ANALYSIS: The build-to-rent movement is gathering pace…

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Build-to-rent is still small beer in relation to the rental property market as a whole; it makes a small dent into the Private Rented Sector (PRS), nonetheless it is “building” steadily and every unit built adds to the competition in some locations for small-scale landlords.

The changing nature of the housing market

Home ownership used to be the aspiration of virtually every young person. It was the basic housing model for Britons right up to the year 2000. Up to then 70% of homes were in owner occupation. This was a much higher proportion that in most other Western European nations.

In Britain, getting onto the housing ladder was every young couple’s expectation. It facilitated nicely a sensible financial life plan, it could ride the inflationary price waves, allowing couples to trade up regularly throughout their working lifespan, eventually using their property’s value as part of their pension.

But gradually this this dream scenario started to falter for many people. House prices started to climb out of the reach of the masses. The deposits needed to secure a mortgage rose out of the reach of the majority who aspired to own. So without the help of wealthy parents – the bank of Mum and Dad – they had limited options.

Help-to-buy

Even with the Government’s generous help-to-buy scheme, demand for new homes for sale declined quite dramatically, with the taxpayer payouts seeming to benefit the housebuilders more than the intended recipients, and it led to even higher house prices.

Forced to rent

Consequently, millions turned to renting from small scale landlords who in turn were financing their rentals with the ubiquitous buy-to-let mortgage. The change allowed thousands of middle class individuals to become private landlords, who in turn were riding the property price inflation waves and providing themselves with substantial pension pots.

Some of these private landlords built up substantial portfolios of rentals to the point were you could call them professional landlords. Now over over five million households are provided by these landlords in what is now a very substantial provision of housing – what is called the Private Rented Sector (PRS).

The steady growth of build-to-rent – the next wave is coming

In a move to what the Government sees as professionalising the private rented sector, mirroring those large scale managed units provided in the US, it is encouraged the growth of build-to-rent. This is being funded by financial institutions, large scale developers and property managers.

KKR, a giant American private equity group, is the latest financial institution to finance an ambitious scheme to build 4,000 build-to-rent flats. The financial behemoth KKR is investing £610 million in a joint venture with Apache Capital Partners. The property investment specialist is to build on development sites in Birmingham, Brighton and Hove and London. They are also keen to look at what they call other “core cities” in the UK.

According to The Times newspaper, these flats are to be built by Moda Living, a company owned by family money, the Caddick family, who are also owners of the Headingley cricket ground, Yorkshire county cricket club’s home, and they co-own the Leeds Rhinos rugby league team.

Moda are sourcing sites and will take them through planning and development stage, while Apache Capital will look for investors, in the current case KKR.

Once they are built, the 4,000 flats are estimated to be worth about £1.7 billion. The rentals will be high-end units aimed at professionals with on site community facilities like co-working spaces, gyms, cinema rooms, and terraces. Moda and Apache are to manage the buildings, while KKR will collect the rent. Apache is to hang on to a minority stake in the flats, and will take a small slice of the rent.

Big finance

One of the world’s biggest biggest private equity firms, KKR co founded by Americans Jerome Kohlberg, Henry Kravis and George Roberts was the inspiration behind the book and eventually the film “Barbarians at the Gate.”

It’s several years ago that the UK Government tried to kick start the build-to-rent initiative, and it’s taken years for the movement to gather momentum, but gather momentum it has. It’s beginning to happen now and the market is starting to establish itself in Britain.

Join the club – they are getting in on the act

Legal & General and Lloyds Bank have both made big commitments into build-to-rent in recent years. More recently The John Lewis Partnership made a surprise announcement that it too was to join the fray. It plans to build around 10,000 rental homes on land it already owns over the next decade or so are materialising, as a part of its diversification strategy.

Wall Street bank Goldman Sachs has committed £200 million to buying 700 homes which are to be rented out to families, while Savills, the estate agency, estimates that 14,000 build-to-rent homes were completed last year, twice as many as were built in 2017.

