 has been a growth in interest in HMOs and shared housing. In the first four months of the year our landlord properties had received over 1 million views and benefited from a 39% increase in enquiries.

Whilst our latest research revealed that 20% of students had delayed making accommodation choices for 2021 because of Covid 19, this delay primarily seems to have affected the PBSA sector where a sharp growth in bookings in anticipated in the later summer months.

Students were willing to commit to a shared housing from the outset and this is positive news for those landlords and agents.

Growing student numbers

The outlook remains positive, with 616,360 applications for a University an 8% increase and the most ever received. Within this there is a strong domestic cohort of 306,200 18 year olds. This is  over 40% of the UK’s population of 18 year olds and is a result of the continued appeal of UK Universities as well as an established trend towards further study at times of economic uncertainty.

While this is good news, it is particularly positive for landlords, as it likely to increase the market for shared housing. Our research shows that most students view living in shared housing as a key part of the University experience and that the majority (64%) thought that it was the best type of accommodation to live in.

Price, location and bills

So while the overall picture is positive, with a healthy audience and appetite for student accommodation, it is still competitive. Our recent research reveals the key factors in the students’ decision making are price and location (either in relation to the University or amenities).

The availability of bills inclusive rents is also important to many students and something that has become increasingly easy to offer. With these key elements in place and a strong online profile, there is a sustainable and growing market available to target.     

Simon Thompson is CEO of AccommodationForStudents.com.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – EXPERT VIEW: Has Covid changed the student lets market? | LandlordZONE.

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STUDENT shared HMO housing remains robust despite Covid

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It has been a difficult year for many students, with limited contact hours on campus from the outset, followed by the strict January lock down, which will keep many away from in-person lectures until September.

While some students are disappointed and are turning their attention to securing tuition fee refunds, the student housing market remains robust, particularly for landlords and agents specialising in shared student housing.

They’re back!

Students can return to campus from the 17^th of May, however, the majority of students anticipate being back on campus this September, with our recent research revealing that almost 90% are of this view.  

Furthermore, there is confidence that the strong vaccine programme and well organised Universities will mean students can enjoy a relatively normal academic year from this autumn.

As a result, accommodationforstudents.com has experienced a 37% increase in website visitors and a 59% increase in page views in the first four months of 2021.

This positive trend is supported by a 15% increase in enquiries through the site, as confident student populations seek to secure their accommodation for next academic year.

Students willing to commit  

One of the main features of 2021 has been a growth in interest in HMOs and shared housing. In the first four months of the year our landlord properties had received over 1 million views and benefited from a 39% increase in enquiries.

Whilst our latest research revealed that 20% of students had delayed making accommodation choices for 2021 because of Covid 19, this delay primarily seems to have affected the PBSA sector where a sharp growth in bookings in anticipated in the later summer months.

Students were willing to commit to a shared housing from the outset and this is positive news for those landlords and agents.

Growing student numbers

The outlook remains positive, with 616,360 applications for a University an 8% increase and the most ever received. Within this there is a strong domestic cohort of 306,200 18 year olds. This is  over 40% of the UK’s population of 18 year olds and is a result of the continued appeal of UK Universities as well as an established trend towards further study at times of economic uncertainty.

While this is good news, it is particularly positive for landlords, as it likely to increase the market for shared housing. Our research shows that most students view living in shared housing as a key part of the University experience and that the majority (64%) thought that it was the best type of accommodation to live in.

Price, location and bills

So while the overall picture is positive, with a healthy audience and appetite for student accommodation, it is still competitive. Our recent research reveals the key factors in the students’ decision making are price and location (either in relation to the University or amenities).

The availability of bills inclusive rents is also important to many students and something that has become increasingly easy to offer. With these key elements in place and a strong online profile, there is a sustainable and growing market available to target.     

Simon Thompson is CEO of AccommodationForStudents.com.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – STUDENT shared HMO housing remains robust despite Covid | LandlordZONE.

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Tory MP: Why I’m hoping for a Renters Reform Bill announcement tomorrow

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The demise of Section 21 ‘no fault’ evictions is set to come a step closer with the expected announcement of the Renters Reform Bill in tomorrow’s Queen’s Speech, a leading Tory MP has said.

First revealed in 2019, the bill will also bolster the Section 8 notice process, usher in a national scheme of ‘lifetime deposits’ for tenants, and reform or abolish Assured Shorthold Tenancies.

Writing in The Times, Conservative MP Nickie Aiken (pictured) said she expected to see it revived and able to make fundamental changes to help fix renters’ problems and strengthen their rights.

The Cities of London and Westminster MP said it needed to remove the “arbitrariness of evictions” and create a system less skewed in favour of landlords by abolishing Section 21.

“I have immediate family who have moved from the security of homeownership to the private rented sector,” said Aiken.

“Like many families in similar situations, the precarious nature of the sector is striking.

“Poor living standards and regulatory problems are an all-too-familiar reality for many renters. Even the best tenants have little protection from being ousted from the place that they call home.”

Unsettling

She added: “It is unsettling that eviction can happen to virtually anyone through the powers of Section 21 notices.”

Aiken pointed to a new YouGov poll that showed 76% of people think landlords should not be able to evict tenants without giving an acceptable reason.

She said that while it was clear the market has seen some seismic shifts, legislation has been slow to keep up or even respond to these changes.

“The abolition of Section 21 is the start but we need to do more to support our renters to give people a stake in the property market and assure them with long-term security.”

She added however, that it was important to recognise that any changes should not take away from a landlord’s right to regain possession of their property when tenants are at fault.

Read Aitken’s comments in full (requires subscription).

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