Browsing all articles from July, 2021

Jul

BREAKING: Rents hit record £1,000 a month as tenants return to city centres

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A significant revival in the city centre private rental market ahead of Covid restrictions being lifted next week has pushed up rents to a record £1,000 a month per property, says Rightmove.

The portal says this is the first time rents have reached this figures outside London on average after a 2.6% quarterly jump. Overall rents are 6.2% higher than this time last year.

These rises are being generated by a surge of tenants returning to their former urban haunts after spending the pandemic living with parents or renting in more rural areas, says Rightmove, with eight out of ten of the largest cities seeing rent increases.

For example, in Nottingham city centre asking rents are up year-on-year by 6.8% and in Liverpool (pictured) by 3.8%.

The rises are also being driven by a shortage of rental property in the market; year-on-year there are 36% fewer properties on the market, and properties that are advertised are being snapped up.

10% more tenants

Rightmove’s Quarterly Rental Trends Tracker, based on over 470,000 properties, reveals that the number of prospective tenants contacting agents about properties for rent is currently 10% higher than in July 2020.

London is the only region with rents lower than this time last year (-6.8%) though rents in the capital have increased this quarter for the first time since before the pandemic

Rightmove’s Director of Property Data Tim Bannister said: “At the start of this year the impact that tenants leaving cities had on rents was clear to see, but with restrictions continuing to lift we’re seeing signs of the city centre comeback.

“As businesses settle into a more structured balance between home and office time, we expect this to continue for the rest of the year.”

Read more about how Covid has impacted the rental markets.

View Full Article: BREAKING: Rents hit record £1,000 a month as tenants return to city centres

Jul

EXCLUSIVE: What’s in the next episode of Nightmare Tenants, Slum Landlords

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Eviction expert Paul Shamplina helps a landlord couple confront their evasive letting agent on the latest edition of Evicted! Nightmare Tenants, Slum Landlords.

The Channel 5 programme features landlords Suketu and Minesha Patel who signed a guaranteed rent agreement with an agent to manage their three-bedroom East London property.

But after receiving only one month’s full rent, payments became sporadic, before stopping altogether. They are now owed more than £7,000 and the agent is avoiding them.

“I would call the agent to follow up on where the rent was and suddenly he would transfer a nominal amount, sometimes £300, sometimes £100, but never the full £1,800 owed,” says Suketu.

“He claimed he was paying us from his own pocket as the tenants had not paid rent. However, the agreement we had was supposed to guarantee our rental income regardless of whether or not the property was occupied, or the tenants had fallen into arrears.”

The Patels call in Shamplina for help, who decides to confront the agent in his office (see below) to try and get their property and money back.

The agent claims he’s the victim and the tenants haven’t been paying any rent, but when the Patels meet the tenant, they hear a different story. With rent arrears still escalating, the couple have no alternative but to start the eviction process.

Shamplina says the prospect of guaranteed rent can seem attractive to landlords, saving them the trouble of dealing with voids, rent arrears, and eviction.

He adds: “However, across each series of the show, I always make sure I expose the problem of guaranteed rent rent-to-rent, and try to educate landlords about this sector of the industry, because significant pitfalls remain for landlords if they choose the wrong company. At present, it is still like the Wild West with far too many landlords being duped.”

Evicted! Nightmare Tenants, Slum Landlords is on Thursday at 10pm.

View Full Article: EXCLUSIVE: What’s in the next episode of Nightmare Tenants, Slum Landlords

Jul

Court refuses to alter terms of a commercial lease on renewal

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When terms of a renewal lease cannot be agreed between the parties, according to the provisions of the Landlord and Tenant Act 1954, which governs the statutory requirements of a commercial lease, a court can have oversight and decide.

Section 35 of the Act provides that a Court shall have powers to vary the terms of the current tenancy, taking into account all relevant circumstances.

Poundland, in Poundland Ltd v Toplain Ltd, argued that its lease on renewal should include a clause stipulating that rent should be reduced by half during any “use prevention measure”. This was taken to include government legislation due to subsequent waves of Covid, changes which Poundland said would “modernise” the lease.

The high street discount goods retailer argued that such a provision inserted into the lease would be in both parties’ best interests – it would allow the tenant to continue to trade and meet its ongoing obligations to the landlord, they claimed.

However, the judge in the case did not agree. The decision went against Poundland to the relief of the commercial landlord community. The County Court refused the tenant’s request to include a clause in its business renewal lease which would reduce the rent by half should the government impose further lockdowns.

As authority for its decision in relation to Section 35 of the Landlord and Tenant Act 1954, the court referred to the test case of O’May v City of London Real Property Co Ltd (1983) which established the principle that a court should not sanction a departure from the terms of the current lease “unless the burden of changing the terms of the current tenancy falls on the party proposing the change” and the change proposed is fair and reasonable.

The landlord Toplain Ltd had argued that there was no market precedent for such a change, an inserted clause that would “fundamentally change the relationship between the parties.” It argued that any future lockdown would be controlled by government legislation and that “the proper course for the tenant would be to take advantage of any benefits or grants offered by the Government.”

