BREAKING: Housing benefit fraud and overpayments now ‘rife’ says National Audit Office

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Spiralling fraud and overpayments in the benefits system now stand at the highest rate ever recorded, admits the Department of Work and Pensions (DWP), as it identifies housing payments as an area of concern.

Housing benefit fraud is particularly rife after the pandemic resulted in more relaxed checks to ensure a record number of new Universal Credit claims – up from three million to six million – could be processed and paid.

To help people with their housing costs, DWP administered some £30 billion of housing support through Housing Benefit and Universal Credit during 2020-21, with additional financial assistance paid through the Local Housing Allowance.

Excluding State Pension, DWP estimates it overpaid £8.3 billion of the £111.4 billion that it spent on benefits during 2020-21, an increase of £3.8 billion on the previous year.

Nearly all of the increase in fraud and error was on Universal Credit; DWP estimates it overpaid £5.5 billion of UC (14.5%) and underpaid £540 million (1.4%).

The DWP has identified four key fraud and error risks; it wants to improve controls over incorrectly reported self-employment earnings, savings, living arrangements and housing costs.

NAO boss Gareth Davies (pictured) says the issue has a real impact on public funds and on those who face deductions to their income due to overpayments.

He adds: “I recognise that the pandemic and the resulting surge in the number of claimants has increased DWP’s exposure to fraud and error.

“It must now review all cases that could have been subject to fraud during this time, whilst continuing to progress our past recommendations on how to reduce fraud and error.”

Read more about DWP payment problems.

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LATEST: By next year half of all landlords will be women

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Female landlords are closing the gap on their male counterparts as they turn their backs on stocks and shares to invest in property.

Women now make up 48% of the 2.6 million buy-to-let investors in the UK, up from 47% in the previous year, according to Ludlowthompson, which reports that the number of residential property landlords who are women increased by 2% to 1.25 million for the most recent tax year, up from 1.2 million the previous year.

The estate agency says buy-to-let investments have traditionally been more popular among female investors than other assets; women account for 44% of investors in stocks and shares ISAs and represent just 15% of Bitcoin traders.

Women now receive 44% of all income from buy-to-let investments (£16.1 billion of a total of £36.4 billion in income), up 27% since 2014/15 from £12.7 billion. In the same period, the total income for male landlords has grown 15%, suggesting that women have been adding to their portfolios of buy-to-let properties much faster than men.

Ludlowthompson chairman Stephen Ludlow (pictured) says the buy-to-let market has built a reputation of delivering long-term, stable returns to investors looking for income and long-term growth.

“With the gender gap in buy-to-let ownership narrowing year-on-year, it might not be long until we see a 50:50 gender split amongst buy-to-let investors,” adds Ludlow.

“This is a significant step considering the much wider ownership gap in other asset classes, such as equities and cryptocurrencies.

“Buy-to-let property is a sensible way to diversify an investment portfolio and you are competing against fewer professional investors than in stock market investments.”

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Government report lifts lid on ‘lazy landlords’

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Lazy landlords are causing thousands of English renters to feel dissatisfied with the state of their homes.

Figures from the latest English Housing Survey show 17% of private tenants aren’t happy – equating to some 748,000 families who could be living with damp, faulty electrics or dodgy plumbing.

One in four renters report being dissatisfied with the repairs and maintenance carried out by their landlord; the three most common reasons cited were that the landlord didn’t bother doing repairs or maintenance (35%), the landlord was slow to get things done (25%) and that their landlord did the bare minimum (15%).

The figures also show that 23% of privately rented homes (and 12% of socially rented homes) fail to meet minimum standards, 13% of privately rented homes contain a hazard and 11% don’t have a working smoke alarm.

Renting campaigner Ajay Jagota (pictured), founder of specialist claims management firm Veriwise, says the figures really bring home how many people in England are living in danger and squalor as a result of landlords not taking their responsibilities seriously.

He adds: “In every corner of the country there are renters wondering why their landlord won’t get rid of rats or wondering how long a landlord has to fix an electrical problem or can legally leave them without heating – all knowing that any complaints will probably get them nowhere.”

The English Housing Survey collects information about people’s housing circumstances and the condition of housing in England.

