Leasehold reforms will help 1.8m landlord properties, Ministers reveal

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New government figures show that there are 1.8 million leasehold properties in the private rented sector.

The Ministry of Housing Communities & Local Government has confirmed its provisional figures, reporting that 39% of leasehold properties are privately owned and let in the PRS.

It illustrates the importance of new leasehold reform plans for landlords; in January, the government announced new measures that mean owners of leasehold houses will be able to extend their leaseholds by 990 years at a zero ground rent, removing the much-publicised attempts by some freeholders and developers to sell properties with escalating ground rents and restricting extensions to 50 years.

It also promised to make it fairer and cheaper to extend leases or convert them to freehold or commonhold status.

In 2019-20, there were an estimated 4.6 million leasehold properties in England, equivalent to 19% of the English housing stock.

Highest proportion

London and the North West of England had the highest proportion, at 34% and 31% respectively, while the East Midlands had the lowest (9%).

In the private sector, 82% of flats were owned on a leasehold basis – 93% of owner-occupied flats and 73% of privately rented flats. Leasehold houses were less prevalent than flats with 8% of houses owned on a leasehold basis. This was highest in the private rented sector at 9%.

The proportion of leasehold houses also varied by region; 28% of houses in the North West were owned on a leasehold basis, significantly greater than in any other region, with the next highest in Yorkshire and the Humber at 8%.

For flats, this ranged from 43% in Yorkshire and the Humber to 63% in the South East.

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BREAKING: Report says landlords can be forced to mediate during evictions

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An official report into whether people involved in litigation should be forced to take part in alternative dispute resolution (ADR) has cleared the way for this – until now – voluntary mechanism to be forced on warring parties.

Recommendations within the report by The Civil Justice Council, which was commissioned by the Master of the Rolls Sir Geoffrey Voss, would usher in new regulations to mandate landlords and tenants who are involved in contested evictions to enter into mediation before going to court.

Published today, the lengthy report (see link below) will have far-reaching ramification for the courts and tribunal service and particular for possession cases involving landlords and tenants.

It also name-checks the pilot ADR scheme set up earlier this year to try out mediation among feuding landlords and tenants prior, largely to try and alleviate the pressure on courts as eviction volumes rise post-Covid, highlighting some of the problems encountered.

“One of the early lessons of the possession ADR pilot has been that because no legal advice is available during the mediation, duty solicitors are reluctant to advise clients to mediate under the pilot scheme and litigants-in-person were very reluctant to take,” it says.

The Master of the Rolls (pictured) adds: “I am grateful to Lady Justice Asplin and the working group for this excellent report.

“They conclude that it is possible, where a court process remains available, lawfully to mandate ADR.

“As I have said before, ADR should no longer be viewed as ‘alternative’ but as an integral part of the dispute resolution process; that process should focus on ‘resolution’ rather than ‘dispute’. This report opens the door to a significant shift towards earlier resolution.”

Mike Morgan (pictured), Legal Division Manager at HF Assist and Mediation, says: “We’re pleased to see this report into the potential for compulsory ADR, and the recognition that forms of ADR, such as mediation, need to be made an integral part of the justice process.

“Doing this will make them more common and more widely used. For housing and tenancy disputes our experience shows that to be effective and get the best results, the earlier mediation happens the better. 

“Offering this when disputes have reached court can be too late, and highlights the need for better education of consumers as to how they can resolve disputes quickly and effectively.”

Tim Frome, Head of Legal at evictions specialist Landlord Action, says: “Achieving resolution through an ADR process is much quicker and more cost effective than using the courts.”

Read more about mediation. Read the report in full.

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MHCLG to spend £100k on national landlord database investigation

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The government is to spend up to £100,000 investigating how best to set up a national register in England for the country’s estimated 2.3 million private landlords.

Details of the work have been revealed in a tender document published on an official ‘supplier opportunities’ website.

The document says the Government wants to understand the ‘different models available for pursuing solutions to our identified problems and to further understand the difficulties individuals face when renting, letting or enforcing property standards in the Private Rented Sector’.

The ‘problems’ referred to are that central and local government authorities have limited and un-joined up records on landlords in England.

Check information

Sources include HMRC tax records, local authority licensing schemes and national mandatory deposit registration scheme data.
Private tenants, on the other hand, have only limited ways to check information about their landlord or property before signing a tenancy.

The exploratory work required by the tender includes looking at the Welsh and Scottish landlord registration scheme.

Wales’ RentSmart programme is heavy on regulation, enforcement and expense (£200+ a year), while Scotland’s lighter and more straightforward scheme charges fees of £67 for each landlord and £15 per property.

The consultancy ‘discovery’ work tender closes later this week and is due to start at the end of August and last up to ten weeks.

In May the Queen’s Speech included reference to the government’s plans for major reform of the PRS including a national register and compulsory redress scheme membership for landlords.

