Warning issued over impact of benefit cuts on tenants

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The UK Government has been told it must complete and publish a full assessment of the impact on renters of their decisions to freeze Local Housing Allowance and cut Universal Credit, which risks pushing many households into poverty, problem debt

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Prepare for success in student lettings?

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The outlook for student lettings is bright. This is particularly the case for landlords and lettings agents serving the HMO, or shared accommodation market, but applies in broad terms across the sector.

More students need more accommodation

This outlook is driven mainly by an increase in student numbers, as with more young people wishing to attend university, the greater the requirement for a term time place to live. On ‘A’ level results day this year, UCAS announced that a record 435,000 students were accepted onto a University Place. This was a 5% increase on 2020, which was also a record year.

In Autumn, just over 1/3rd of the UK’s population of 18 year olds will be attending University. The popularity of studying among 18 year olds is also key, with the growth of this demographic likely to maintain the upward pressure on student numbers for a decade. Positive news for student landlords.

Student culture

A further positive is that the majority of students want to live in shared housing at some point of their University Career. It is a trend baked into the University culture and is seen by students as a key part of the experience.Our recent research shows almost 70% of student felt that moving into this type of accommodation is ‘a rite of passage’. A further 67% of students told us that price was the primary consideration when finding a place to live. Given that shared housing tends to offer a price advantage over the alternatives, this is again is a strong position for student landlords.

Timing is everything

Given these factors stacking up in favour of landlords, preparing for a successful 2021/22 is really about focusing on maximising the opportunities that are available.  
Ensuring that your property marketing is in line with the student letting season in your city is vital. Many students are keen to secure a property for the following year very soon after going to University, with some starting their search as early as October.  
Understanding this is important. AFS has enjoyed a 40% growth in web traffic and a 50% increase in HMO enquiries over the last 12 months, however, even on a busy site like ours it will take longer to let your property if you start late in this cycle.  

Bills inclusive rents

Offering bills inclusive rent is increasingly important to students now. In our recent survey, the inclusion of bills was cited as the 3rd most important factor, behind price and location when choosing where to live.
For many students this is more than just about the convenience and lack of hassle, it is a way to reduce the potential areas for friction when sharing with housemates. Whilst offering bills inclusive rents is not new, there are still enough landlords NOT doing to offer and advantage to those that are.

Do the simple things well.

The current strong market should mean that landlords who do the simple things well will let their properties faster. At a very basic level, high quality pictures and a decent video tour of property will put landlords in a stronger position to generate enquiries provided the property is in a good location and at the right price point.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Prepare for success in student lettings? | LandlordZONE.

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Property owner who allowed portfolio to become cannabis mega-factory is jailed

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A commercial property owner has been jailed for three and a half years after she let a drug gang run a £500,000 cannabis factory in her three properties.

Pensioner Yoko Banks (pictured) admitted renting out the upmarket homes in Harrogate for the industrial production of cannabis with the expectation of making a significant profit.

The 73-year-old was sentenced at Leeds Crown Court alongside six members of the Albanian drug gang who were jailed for a combined 22 years.

Prosecutor Martin Bosomworth said the gang had invested tens of thousands into the three cannabis factories; they even dug a trench outside one to feed electricity cables to the house to power the cultivation system and bypass the electricity grid.

Their audacious plot unravelled when police were called to the five-bedroom villa on 26^th September after reports of a disturbance in the street. Officers found 283 plants in the four growing rooms in the house, which was fitted with CCTV cameras, along with a large crossbow and arrows next to the front door.

Facilitating

Although Banks was not involved in the cultivation, she had played a “facilitating” or advisory role in the plot, the court was told.

Banks – who had previous convictions for health and safety offences – was due to be paid at least £12,000 a month in rent for the three properties and was also receiving “high” deposits.

Jailing Banks, the judge told her: “You were, at the time, in some financial difficulties which may explain why you were – a woman in your seventies, a widow with a number of health problems – prepared to get involved with a gang from London.

“You knew that by doing that you were bringing drugs and criminality to Harrogate, a town where you have lived and worked for many years.”

Read more about cannabis farms.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Property owner who allowed portfolio to become cannabis mega-factory is jailed | LandlordZONE.