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Private rented properties cost on average £7,600 to upgrade to EPC Band C – official

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The private rented sector won’t meet new energy efficiency targets unless the government stumps up more cash for any replacement to the Green Homes Grant, it has been claimed.

Latest English Housing Survey figures show that the average cost to bring a privately rented property up to EPC C is £7,646 compared to £5,979 for a social rented property, or £8,579 for owner occupiers.

The Green Homes Grant scheme provided householders and landlords with support for the cost of installing energy efficient improvements in their home. However, the government only funded up to two-thirds of the cost of home improvements up to £5,000 under the scheme, which closed in March.

Timothy Douglas, Propertymark’s policy and campaigns manager, believes a long-term, costed and well-funded plan is desperately needed to encourage households and landlords to make energy efficiency improvements.

He says the survey also clearly highlights how the Green Homes Grant scheme wasn’t offering enough support based on the proposals to improve properties to EPC Band C.

“Any revised or reintroduced scheme must be increased from £5,000 to £10,000 maximum,” says Douglas (pictured).

“Similarly, it is vital that the UK government move away from a one-size fits all policy and develop energy efficiency proposals that work with the different age, condition, size and location of properties across the country. This way, grants and funding support can be targeted on the architype of a property rather than its tenure.”

In December, LandlordZONE reported that the scheme hadn’t managed to recruit enough accredited tradespeople to undertake the work.

Landlords who applied for vouchers have now been told they might not be able to get work done on time; they can request an extension until 31st July and vouchers will be extended for 90 days or until 31st October, however some builders are warning they won’t be able to do the work before this deadline.

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Rental Index Live! Talk to the experts at Belvoir’s free property webinar…

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If you are a landlord your number one concern is probably ensuring that your investments are performing to their maximum potential. But how often do you take time to review your portfolio, and catch up with industry experts to find out about any changes to the rental market in your area? Post lockdown Britain paints a very different picture to pre-March 2020, making it more important than ever to keep up to date with developments. Are you sure you are fully informed about how rents are performing in your area? Do you wonder whether you should be charging more or less rent? Do you have tenants who are now in arrears and are you confused by changes to eviction laws?

Click here to register for Belvoir’s Rental Index Live webinar

Belvoir, which has over 170 offices nationwide, is one of the largest property management franchises on the UK High Street, with local business owners who are able to answer all of your questions. Belvoir is constantly monitoring the UK rental market and for the past 11 years has examined advertised rents each quarter to provide a unique rental index, focusing on regional landlord and tenant trends right across the country. This valuable resource is made freely available to landlords via the Belvoir website (www.belvoir.co.uk) and is well worth a read to see how rents are performing in your area. Importantly however, Belvoir also conducts a quarterly survey of franchisees across the network, seeking their views on current issues, and asking for predictions of what they think is likely to happen to rents in the next quarter.

The most recent survey, which is collated for Belvoir by property expert Kate Faulkner, provided a snapshot of how the High Street was coping during the first quarter of 2021. It also looked at what agents thought would happen as the year progressed. Check out the results…

Flats

• 10% of Belvoir offices, including Leamington Spa, Wembley, Aberdeen and Edinburgh, reported a decline in rents.
• 74% of Belvoir offices, including Swansea, Perth, Bangor, Warrington, Bolton, Newcastle Central, Yorkshire, the South West, most of the South East, East and West Midlands reported a rise in rents.
• 15% of offices, including Tynedale, Nottingham, Southampton, Boston, Westminster and Chester reported static rents.

Houses

• Belvoir Westminster, Wembley and Swansea were the only offices reporting rental decreases.
• 79.5% of Belvoir offices, including the North West, North East, Yorkshire, South West, most of the South East, West Midlands, East Midlands, Perth and Bangor, reported a rise in rents.
• 13% of offices, including Watford, Leamington Spa, Boston, Nottingham, Edinburgh and Aberdeen, reported static rents.

Click here to register for Belvoir’s Rental Index Live webinar

Rental forecasts for Q2 2021

• No Belvoir offices forecast rental decreases.
• 74% of Belvoir offices forecast rental increases.
• 26% of Belvoir offices forecast rents staying the same.