Savills has forecast that the number of build-to-rent homes built each year could double again by 2026. It has said that “the appetite for build-to-rent from the investment community could support such a level of growth” and that “The only part of the private house building market that we expect to be appreciably larger in 2026 compared with 2020 is build-to-rent.”

Look out in the future

These are important trends and developments in the UK rented sector. It’s something that all small-scale landlords need to keep a wary eye on. It will take some time for this scale of development to affect the gigantic PRS small-scale landlord market as a whole, but in some locations the effect will be substantial.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – ANALYSIS: The build-to-rent movement is gathering pace… | LandlordZONE.

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OFFICIAL data: Sharp decline in Section 21 evictions debunks ‘crisis’ claims

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Fewer landlords are using Section 21 notices to evict tenants, assessment of official data by the National Residential Landlords Association has revealed.

These are the ‘no fault’ eviction notices that landlords use to evict tenants often when they wish to sell a property or move back in themselves, and the tenant will not leave voluntarily.

This kind of eviction is under the spotlight – many housing groups including Shelter and Generation Rent want to see them banned, and the government has said they will be replaced when its rental reform bill goes through parliament next year.

But the government’s own data shows that the use of Section 21 notices plummeted by 55% over the past two years and, although this is in part due to the Covid evictions ban, it’s also part of a trend.

Section 21 cases dropped by 50% between 2015 and 2019 which can be explained, to a significant extent, by more and more landlords using Section 8 evictions which, although more expensive, can be faster than a Section 21 when notice periods are included.

Peddled

“These figures dispel the myth, peddled by some, that landlords spend much of their time looking for ways to evict tenants for no reason,” says Ben Beadle (pictured), Chief Executive of the NRLA.

“Whilst we condemn any landlord who abuses the system, it is vital to remember that most tenants and landlords enjoy a good relationship.

“It is in that spirit that the Government should develop its plans for a system to replace Section 21 in its forthcoming White Paper on rental reform.”

The NRLA is calling for clear and comprehensive grounds upon which landlords can legitimately repossess properties including anti-social behaviour, and for the process in these cases to be speeded up.

At present, it can take an average of almost 59 weeks from a private landlord making a claim to repossess a property to it actually happening.

Annual decline

“The use of Section 21 accelerated applications has been declining every year for the past five years,” says evictions expert Paul Shamplina (pictured).

“As well as the pandemic, the measures within the Deregulation Act 2015 to prevent retaliatory evictions has played a part in lowering the use of Section 21 notices, as has the increasing use of selective licensing by local authorities.”

Read more about Section 21.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – OFFICIAL data: Sharp decline in Section 21 evictions debunks ‘crisis’ claims | LandlordZONE.

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OFFICIAL data: Section 21 evictions slump scotches ‘crisis’ claims

admin    Uncategorized     agents

Fewer landlords are using Section 21 notices to evict tenants, assessment of official data by the National Residential Landlords Association has revealed.

These are the ‘no fault’ eviction notices that landlords use to evict tenants often when they wish to sell a property or move back in themselves, and the tenant will not leave voluntarily.

This kind of eviction is under the spotlight – many housing groups including Shelter and Generation Rent want to see them banned, and the government has said they will be replaced when its rental reform bill goes through parliament next year.

But the government’s own data shows that the use of Section 21 notices plummeted by 55% over the past two years and, although this is in part due to the Covid evictions ban, it’s also part of a trend.

Section 21 cases dropped by 50% between 2015 and 2019 which can be explained, to a significant extent, by more and more landlords using Section 8 evictions which, although more expensive, can be faster than a Section 21 when notice periods are included.

Peddled

“These figures dispel the myth, peddled by some, that landlords spend much of their time looking for ways to evict tenants for no reason,” says Ben Beadle (pictured), Chief Executive of the NRLA.

“Whilst we condemn any landlord who abuses the system, it is vital to remember that most tenants and landlords enjoy a good relationship.

“It is in that spirit that the Government should develop its plans for a system to replace Section 21 in its forthcoming White Paper on rental reform.”