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PRS under pressure as frustrated former home owners turn to renting

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Ten percent of all new tenancies or some 117,000 rentals agreed this year have been homeowners stranded by the difficult sales market, estate agency chain Hamptons has revealed.

Its figures reflect the current challenges within the sales market, where the recent post-Covid sales boom has led to a 27% drop in homes for sale in many parts of the UK.

The consequent growth in demand is contributing to a ‘squeeze in rental stock’ as former homeowners compete with longer-term tenants. 

For example, in July there were 43% fewer homes available to rent than at the same time last year, a fall that has accelerated significantly over the last four months.

Change of scenery

Hamptons also says the reasons why people are moving home within the PRS have changed dramatically in recent months; just 11.5% of tenants were moving to start a new job, while half were moving for a ‘change of scenery’ after the long months of Covid.

These different pressures on the rental market are having a predictable effect – higher rents.

Last month saw five of Great Britain’s 11 regions record their fastest ever rate of annual rental growth since the Hamptons Lettings Index began in 2014.

“With many sellers facing pressure from their buyer to move as they struggle to find their next home, rising numbers of homeowners are breaking their chain and renting instead,” says Aneisha Beveridge (pictured), Head of Research at Hamptons.

“While moving into a rented home to beat the end of a stamp duty holiday is not new, it is increasingly being used as a stop-gap by house-hunters faced with a lack of stock to buy.”       

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – PRS under pressure as frustrated former home owners turn to renting | LandlordZONE.

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Rent Smart Wales claims summer retainer fees charged to students ‘unlawful’

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Rent Smart Wales is challenging letting agents and landlords over the widespread practice of charging student tenants summer ‘retainer fees’ which it claims are unlawful under Welsh legislation.

It says a retainer is an additional fee which is unlawful under the Renting Homes (Fees etc) (Wales) Act – the equivalent of the Tenant Fees Act, which took effect in 2019, and has been flagging up the issue during recent audits of letting agents in the country.

Many student tenancies ask tenants to pay half the rent in July and August meaning that students can’t pick up the keys permanently until they move in full-time; if they want to drop off some belongings, landlords will usually lend them the keys for a few hours at a time.

They can then give seven days’ notice when they want to move in, and it then becomes full rent.

David Smith (pictured), property solicitor at JMW, says students have become much more militant about their rights and what they’re paying and that a successful challenge could have big consequences.

He admits there are problems with the way that some landlords charge a retainer, but that there are ways to do this lawfully – and regulators don’t understand the difference.

He tells LandlordZONE: “Rent Smart Wales are saying it’s not a tenancy because you’re not living there, but it is – you still have a tenancy on a shop, even if you’re not living there.”

He advises landlords: “If you draw it up such that it’s a tenancy with restricted use it’s probably OK, but if it’s drawn up as a tenancy with an additional fee on the front of a tenancy, it’s probably not.”

LandlordZONE has approached Rent Smart Wales for a comment.

Read more about Rent Smart Wales.

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Do landlords qualify for COVID-19 cash support?

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The latest, and most likely final, cash help for landlords and the self-employed who are struggling financially due to coronavirus is open until 30 September 2021.

Although the Government has spent billions on cash benefits to keep small businesses afloat, landlords have slipped through the cracks.

While Chancellor Rishi Sunak has been willing to give a lifeline to small businesses that have lost money during the pandemic, unfortunately there has been little help for property investors.

This is because coronavirus cash aid protects business earnings, but not income from investments.

The fifth SEISS grant will cover the months of May to September 2021 and will differ from the previous four SEISS grants in terms of how the payouts are calculated.

The size of the grant will be determined by how much your turnover has been reduced in the year from April 2020 to April 2021. To be eligible for the fifth SEISS grant, you must be a self-employed landlord or a member of a partnership.

“Throughout the pandemic landlords have had very little financial support from the Government, so the fifth Self-Employed Income Support Scheme presents in all likelihood a final opportunity for landlords that are eligible to seek help,” says Daniel Lee, Principal, Total Landlord Mortgages (pictured).

But it’s important to be aware that being awarded the grant may present issues arising further down the line when it comes to applying for a mortgage.”

Here, LandlordZONE mortgage partner, Hamilton Fraser Total Landlord Mortgages explains what the scheme is, how to check if you qualify and provides a breakdown of how much you could be entitled to.