Houses

• No Belvoir offices forecast rental decreases.
• 82% of offices, including London, North East, Yorkshire, Scotland, most of the West Midlands, South West, East Midlands, Southampton, Portsmouth, Brighton, Thanet, Warrington, Chester, Swansea and Bangor forecast rental increases.
• 18% of Belvoir offices, including Boston, Bolton, Harlow, Watford, Tunbridge Wells, Devizes and Evesham, forecast static rents

Summary: Belvoir’s survey confirms that rent increases for flats are now catching up with house increases. A total of 90% of offices saw rises/static rents for flats, and 93% saw rises/static rents for houses. Not a single office forecast falls in rents for the next quarter! This confirms the ‘race for space’ is happening in both the rental and sales market. BTL remains a robust investment, typically doing well during a recession as well as a pandemic.

Rental Index Live webinar

To find out more about the current ‘race for space’ and other rental trends including any concerns you may have about rent arrears, why not register for Belvoir’s FREE Rental Index Live webinar that is being hosted at 7pm on 28th July by Channel 4’s Paul Shamplina and a panel of Belvoir franchisees from across the UK? You can hear their views, submit a question, and find out how to ensure that your BTL investments are performing to maximum potential throughout the second half of 2021. It’s a fantastic opportunity, so don’t miss out!

Click here to register for Belvoir’s Rental Index Live webinar

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Renting now cheaper than buying according to Hamptons International

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Hamptons International is the trading name of Countrywide Estate Agents, a group which carries out regular research into the UK property market.

The firm’s recent analysis suggests that the average private sector tenant is currently better off than a buyer with a 10% deposit, to the tune of £71 per month and this it puts down to the pandemic effect.

Many things have changed in the UK property market since the onset of the pandemic last March, and one of these changes has been that renting has now become cheaper than buying, an encouraging sign for buy-to-let investors.

The research identified only four areas in the UK where it is cheaper to buy than it is to rent: the North East, North West, Yorkshire and Humber, and Scotland.

Pre the pandemic it was cheaper to buy that to rent in every UK nation and region. But the sudden drop in demand for renting last year – as young people gave up their tenancies and returned to living with parents – changed the financial metrics dramatically. City living became considerably less attractive.

It’s the price rises what did it!

Just over a year on from the initial shock of Covid we’ve seen unprecedented house price rises, helped along by the successive Stamp Duty (SDLT) holidays and deadlines introduced by the chancellor.

So, despite a 7.1% rise in average rents over the past 12 months, there’s been a dramatic switch between the costs of renting verses buying as the exceptionally strong house price growth coupled with increases in higher loan-to-value (LTV) mortgage rates have outpaced the rental market.

With more young people being forced to stay in the rental market, being priced out of buying properties for themselves, the demand for rental properties has about-turned in city centres from 12 months ago. Rents are now on the rise again encouraging more landlords to stay in the rental market.

The renting market bounces back

Many young people are more inclined to move around with jobs and locations, they are even prepared to move and live abroad or travel, and the prospect of being tied to long-term mortgage commitments just does not compute with them – therefore for a fairly large section of the working population, renting has become a lifestyle choice.

With more and more young people less focused on purchasing their own property and more on a convenient and flexible renting lifestyle, the demand for rental property in the right locations has made a strong recovery and looks set to remain strong for the foreseeable future.

On the other hand, city centre properties, for those landlords who can afford to buy now, offer relative affordability while prices remain depressed; mortgage deals remain competitively priced and affordable, both offering the prospect of strong profits through healthy rental yields and future capital appreciation.

As might be expected, London has seen the biggest turmoil in the market since the start of the coronavirus pandemic last March, but with things beginning to turn around again and with the cost of renting becoming cheaper than buying, it creates a window opportunity for new and existing buy-to-let investors. The Hampton’s research shows that city centre rents are creeping up again and void periods coming down.

Where should landlords buy?

Young people tend to favour city locations and as workers drift back to their offices, as we all learn to live with the Covid threat, they will want to maintain their pre-pandemic vibrant social lives close to amenities and close to good restaurants, bars, and clubs.

UK hotspots for city centre locations outside of London include vibrant and growing cities such as Manchester, Liverpool and Leeds, cities where prices and rental demand remains strong. These large university cities with great social scenes, strong transport links and relative affordability offer great investment opportunities when compared to London.

However, other regions may offer even better value for buy-to-let investors, such as those identified in the research, the North East, North West, Yorkshire & Humber, and Scotland. These regions still offer excellent rental yields, with the prospect of future capital growth.