The NRLA is calling for clear and comprehensive grounds upon which landlords can legitimately repossess properties including anti-social behaviour, and for the process in these cases to be speeded up.

At present, it can take an average of almost 59 weeks from a private landlord making a claim to repossess a property to it actually happening.

Read more about Section 21.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – OFFICIAL data: Section 21 evictions slump scotches ‘crisis’ claims | LandlordZONE.

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ROGUE landlord convicted of illegally evicting pregnant tenant

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A rogue landlord whose proeprty is also the subject of a prohibition order has been fined for illegally evicting a pregnant tenant and her partner from their home and throwing their belongings into the street.

Businesswoman Lidia Szopinska, from Camden, rented a room in a house she owned in Townsend Street, Cheltenham, to the couple for nine months in May 2019. After they gave notice to leave the property early, relations soured and Szopinska made allegations of breach of tenancy.

The couple had agreed to leave the property on 19th August 2019 but on 14th July, when they returned home after visiting relatives, they found the landlord standing outside with all their possessions on the street.

Magistrates ruled that she was guilty of illegally evicting the pair. Szopinska was fined £180 with £2,010 costs and ordered to pay £1,560 compensation to the couple for the distress caused, the non-return of their deposit, rent repayment and for the loss of a bag containing a laptop and other items that were stolen from outside the property.  

Prohibition order

Earlier this year, Szopinska had her appeal against a prohibition order made in December 2020 relating to the same property thrown out.

The council had prevented her from renting the basement after it identified a Category 1 fire hazard; there was no adequate and unobstructed means of escape, fire doors, automatic fire detection or alarm system.

She blamed Covid complications and the fact she had been given the wrong address as the reason for her appeal being made outside the 28-day time limit.

However, a First Tier Property Tribunal ruled that she knew that the limit applied and was not convinced that Covid would impact on her ability to deal with the appeal process.

Cheltenham Council enforcement manager, Mark Nelson, says: “No landlord can act outside the law and we will do everything in our power to ensure tenants can live in rented properties safe in the knowledge that we are there to protect them from illegal eviction.”

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Specific HMRC form for – Rent a room Method B?

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My daughter bought a house which she shares with two friends as her tenants. They pay below market value rents for the area, but this year the rental income will be above the £7,500 annual rent a room allowance.

She wants to opt for “Method B”

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LATEST: Councils hammer London landlords with fines totalling £1m in 2021

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Fines for London’s errant landlords and letting agents have totalled £1 million in less than a year as councils pick up the pace of enforcement efforts.

Geospatial technology firm Kamma reports that penalties have increased from £6,052,932 in December 2020 to £7,128,973 at the start of November, a jump of £600,000 in the last four months, and a £372,874 increase since October. This is the total levied since the company set up its database in 2017.

Earlier this year, Kamma – the only company to track the Mayor of London’s Rogue Landlord and Agent Checker – reported a 532% increase in fines between May and July as local authorities embarked on post-lockdown enforcement.

Since the start of 2021, it has seen an average increase of £89,670 in fines every month, with Camden council topping the enforcement league table as the most active in terms of number of fines, followed closely by Newham and Southwark.

Hammersmith and Fulham is now the London borough with the highest average fines of £19,800, followed by Hillingdon with an average of £13,500, and Hackney with £11,250.

With increases across the region, letting agents and landlords have to stay on top of their game, says Kamma CEO Orla Shields (pictured): “The lettings market is more regulated than ever before. Licensing schemes, fines and enforcement through Rent Repayment Orders are all increasing, so it’s vital agents act to protect themselves, their landlords and of course their tenants.”

Landlords and letting agents face fines of up to £30,000 for failing to comply with safety and licensing regulations, and additional fines of up to £5,000 per property for non-compliance with MEES regulations.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Councils hammer London landlords with fines totalling £1m in 2021 | LandlordZONE.

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The Property Investors Awards team are delighted to announce the winners for 2021

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With celebrations usually consisting of an illustrious evening of fine dining and entertainment to announce the winners, this year announcements were made virtually. It has never been more important to ensure we continue to celebrate the very best in the property investment sector.

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