What is the Self-Employed Income Support Scheme (SEISS)?

The Self-Employed Income Support Scheme offers financial help to sole traders and partnerships who need cash help due to the impact of the coronavirus pandemic.

Do landlords qualify for SEISS?

Generally, landlords with buy to let investments do not qualify for SEISS. However, landlords with holiday lets tax-treated as businesses rather than investments can apply for an SEISS grant.

Here is a quick test to check if you are eligible:

• You are unlikely to qualify if you report your letting profits on the land and property pages of a self-assessment tax return or pay council tax on a rental home instead of business rates

• You should qualify if you complete the self-employed pages of the tax return for a furnished holiday letting business

• SEISS rules exclude companies or trusts from making a claim

If your tax returns show you are eligible for SEISS, HM Revenue & Customs should have already  been in touch with you.

Check if you can make a SEISS claim

After confirming if you qualify for SEISS as a landlord, you must pass three more tests to make a claim.

You must have traded in both 2019-20 and 2020-21

To pass this section, you must:

have filed a 2019-20 tax return by 2 March 2021

have trading profits of £50,000 or less

have trading profits that at least match any non-trading income, for example a pension or buy to let rents

You must also:

• continue trading in 2021-22
• show you expect a significant loss in profits due to COVID-19 between 1 May 2021 and 30 September 30 2021

When assessing your claim, HMRC will compare your turnover between April 2020 to April 2021 with your business income in 2019-20 or 2018-19.

How much is the SEISS grant?

How much SEISS grant you receive depends on how much turnover you have lost due to COVID-19.

Source: HMRC

For example, If your average profits were £30,000 over four tax years:

• Divide by 12 = £2,500

• Multiply by three = £7,500

If your profits were down by 30 per cent or more:

• Work out 80 per cent of £7,500 = £6,000

The grant is £6,000

If your profits were down less than 30 per cent:

• Work out 30 per cent of £7,500 = £2,250

The grant is £2,250

You should deduct tax and self-employed national insurance from the grant, which you should report on your 2021-22 self-assessment. The grant amount is calculated before deductions, which are the responsibility of the landlord or self-employed to pay.

Making your SEISS fifth-round claim

You must make a claim yourself online on or after the date HMRC supplies.

You will need your turnover figures, a Government Gateway ID and your unique tax reference (UTR) together with personal and business details like your national insurance number.

If the claim succeeds, HMRC will transfer the grant money to your bank within six working days.

Find out more about SEISS for landlords and the self-employed

SEISS and mortgages for landlords and the self-employed

It’s important to note that many lenders are rejecting mortgage applications from landlords and the self-employed who have claimed the SEISS grant.

“When considering a mortgage application, lenders tend to scrutinise the last two years of accounts to assess earnings and loan affordability so it is vital to only apply for the SEISS grant if needed. The impact of the pandemic could influence mortgage decsisions until at least 2023.” – Daniel Lee, Principal, Total Landlord Mortgages.

Some banks are also asking landlords and the self-employed to pay in larger deposits. For example, Metro Bank won’t lend to customers taking a SEISS grant unless they put down a deposit of at least 20 per cent of the value of their home, while Santander demands 25 per cent.

Consumer watchdog, the Financial Conduct Authority, says lenders should treat customers taking a SEISS grant fairly.

Office for National Statistics data puts the number of landlords in the UK at 2.66 million, while five million workers are self-employed.

Two out of three feel penalised by lenders when seeking a mortgage, says an Association of Independent Professionals and the Self-employed (IPSE) survey.

Mortgage lender trade body UK Finance says lenders must make checks to ensure loans are affordable.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Do landlords qualify for COVID-19 cash support? | LandlordZONE.

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RICS UK Residential Market Survey – New instructions from landlords remaining in decline

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With new instructions from landlords remaining in decline (slipping from -6% last month to -20% in July), rents are now expected to rise over the next three months. This is according to a net balance of +50% of RICS member respondents.

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Ealing proposed Licensing schemes

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Are you aware that Ealing are proposing to extend and enlarge their existing licensing schemes? At a recent boisterous virtual meeting, the council outlined their plans, ending that there was a consultation period which is going to end on Monday August 16th at midnight.

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What is the difference: Lease, Licence or Tenancy-at-Will?