In his Judgment District Judge Jenkins, presiding at Brentford County Court on 2 July 2021, followed the principles laid down in O’May and refused to sanction the change. The judge said that it would not be fair and reasonable to expect the landlord to share the risk (with the tenant) in circumstances over which the landlord would have no control and where the tenant could avail itself of reliefs or schemes offered by the Government.

District Judge Jenkins said that the case was different from the recent decision in WH Smith Retail Holdings Ltd v Commerz Real Investmentgesellschaft mbH (March 2021) as the parties in the WH Smith case had already previously agreed that a pandemic rent suspension clause should be included in the renewal lease – here the court was simply required to determine the mechanics of how that provision would operate.

The landlord was successfully represented by Ms Cecily Crampin at Falcon Chambers, a barrister regularly instructed by PDT Solicitors.

Lessons to be learned from the case:

The Poundland case is a County Court decision without binding effect on future cases, though it does give a guide as to how judges may apply current guidance to pandemic-related decisions.

PDT Solcitors relayed Ms Crampin’s comments:

“This case shows judicial thinking on the inclusion of Covid-clauses, and how the guidance in O’May may be applied in the specific context of lease terms sought as a result of the Covid-19 lockdowns.”

View Full Article: Court refuses to alter terms of a commercial lease on renewal

Jul

Another council brings in huge fines for landlords who ignore electrical safety standards

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Bury Council in Manchester has adopted new measures to fine landlords up to £30,000 if their properties don’t meet the recently-introduced electrical safety standards.

Although the standards came into force in June 2020, they had not been adopted and implemented by the council which has now agreed to introduce the civil penalties after a report to the council’s cabinet said unsafe electrical installations in rented homes ‘will not be tolerated’.

Regulations now apply to all tenancies in England and require landlords to have the electrical installations in their properties inspected and tested by a qualified and competent person, at least every five years, and to give a copy of the electrical safety report to their tenants, and local authority if requested.

Councils can decide the level of penalty for landlords who don’t comply – up to £30,000 – and can spend the proceeds on enforcement purposes.

Civil penalties

It’s not known how many councils have adopted the civil penalties or how many landlords have been fined so far, says the Local Government Association.

Last December, LandlordZONE reported that East Riding Council had signed off civil penalties of up to £30,000 as an alternative to taking landlords to court.

Bury councillor Clare Cummins says: “The additional provision to impose a fine up to £30,000 sends a strong message to any rogue landlord that substandard property conditions and unsafe electrical installations will not be tolerated. We as a council want to send out a clear message that we expect all homes to be safe and of a decent standard within the PRS.”

View Full Article: Another council brings in huge fines for landlords who ignore electrical safety standards

Jul

Landlords are now bribing tenants to quit properties, claims report

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Landlords faced with lengthy court waits have resorted to bribing tenants to get them out of their properties, it has been reported.

Many are so desperate that they are willing to cut their losses and write off arrears to gain vacant possession and avoid a long and expensive court process, reports The Telegraph.

A recent report by the University of York found landlords who were worried that increasingly restrictive regulations would hamper eviction had paid problematic tenants to leave.

Exhaustion

Author Dr Julie Rugg said the practice most often applied in cases of anti-social tenants or where huge arrears had accumulated. “A landlord won’t ask a good tenant to leave, so payments like this can represent exhaustion on the landlord’s part,” said Rugg.

One anonymous landlord who has about 200 tenants told the newspaper: “I have two tenants that I have offered to pay to leave. One was £20,000 in arrears, the other was £12,000 in arrears, and I offered to find them each a place to live and pay the first month’s rent and the deposit. I was going to write off their arrears.”

He expected to pay £2,000 to £2,500 on each case to cover the costs, but both offers were rejected because they wanted to be rehoused by the council and were told to wait for the bailiffs.

“If a tenant is in receipt of benefits, offering an incentive to leave is a problem because the council then deems them intentionally homeless,” the landlord added.

Paul Shamplina, founder of Landlord Action, said: “If a landlord is faced with choosing an eviction process, which could take up to 14 months, or writing off existing arrears but re-letting the property much sooner, the landlord has to weigh up which makes most financial sense and is the least stressful.”

Read more about evictions.

View Full Article: Landlords are now bribing tenants to quit properties, claims report

Jul

How will EPC legislation impact your lettings business?

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Post-COVID, the landscape for landlords and lettings business owners faces further regulation.

The latest potential squeeze on landlords revolves around the Minimum Energy Efficiency Standards, which could take effect in 2025; these changes will impact the domestic rental property in England and Wales.

In practice, this will likely lead to tougher rules regarding your Energy Performance Certificates for each of your properties and the measurement of how efficient your properties are.

New legislation proposes that if you wish to advertise your property for rental from 2025 and onwards, you’ll be required to give lettings agents an updated and compliant EPC of a minimum of a C (currently an E).

This can potentially cost landlords thousands.

Landlords will be expected to pay for either insulating their properties to retain heat or use other ‘fabric first’ features that can help to improve heating and lighting.