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Short-lets rental sector bounces back strongly as Covid rules relax

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London’s short-term rental sector has bounced back more quickly than hotels and serviced apartments since the UK’s re-opening.

Short-term rentals occupancy in the capital went up from 43.1% in May 2020 to 64.1% in May 2021 – a 48.8% increase and a 12.5% rise between April and May this year.

The latest comparable data available across the sectors is to the end of April 2020, showing that hotel occupancy stood at 28%, serviced apartments was 39.9% and short-term rentals outpaced both at 57%.

The study, conducted in partnership with the UK Short Term Accommodation Association (STAA), reveals that average daily rates for the year ending April 2021 increased 9.4% for short-term rentals, but fell by 14.9% for hotels and saw a massive 63.1% drop in serviced apartments. Rates increased for short-term rentals by 16.5% from April to May this year.

Short-term rentals saw the highest growth (44%) in revenue per available room in the same period, while serviced apartments was up 25.2% and hotels fell by 2.6%.

The month-on-month picture was even brighter for short-term rentals, with a huge 40.8% increase from April to May this year.

The average length of stay for short-term rentals rose from 11.9 days in May 2020 to 13.3 days by December 2020, hitting a high in November of 14.3 days.

STAA chair Merilee Karr (pictured) says: “Whilst a hole will still exist from the absence of international visitors to London, customer confidence and the strength of the staycation trend are likely to fuel further the London accommodation recovery.

“The ease at which guests can socially distance themselves from others and benefits such as the high standards of cleanliness and safety, should cement short-term rentals as a mainstream option for tourists and holidaymakers.”

Read more about short lets.

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Jump in BTR planning approvals signals boom for growing housing sector

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The build-to-rent (BTR) sector has been booming during the pandemic including a record 11,975 planning applications submitted, up 52% year-on-year.

Of these, 58% received full approval, a rise of almost 6% since the start of the pandemic, while 42% were either rejected or withdrawn, a drop of nearly -6%, according to BTR specialists Ascend Properties.

It says the sector is becoming a driving force in the UK new-build market and that Covid has failed to impact the positive momentum.

Ascend’s research shows that the pre-pandemic peak for BTR planning application approval came in Q2 2019 when 6,682 applications were submitted.

Of these, 4,151 – an all-time high of 62% – were granted full planning consent, while 2,531 – an all-time low of 38% – were either rejected or voluntarily withdrawn. By the time the pandemic began, applications had risen to 7,900 submissions but the amount being granted was down to 52%, while rejections and withdrawals rose to 48%.

Q2 2020 brought a predictably significant slump for the sector; while the total number of applications only fell slightly to 6,530, the approval rate dropped significantly to just 39%, while rejection and withdrawal jumped to almost 61%.

Predictable slump

Ascend MD Ged McPartlin (pictured) says build-to-rent is becoming the go-to choice for developers, with projects popping up both in major cities and smaller regional towns.

He adds that there’s also greater willingness from local planning authorities to grant permission for developments.

“While developers sense high yield, low-risk opportunities, local authorities sense an opportunity to simultaneously meet the demand for new homes while rejuvenating and reinvigorating their economies and communities by introducing this new, dynamic way of living,” says McPartlin.

Read more about build to rent.

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Here’s a lesson for overzealous landlords

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A Portsmouth buy-to-let landlord thought he would take advantage of the renovation efforts on his Victorian house in Southsea to meet the government’s projected minimum EPC rating targeted for 2030.

The local council thought otherwise. It is now demanding that the new triple-glazed windows he has installed be replaced at a possible cost of £10,000. It will mean getting custom made-to-measure sliding sash front windows fitted and scrapping the new windows at the four-storey rental property.

Landlord Mike West has replaced his single-glazed sliding sash windows with modern UPVC triple-glazed ones whilst carrying out his renovation works, which perhaps understandably he thought would future proof the Victorian property and meet the projected band C rating.

However, this thought clashed with the council’s thinking as the property is in a conservation area, subject to the many restrictions that implies when it comes to alternations, windows being one of the controlled elements.

What is a conservation area?

These are designated areas of historic and architectural interest, areas in which there are legal restrictions on what changes can be made to buildings, gardens and street furniture in order to preserve the unique character of the place. 

