BREAKING: End to unfair leaseholds in sight as Persimmon and Aviva promise change

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A major breakthrough in the reform of leaseholds has been secure by the Competition and Markets Authority (CMA) this morning.

The watchdog has secured commitments from two of the UK’s leading players in the leasehold house market to change their contracts to end doubling ground rents and enable existing home owners to buy their freeholds at a discount.

These changes follow a campaign by the CMA to look into unfair practices within the house building sector and enforcement action last year against several developers.

It has also been revealed that the watchdog has been putting pressure on several of the institutional investors who buy freeholds off house builders once developments are completed and who benefit from often unfair ground rent terms.

The two companies involved are builder Persimmon and freeholder Aviva.

Doubling removed

The insurance giant has promised to remove doubling ground rent and retail price index-based ground rent increase clauses from existing leaseholds and revert the leasehold to their starting ground rents.

Aviva will also reimburse property owners who have been affected by doubling ground rent clauses.

Persimmon, on the other hand, is to offer leasehold house owners – which are largely concentrated in the NW of England – the option to buy the freehold of their property at a discount, and reimburse those who have already bought their freeholders without the discount.

Pressure sales

The house builder has also agreed to give home buyers more time to purchase a property after reservation to stop ‘pressure sales’ during which many people don’t have the time to understand the annual costs of owning their home.

Andrea Coscelli, Chief Executive of the CMA, says: “It’s good that Aviva and Persimmon have responded positively to this investigation, enabling these issues to be fixed for leaseholders.

“But our work isn’t done. We now expect other housing developers and investors to follow the lead of Aviva and Persimmon. If not, they can expect to face legal action.”

Housing Secretary Robert Jenrick says: “The Government asked the CMA to conduct this investigation – and I welcome their efforts to bring justice to homeowners affected by unfair practices, such as doubling ground rents, which have no place in our housing market.

“We have also introduced new legislation that will protect future homeowners by restricting ground rents in new leases to zero and I would strongly urge other developers to follow suit in amending their historic practices.”

Other developers and freeholders facing the CMA’s wrath over leaseholders include Taylor Wimpey, Countrywide Properties, Brigante Properties, and Abacus Land and Adriatic Land.

Find out more about leaseholds and freeholds.

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EXCLUSIVE: BTR tenants revolt over services withdrawn during Covid

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Build to Rent (BTR) developers’ response to Covid has tested promises they made to tenants around hassle-free living and being an antidote to the traditional landlord, says residents review platform HomeViews.

Its National Build to Rent report – which gathers reviews from residents of new build developments – reveals that some tenants in the sector have battled with owners over whether they should be entitled to rent reductions while they weren’t getting the full range of services.

Some operators offered discounts or agreed not to raise rents, but despite usually being under no obligation to offer a discount, tenants viewed their apartments in the wider context of the building and services they could enjoy – and without these, some felt they were paying too much.

HomeViews reports: “Most tenants who commented negatively on value for money during Covid simply compared their rents to the wider market and were not impressed with what they saw. Others felt that rent increases showed a lack of care for tenants during a pandemic.#

Constantly increased

“One resident at a London scheme said, ‘Due to the current economy I find it hard to understand how rent is constantly increased yearly. This does not show loyalty hence why many tenants move out and find cheaper accommodation at the same or better quality.’”

However, the fact that average value scores actually increased from 3.99 out of 5 in 2019 to 4.08 in 2020 suggests that many tenants are still happy with their buildings.

It adds: “There is also evidence to suggest that they did not go as far as voting with their feet.” HomeView believes that high ratings, despite closed communal areas, shine a positive light on the sector and in particular the work of on-site management teams.

Read more about build to rent.

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Had to pay solicitor to prove I don’t own the Council’s land!

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You couldn’t make this up. The neighbour to one of my houses I’ve owned 22 years asked Nottingham Council to maintain their trees close to his house. Nottingham Council said Not our trees, they’re that Landlord Mr Roberts. I of course said Not mine

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Landlord reveals Covid ‘nightmare’ of elusive tenant and slippery letting agency

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A frustrated landlord has told how she feels held to ransom by her non-paying tenant and let down by a slippery letting agency.

The landlord, who currently lives in Dubai, has only had one months’ rent since September after her tenant used two spurious maintenance issues as an excuse.

She tells LandlordZONE: “He’s given me no other reason and I believe he’s working and not claiming benefits. He even told me he knows he’s in breach of his tenancy agreement but doesn’t care.”

Her tenant moved into the one-bedroom flat in Blackheath in 2017 after a large London letting agency promised to take care of the credit checks and monthly £1,250 rent collection.

Although she was resigned to him being a consistently late payer, the trouble really started last September when he complained about an incorrectly fitted lightbulb in the bathroom and a faulty ventilator.

She’s since paid for an engineer to do an MOT on the ventilator – giving it a clean bill of health – but he’s still not paying rent.

Meanwhile, the letting agent only contacted her in January to alert her to the problem and was so hard to get hold of, despite taking the £1,000 renewal fee from the tenant, she terminated the contract and plans to take them to court.

Collusion

She says: “I actually wonder if they have been in collusion with the tenant to make sure he was less than six months’ in arrears, to prevent an eviction.”

The landlord has now served a Section 8 notice although with the court backlog, has no idea when she might get her flat back.

“It’s hugely frustrating as he has taken full advantage of the Covid rules to hold me to ransom.

“It’s affected my health as I’m so stressed and I’ve not been able to do the charity work I was involved in – buying oxygen cylinders for Indian hospitals – and I still have to pay the mortgage.”

The experience has also put her off the PRS, she adds: “I don’t think I’ll rent the flat out again after this and will either move back in or sell it.”