Sean Hooker (pictured), Head of Redress at the PRS, say he hopes the consultation will recommend that all the existing sources of information are ‘joined up’ to create the register, rather than it relying solely on landlords to upload their details.

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Why landlords are facing a buy to let mortgage rate dilemma

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Mortgage broker, Hamilton Fraser Total Landlord Mortgages explains the current predicament landlords have with whether to stick or twist on mortgage rates as inflation bursts through the Bank of England target.

The year-on-year cost of living surged from 1.5 per cent in April 2019 to 2.1 per cent in May, nudging above the Bank of England’s self-imposed two per cent ceiling.

The latest report from the Monetary Policy Committee – the team of rate-setters – reveals inflation is 0.3 per cent higher than expected and is forecast to soar above three per cent due to rising energy and commodity prices.

“The committee’s expectation is that the direct impact of rises in commodity prices on inflation will be transitory.  More generally, the committee’s central expectation is that the economy will experience a temporary period of strong GDP growth and above-target inflation. After which growth and inflation will fall back.  There are two-sided risks around this central path, and it is possible that near-term upward pressure on prices could prove somewhat larger than expected,” says the BoE.

Rate setters next meet on 5 August 2021 and have yet to reveal their hand on which way interest rates will go.

Are mortgage rates set to rise?

The current Bank of England interest rate has sat at a record low of 0.1 per cent since March 2020. Raising the rate will likely see buy to let mortgage rates rise as well.

Current best buy to let mortgage rates range from 1.19% for a two-year fix to 1.65% for a five-year term.

Remortgaging now means locking into the current rate as a safety net if inflation continues to rise, explains Total Landlord Mortgages Principal Daniel Lee.

“With inflation rising above the Government target, will this trigger a rise in the coming months? I think we will see the rates remain low for the foreseeable future, but we have to keep a close eye on where inflation is going. Is this a short-term blip or here to stay?” said Daniel  Lee.

Time to review portfolio borrowing

There has never been a more important time to look at your portfolio, get the right advice and assess two-year rates against five-year rates

Generally, landlords should keep an eye on interest rates to keep a lid on property costs.

Daniel Lee added that many landlords need to pay extra attention as they exit five-year fixes following the buy to let bonanza lead up to introducing the three per cent investment property surcharge in April 2016.

Sting in the tail for 80 per cent loans

The Mortgage Works (TMW), the buy to let brand of The Nationwide and one of the UK’s largest landlord lenders, is again offering 80 per cent loan-to-value mortgages for purchases, remortgages and further advances, including buy-to-let. But they have insisted that all rental properties must have an EPC rating of C or above to be eligible.

Daniel Lee (pictured), Principal at Total Landlord Mortgages says, “The decision to begin once more offering 80 per cent LTV mortgages is a significant vote of confidence in the buy to let market after a difficult period.”

The move aligns TMW with several smaller lenders in the buy to let market and likely signals a similar shift may follow from other leading lenders.

The Government has already announced that all private rented homes must match the EPC C rating by 2030 and this new requirement is an indication that The Mortgage Works is behind the Government’s environmental policy.

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Landlord given suspended sentence over property fires at notorious property

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A commercial landlord whose building was damaged by two fires has been handed an 18-month suspended prison sentence, it has been reported.

Wayne Braund, 52, owner of the former Strachan and Henshaw building in Foundry Lane, Bristol (pictured), admitted six fire safety breaches including failing to risk assess for possible asbestos violations and not ensuring fire extinguishers were in place.

Bristol Crown Court heard that it was fortunate no one was harmed during the blaze in the tower block, known locally as The Office, on 31st December 2018 when a number of people were living there.

Just six months later, another fire damaged the building causing significant structural damage.

It had housed more than 40 small and independent businesses, while the adjacent Office tower was infamous for its swinger’s club, cannabis factory, and as a Hells Angels’ haunt for bikers.

Criminal threats

Brendon Moorhouse, defending, said Braund’s life and that of his family had been threatened by criminals, triggering arrests and a criminal investigation.

In February 2020, Braund was the victim of an attempted blackmail by a gang of masked men at his Douglas Road Estate residential development in Kingswood.

His business associate and landlord, Alan Dykes, was later violently assaulted at his Bridge Road Industrial Estate in Kingswood. Dykes had owned the building before selling it to Braund for £1 in April 2018.

Asbestos fine

Braund was also given a six-month suspended sentence for failing to ensure a risk assessment to determine asbestos on the premises of a property on Moravian Road in Kingswood where his company Stairs2U was headquartered.

Prosecutor Sam Jones said Ernest Braund, acting for Braund, had sent false documentation to the HSE purporting to show that an asbestos contractor had been engaged when it had not been. 