There are now around 10,000 conservation areas in the UK since they were introduced into the planning system in 1967 comprising housing estates, parks, canals, historic town centres and some entire villages.

Local conservation restrictions vary depending on the local authority’s vision. Examples might include things like the prevention of changes to railings, street lighting, trees, windows, extensions, and even including such things as the colour of paint that can be used on front doors and windows.

Always consult before you buy

Most local councils have their own Conservation Officer. This person should always be consulted before carrying out any renovation work or changes to properties in conservation areas. A site visit should be arranged at an early stage in the process of planning your changes, to establish exactly what is and is not acceptable to the council.

The Minimum Energy Efficiency Standard (MEES) came into force in England and Wales on 1 April 2018 and applies to private rented residential and non-domestic property. It is aimed improving the energy efficiency of rental properties by legally restricting the granting and continuation of existing tenancies where the property has an Energy Performance Certificate Rating of F and G. Currently the Minimum Energy Efficiency Standard Rating is E and above.

However, the government recently stated that it wants to upgrade as many private rented sector homes as possible to EPC Band C by 2030 at this it would seem motivated Mr West to go for the ultimate in windows energy efficiency, with modern triple blazing. 

Unfortunately, standard design UPC windows rarely meet the requirements in a conservation area, and because older sliding sash windows are rarely made in standard sizes, their replacement means having them specially made at considerably higher cost than normal.

Mr West has learned about conservation restrictions the hard way as Portsmouth Council has ordered him to remove his triple glazed windows and replace them with windows more in keeping with the style of the originals, as the authority says, to prevent any further “erosion” of the area’s heritage.

Mr West had had comented:

“We put in triple glazing. It’s very energy efficient and also very comfortable for the tenants.

“We’re not conservation cowboys… anybody walking casually up and down the street would not notice the difference.”

However, Mr West’s view was not upheld when it came to his appeal. The Planning Inspectorate upheld the council’s decision.

A spokesperson for Portsmouth City Council said: 

“Unfortunately, there are other UPVC windows on the street. We can’t do anything about these, because we didn’t know about the changes at the time, and legally too much time has passed for us to take action.”

The lesson here perhaps is that with planning matters it rarely pays to make assumptions, especially when it comes to conservation areas and listed buildings. The fact that other properties in the area do not meet the requirements, it does not necessarily follow that any new alterations will – always start off any project by consulting your local authority.

Of course, there are other ways of improving the energy efficiency of traditional sliding sash windows without drastic changes to the outside appearance, possibly with secondary glazing or by fitting double or triple glazing into the wood frames.

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‘Eviction delays to get worse when furlough scheme finishes’

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Landlord Action’s new head of legal Paul Sowerbutts fears the protracted delays around the eviction process are going to get worse before they get better.

The eviction service took 707 calls from landlords looking for advice in June, up from 439 calls in April, and Paul Sowerbutts predicts that once the furlough scheme ends in October there will be more job losses, leading to even more landlords needing to evict tenants who’ve built up large rent arrears.

Review hearings have created an extra hurdle that leads to delays too, which Landlord Action is petitioning to remove.

He tells LandlordZONE: “There’s a lot of frustration directed at local authorities who landlords feel aren’t supporting them because they want tenants to stay in properties for as long as possible.”

Loopholes can sometimes be found to expedite the process, says Sowerbutts, who cites the six-month notice period facing landlords in Wales.

Issuing a notice on the grounds of anti-social behaviour along with rent arrears means the courts should prioritise a case, he advises.

In England, relying on a county court bailiff is taking at least three or four months. Consequently, Landlord Action had been advising clients to apply directly to the high court to get a high court enforcement officer to carry out a much speedier eviction in a couple of weeks. However, this is proving less effective as an application now takes several months.

An experienced solicitor with many years working in local government, as well as with tenants using legal aid and social landlords, he believes the market will evolve once Section 21 is abolished, leading to fewer landlords in the PRS but with larger portfolios, where his expertise in housing management – maintaining relationships with tenants – will be useful.

Paul’s rounded knowledge of all aspects of housing law and the strategies needed to bring successful evictions will also be key. “I’m getting my sleeves rolled up and using my understanding of all sides in the process,” he adds.

Visit Landlord Action.

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