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Owners (landlords) of commercial (business) premises and sometimes residential premises want to let to a tenant on a short term basis, but are fearful of creating a long-term arrangement such that the tenant cannot be removed if the landlord wants it.

Basically, there are three ways to do that which comply with the law and protect the landlords interests: a lease, a licence or a tenancy-at-will.

A lease

A lease grants the occupier an interest in land – a legal title, albeit a time limited one. A lease gives the lessee the right to exclude all others, including the land.

A licence on the other hand is merely a right to occupy does not give a tenant the right to exclude the landlord, indeed the landlord should ensure that this is never the case, otherwise a tenancy could be created by default.

By having a lease the tenant has been granted exclusive possession of the land (property) under the terms of that lease and is able to exercise the rights of an owner of that land. In other words the tenant is for all practical purposes the “owner” of the premises for the term of the lease. And in that respect is responsible for everything connected with the premises as if he were the owner: safety, liabilities and fines, insuring, internal repairs, and in the case of a full repairing and insuring lease, what the Americans call a “triple net lease”, for all repairs as well.

A license

Licenses offer both landlord and tenant a high degree of flexibility. For example, a licence can be highly beneficial to start-up businesses as they don’t commit the tenant to a long-term lease when their future requirements in terms of activity levels and space requirements are uncertain. Licenses are the effective solution for both parties in this situation with serviced workshops and offices. They are seldom used for residential lettings apart from when the landlord lives with the tenant (lodger).

The crucial distinction between the two – license or tenancy – is the terms “exclusive possession” and “control”. So, where a tenant can exclude all others, including the landlord, he has a tenancy, regardless of what the landlord may title his agreement.

On the other hand, generally, where the landlord can exercise control (usually living on or occupying the same premises, or providing management or cleaning services) and where the tenant cannot exclude all others (lodgers and serviced office occupiers share facilities) then a license situation exists, even if the agreement says it’s a tenancy.

In the famous 1985 case (Street v Mountford) the House of Lords held that it is a matter of fact (the situation) that counts, not form (the wording) of the agreement.

So, a landlord granting exclusive possession of premises, or a part thereof (land in legal terms), for a fixed term, will create a tenancy, regardless of what title the parties attach to the agreement.

In the case of residential occupation there’s a peculiar “grey” area of the law sitting somewhere between the lease and the license. This is the situation where a landlord lives in the building but where the occupiers (landlord and tenant) do not share facilities.

This is known as an “occupier with basic protection”, someone who does not have the full rights and protection that a tenant would have under the Housing Acts. This situation is somewhat akin to a commercial tenancy (common law tenancy) which is purely contractual and not affected by the statutory rules under the Housing Acts. Nevertheless, having served a notice to quit, to be certain of being fully lawful when seeking challenged possession, the landlord should apply through the courts for a possession order.

In the case of a commercial tenancy, the landlord has always had the traditional remedy of forfeiture, where a tenant is in breach of contract. This is so whether lease or license, but great care should be used in applying this remedy which effectively means locking the tenant out – seek legal advice in every case.

The advantages of a licence for a landlord and tenant are that licences cover a relatively short period of time, usually up to six months, whereas leases usually run for some or many years and can have onerous conditions. Most licences give both the landlord and tenant the right to terminate the agreement when required with a typical notice period being one tenancy term (rent period) or 28 days.

The license agreement is straightforward and does not need a solicitor to prepare each time, as is the case with a complex lease, and is therefore inexpensive to set up. Basically both parties sign a standard agreement. The landlord has the right to enter the licenses premises at any time and the tenant has no right to renew the licence once it has expired.

A Tenancy-at-Will

A tenancy or license at will is a short, flexible tenancy or license and in most respects is more like a licence than a tenancy. A tenancy-at-will is from the outset intended to be short and can be terminated at any time by either party. A tenancy-a-will is often used as an interim tenancy allowing the parties to negotiate the terms of a longer lease and must not be prolonged.

A tenancy-at-will is used exclusively for commercial (business) tenancies. They need careful attention to the legal drafting so as not to create a periodic tenancy thereby conferring security of tenure on the occupier. Generally, a tenant given the right to occupy commercial premises for a business purpose acquires a statutory right (under the Landlord and Tenant Act 1954) to renew the tenancy virtually indefinitely, subject to the landlord having the right to oppose renewal very certain limited grounds.