What’s the trigger for the added requirement? Well the government is focused on the ‘green recovery’.

The current government mandate is to ensure that homes are energy-efficient and reduce

carbon waste, helping towards the government’s net-zero target.

We listen to dozens of Landlords a week at our parent company allervices4u.co.uk and one of the big ‘pain questions’ that we receive is, ‘how many more changes are there going to be, which will cut into my margins’?

It’s a tough question to answer, however, we can only answer by saying ‘we cant be 100% sure but likely yes’.

There is one thing that we are 100% sure of, however, and it is the fact that landlords must find solutions that protect themselves against the inevitable changes and do it in the most cost effective manner possible.

Our clients a kept on asking us for help, so we created the Total Asset Protection Plan

(landlord-protection.co.uk)

View Full Article: How will EPC legislation impact your lettings business?

Jul

‘Landlords have bills to pay too’, leading figure reminds Ministers as evictions loom

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A leading PRS figure has warned that the easing of Covid restrictions on July 19^th and the government’s plans to wind-down Covid support for the economy will have a significant effect on the private rented sector.

Tim Clark (pictured), chairman of the UK Association of Letting Agents (UKALA), says his members are worried about a surge in evictions and a contraction in the size of the rental market as the support for – and protection of – tenants ends following months of Covid.

“The restrictions on evictions during the last year, while appropriate for the time, could result in an explosive situation without the government providing more support to tenants,” he says.

“Landlord mortgage payments still need to be made and rent arrears will still exist.

“Without more support to tenants, as has been done elsewhere, there will be wide-spread evictions, leaving many tenants in impossible positions.

Kicked the can

“The government has effectively kicked the can down the road on this one. Currently, potential evictions are merely being postponed, but tangible help for tenants could help avoid them and the distress they bring.”

Clark also says this uncertainty within the private rental sector is driving more landlord to change their strategies, with over 50% of his members’ client landlords putting off plans to buy more properties and 40% planning to reduce their portfolio’s size.

“This situation, suggesting a possible reduction in the size of the PRS, adds a further potential squeeze on top of the evictions boiling pot,” adds Clark.

“Unfortunately the government has yet to recognise that, without help, tenants may not be able to rent again.”

View Full Article: ‘Landlords have bills to pay too’, leading figure reminds Ministers as evictions loom

Jul

Lancashire town to extend selective licensing and raise fees for landlords

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The town of Burnley is set to ask residents and landlords whether it should extend its selective licensing schemes for another five years.

Its schemes in Burnley Wood and Healey Wood, along with the Leyland Road area of the town, are due to end in November but Burnley Council reports that both areas have seen improvements in the last five years.

Housing disrepair complaints have fallen, as well as the number of empty houses, while there’s also been a reduction in ASB and environmental crime and a rise in average house prices.

Fees are set to go up under the new scheme: from £715 for a new application and £640 for each additional property to £750 per new application and £670 for each additional property, with a 30% discount for anyone in the council’s good landlord and agent scheme.

Secretary of State

If it gets the go-ahead, an 11-week public consultation would start on 9th August, although the size of the schemes mean they would need Secretary of State sign off.

The council has been operating selective licensing since October 2008 and says that between 2013 and 2021, 25 landlords representing 41 properties were prosecuted for failing to apply for a licence while it served 20 financial civil penalties totalling £161,500.

In the Burnley Wood/Healey Wood and Leyland Road selective licensing areas, six financial civil penalties totalling £33,000 have been served.

Councillor John Harbour (pictured), executive member for housing, says tenants, landlords and the wider communities have all benefited from the initiative.

He adds: “It’s now time to consider whether selective licensing should continue in these areas and we want to hear from all those affected so we can make an informed decision.”

Read more about Burnley.

View Full Article: Lancashire town to extend selective licensing and raise fees for landlords

Jul

Tenants more worried about fire safety in their homes than homeowners – official

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Renters are more likely to feel unsafe in their home than owner occupiers, according to the latest English Housing Survey.

The Ministry of Housing Communities & Local Government (MHCLG) research found that only 5% of people on average felt unsafe and feared that a fire would break out.

But 7% of private renters didn’t feel safe along with 10% of social renters, compared with 3% of owner occupiers.

The 2019-2020 survey found that those who live in low (11%) and high (21%) rise flats were more likely than those in houses (6%) to feel unsafe in their homes.

Younger people were more likely to feel this way, with 15% of those aged 16-24 agreeing – higher than any other age group.

Those from an ethnic minority background were more likely than those from a White background to report a lack of confidence (8% compared to 5%).

The MHCLG reports: “It is likely that all these findings are related. For example, younger people and those from an ethnic minority background are more likely to be renters and renters are more likely to live in flats.”

The national survey of people’s housing circumstances and the condition and energy efficiency of housing in England is one of the longest standing government surveys and was first run in 1967.

This was the first time a question on safety confidence had been included the survey.

View Full Article: Tenants more worried about fire safety in their homes than homeowners – official

Jul

Private tenants ‘most worried’ about fire safety in their homes