Find out more about evictions.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Landlord reveals Covid ‘nightmare’ of elusive tenant and slippery letting agency | LandlordZONE.

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EXCLUSIVE: Referencing platform reveals latest sophisticated renting fraud

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Referencing platform Homeppl has revealed how a fraudulent tenant in London tried to rent properties from three different letting agents who used its system, highlighting the severe challenges faced by landlords from tech-savvy criminal renters.

The platform says its systems were able to foil the male tenant’s initial attempt in March to rent a property via fake references and documents. It also claims that the sophistication of his efforts would probably have fooled most landlords or letting agents using traditional referencing systems.

The tenant, who cannot be identified for legal reasons, initially approached a letting agent but checks on Companies House revealed his claimed employer was a firm with no turnover.

A bank statement provided proved by him turned out to be a manipulated image and therefore a fake, while email addresses provided had only recently been set up and were only lightly used.

Also, website addresses for different companies and entities offered as referees were linked digitally to the tenant.

The fraudster then tried to apply for tenancies through two further letting agencies in April and May.

Unfortunately for him, all three agents used Homeppl to reference tenants and his name was flagged by the system and his applications refused – unlike in other examples we have reported on recently.

“This example highlights the lengths that some tenants will go to in order to fraudulently rent a property which once they are in gives them the opportunity to commit further offences including illegally subletting or short letting on Airbnb or just to default on the rent,” says Homeppl founder and CEO Alexander Siedes (pictured).

“Unfortunately, there is no penalty for a fraudulent application, so they will just keep trying.
“And given most tenant referencing is nowhere near as reliable as ours, it makes you wonder where else has he tried and been successful.

Siedes blames ‘sloppy referencing’ by some large referencing companies on the 8% rent default rates within the private rented sector, which he claims his system reduces to zero.

The ultimate guide to tenant referencing – Hamilton Fraser

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Exchange and completion on the same day?

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Hi, We are approaching the end of the Stamp duty holiday up to 500K and I have a property that is legally ready to exchange.  However, we are having an issue on the approach to exchange and completion.

My challenge is that in case this moves to July

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Tenant claims advised to stay put?

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Hello, Can anyone advise the best course of action for me to take in this situation?

I received a message from a tenant in arrears, and we are currently taking her to court for eviction.

The message I received said:

“I’ve been in hospital on morphine.

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Manchester gives landlords more time to comment on huge new licensing scheme

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Landlords in Manchester have another chance to comment on plans for a bigger selective licensing scheme in the city after too few people responded to an earlier poll.

The plan – to cover more than 1,400 properties in Clayton and Openshaw, two areas of Gorton (pictured) and Abbey Hey and 430 homes in Harpurhey – was first suggested back in January but the council says lockdown and Covid regulations meant there wasn’t a chance to make an informed decision by the April deadline.

The new consultation will end on 29th August.

It has also flagged up another eight areas where it might consider schemes in future, including Claremont Rd/Great Western Street, Moss Side, and Royals, Longsight, which would cover another 1,031 properties.

The consultation process has been a real stop-start affair with different criteria suggested; last September the council announced plans for up to 12 parts of the city, with another eight more areas lined up.

But regardless of the areas covered, the National Residential Landlords Association has come out against selective licensing in the city as it believes the council should use its data to find landlords and target resources to best enforce current powers. 

Selective licensing is already operating in Crumpsall, Old Moat, Moston and Rusholme, where 1,681 properties are licensed. 

This has led to 403 homes targeted for follow-up inspections, 282 properties have seen improvement works carried out as a result, and 15 properties were given fines totalling £72,599. 

Greater Manchester’s mayor Andy Burnham has vowed to come down hard on rogue landlords with plans to introduce a £1.5m Good Landlord Charter in partnership with the city’s 10 councils to support landlord licensing and drive up standards in the private rented sector.

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Reasonably priced and efficient?

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Hello, Could anyone help please, I have recently taken advantage of the excellent tax planning structure offered by Property118.

I have started to remortgage some of my properties in the new structure, however, some of the conveyancing fees being charged seem on the high side.

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EVICTIONS: Changes to property possession process are needed, says legal expert

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Leading housing lawyer Simon Mullings is working with tenants’ groups on a five-point plan to make the evictions process fairer.

Mullings, co-chair of the Housing Law Practitioners Association (HLPA), says a worryingly low number of tenants facing eviction are not accessing free legal advice when their case is being reviewed by a judge under revised arrangements for possession proceedings.

Although the requirement for landlords to send the court an electronic copy of all the case documents – and confirm that these have been sent to the tenant – at least 14 days before the review is a positive innovation, Mullings suggests that duty advisers should be allowed to proactively contact tenants.

He told a conference organised by HLPA that one benefit of the mediation pilot being used in the process is that legal advice must first be given to a tenant.

Master of the Rolls

His announcement follows a recent Master of the Rolls report into possession hearings for evictions following the Covid court restrictions which warned of decreasing trust in the justice system without good availability of legal advice.

It said possession hearings were deemed unsuitable for remote determination by many, mainly because of the number of vulnerable tenants involved who were unlikely to be able to access the technology needed to take part, or to provide instructions to solicitors where they were represented.

Measures mandated by the pandemic had reduced the availability and accessibility of legal advice, with the impact of reduced advice disproportionately affecting those on low incomes.

It added: “Possession hearings, if conducted remotely, would threaten effective participation and undermine trust in the justice system.”

A working group is now looking into the ‘absurdly complicated’ process of evicting tenants and housing law in general.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – EVICTIONS: Changes to property possession process are needed, says legal expert | LandlordZONE.

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