I each case, a lease, license or tenancy-at-will, it is very important to have a properly drafted agreement to fully protect the rights of both parties without any ambiguity. A landlord may want to avoid an indefinite commitment to a tenant, and likewise a tenant may not want to be trapped in a long-term lease agreement.

The importance of correctly drafting a tenancy-at-will agreement cannot be overstated. If it is incorrectly drafted or if it runs for too long it may result in the creation of a periodic tenancy. This was the case in Javad v Aquil [1991]. The main factors which determined this were: (1) the length of rent-paying occupation, and (2) lack of insistence by the landlord on writing a formal lease.

Leases are subject to Stamp Duty Land Tax whereas license and a tenancy-at-will are not.

Leases – letting outside the Landlord and Tenant Act

A commercial tenancy for business use comes under the Landlord & Tenant Act 1954 Part 2. This gives statutory security of tenure for the business tenant and a right to renew, even if the landlord opposes this. As a business tenancy can be created by default, without a written agreement, purely by the action of the parties, e.g. taking rent over an extended period, great care is needed.

In order to exclude a tenancy from the requirements of the Landlord & Tenant Act 1954 Part 2 the landlord can serve a special warning notice on the tenant, allowing him or her at least 14 days’ notice that this will be the case, before signing the lease.

This notice must be substantially in the form given in The Landlord and Tenant Act 1954, Part 2 (Notices) Regulations 2004* which informs the tenant that the landlord is offering a lease without security of tenure. It explains the rights which the tenant will be giving up if it agrees to a lease on those terms. It also suggests that the tenant should take professional advice before making a decision.

As with all notices it is very important to make sure that the notice is validly served, that proof of service is obtained and that the signed notice is kept safe with the signed counterpart lease.

In addition the notice must be acknowledged in writing by the tenant by way of a signed declaration and the lease must include provisions which exclude sections 24 and 28 of the LTA Landlord and Tenant Act, with reference to the notice and declaration.

Security of Tenure – short Business Tenancies under the 1954 Act

Part II of the Landlord & Tenant Act 1954 applies to any tenancy where the property “is or includes premises which are occupied by the tenant and are so occupied for the purposes of a business carried on by him or for those and other purposes”.

There are some exceptions to this including mining leases and agricultural premises. The Act does not protect leases of under 6 months, which have no provisions for renewal.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – What is the difference: Lease, Licence or Tenancy-at-Will? | LandlordZONE.

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High-profile millionaire landlord offers 20 empty flats to asylum seekers

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Multi-millionaire landlord Fergus Wilson has offered to sell four of his apartment blocks to the Home Office or Kent County Council to help address the issue of homeless asylum seekers.

The colourful character suggests they could buy the four empty blocks – containing approximately 20 flats – at Littlestone, New Romney, Folkestone and Wateringbury.

He tells LandlordZONE that he was inspired by seeing people coming off the boats on the Kent coasts, explaining: “These kids have nowhere to go and as a society we have a duty of care. It’s a pragmatic decision – Kent County Council are having a terrible time accommodating them.”

His suggestion comes as growing numbers are risking their lives to navigate the Channel.

New arrivals

Kent County Council is responsible for housing unaccompanied asylum-seeking children but has no more room and has threatened to sue the government for failing to help. Meanwhile the Home Office has resorted to using hotels to house new arrivals.

In an email, the Home Office responded: ‘Thank you for your email correspondence to the Home Secretary and your offer of accommodation. Your correspondence has been passed to the relevant business area, and they will be in contact with you in due course.’

Retirement plan

The four empty properties are a result of Wilson’s retirement plan to sell off his impressive portfolio around Ashford and Maidstone.

He says the sale is going extremely well and that he now only has about 150 of his 970 two-and three-bedroom properties left, with the target of leaving himself just 10 houses.

However, he has taken issue with a Daily Mail article about the offer, which brands him, ‘Britain’s most hated landlord’. Wilson says: “Where’s the evidence to show that? I think I’m the most loved landlord by my tenants.”

In 2017 a court ruled that Wilson’s policy preventing people from renting his properties based on their ethnicity was unlawful following intervention from the Equality and Human Rights Commission.

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