Braund admitted the breach and was ordered to pay £50,000 in costs along with a £25,000 fine. Stairs2U was also given a £25,000 fine.

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BREAKING: Landlords told how they should deal with self-isolating tenants

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The government has clarified the approach landlords and letting agents should take towards self-isolating tenants who are due to move out of a property.

In response to a written question from Labour MP Steve McCabe, Junior Housing Minister Eddie Hughes said it had strongly urged accommodation providers to be flexible in extending tenancies and delaying moves if tenants were isolating due to Covid.

He added: “However, under The Health Protection (Coronavirus, Restrictions) (Self-Isolation) (England) if someone is legally obliged to move, they are allowed to do so even if isolating.”

It follows a BBC news report about students who were due to leave their accommodation when one tested positive meaning that she and three housemates were legally obliged to self-isolate.

Break the rules

With their tenancy agreement coming to an end, they decided to break the rules to move back home as their landlord was going to charge a month’s rent, a 30-day cancellation notice fee and the upkeep of the next tenants – which would have cost thousands.

A government spokeswoman told the BBC that students who are required to self-isolate should seek to delay their move with support from their university.

It added: “We strongly urge accommodation providers and private landlords to come to amicable agreements with students, and to change move dates to ensure students are able to complete their self-isolation periods.”

The National Residential Landlords Association says landlords must respect the required isolation period during which households should not move. A spokesman tells LandlordZONE: “We also encourage landlords to show as much flexibility as possible to support their tenants and help efforts to halt the spread of the virus.”

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85% of tenants are ‘happy with their landlord’ says new report

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The vast majority of private renters in England are satisfied with their accommodation and experience of renting – especially when they deal directly with a landlord.

The English Housing Survey for 2019/20 reports that 83% of private renters were satisfied with their homes and 85% happy with their landlord, a figure that has remained constant over the past 10 years. However, the proportion of satisfied social renters stands at 78%, having fallen from 81% in 2018/19.

The government’s survey also revealed that tenants generally had a more positive experience of renting when dealing directly with a landlord than a letting agent.

Private renters were asked how satisfied they were with the services provided by the landlord or, if they rented through a letting agency, letting agent from first contact to the day they moved into the property.

It found 85% were satisfied where services were provided by their landlord, while 79% said the same where they were provided by a letting agent.

It reports that 75% of private renters are satisfied with the way their landlords carry out repairs and maintenance, the highest figure for about a decade. In contrast, 66% of social renters were satisfied with their landlords’ work, down one percentage point from the previous year. 

National Residential Landlords Association chief executive, Ben Beadle (pictured), says: “The NRLA is mindful of the challenges the private rented sector is confronted with and remains firmly committed to tackling them in a spirit of co-operation between tenants, landlords and government.

“However, today’s figures demonstrate that the vast majority of private renters are satisfied with their accommodation and the service being provided by their landlord. This positive feedback is representative of tenants’ experiences across the private rented sector, and it is through this lens that future changes need to be seen.”

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Have I been scammed into Leasehold?

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I have just purchased a house from an auction and the legal pack said the house was Freehold, even Land Registry right now says the house is Freehold

However, only one day before the auction, the auctioneers put a document in the legal pack saying it has a 999 years Leasehold.

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Selective licensing forces more landlords to use letting agents, council claims

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Peterborough council has claimed that selective licensing schemes compel more landlords to switch from self-managing their properties to using a letting agent.

The claim was made this week at the meeting of a scrutiny committee looking at the success of Peterborough’s large selective licensing scheme which is due to end in October.

A new scheme is to be submitted to the secretary of state for approval, which may include more wards than the original scheme following calls for the scheme to be expanded

So far 6,500 licences have been issued to private landlords and 227 properties inspected but with a further 551 due to be inspected including 180 that the council suspects don’t have licences.

Landlords prosecuted

Peterborough council has also prosecuted 15 landlords for non-compliance with the selective licensing scheme regulations, it was revealed.

Jo Bezant, a prevention and enforcement service manager for housing, told councillors at the meeting that most private landlords the council contacted to chase them up on getting a licence, then applied for a licence.

Bezant added: “It’s gone really, really well. What we’ve found has happened is landlords that didn’t know what they were doing – they had one property or two properties – a lot of those have moved and given their properties to agents so the agents manage them,” the Peterborough Telegraph reports.

“So we’ve seen a rise in professionalism of landlords through the management of the properties. And also a lot of landlords went on and did their own accreditation – so went off and became educated in what they should be doing and their legal responsibilities.”

The main reason for non-compliance was from landlords who did not believe the council would take enforcement action, she added.

Read more about selective licensing.

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Have you paid a problem tenant to leave?

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My name’s Melissa Lawford and I’m the property correspondent at The Telegraph. We’re running a story on a report which says that some landlords who are worried about the slow and restrictive eviction process have tried to pay problem tenants to leave their properties.

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