Short-term lets licensing scheme across Scotland to start 1st Oct 2022

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Foreword below by Shona Robison MSP, Cabinet Secretary for Social Justice, Housing and Local Government. Click here to see full details of the consultation

We are legislating to establish a short-term lets licensing scheme across Scotland.

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Is it worth it after CGT?

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It would seem many landlords are selling up, ‘but’ is this where capital gains tax comes in?

As an example:- I have read if a property rises in value to leave £300,000 after taking away purchase price exp’s etc.

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Say yes to DSS – why landlords should let to families on benefits

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Are you blessed with long, trouble-free tenancies with no voids and an amazing agent? If the answer is yes, you may be hard to convince!

But if not, you should look at the growing number of working families who claim benefits and just need an affordable home.

In recent years, there has been steady growth in the number of working families claiming universal credit. Since Covid hit, there has been a big jump in claimants. This has meant many more landlords find themselves with tenants on benefits for the first time.

In Great Britain, half the families with children living in the private rented sector are claiming universal credit, according to an analysis of government statistics by Generation Rent.

In London, over half (56%) of homeless households are in work and just need to be able to find an affordable home.

In other words, there is a growing number of potential tenants who are claiming universal credit and looking for settled homes. Saying yes to DSS is saying yes to a growing market with high demand.

Properties do need to be affordable for families who are claiming benefits. The rent must be at the local housing allowance (LHA) rate, which is set by the government and based on rents in the bottom 30% of a local rental market.

Universal Credit (UC) replaced Housing Benefit and has a “housing element” for the rent as part of the payment. The LHA rate is used to calculate the housing element for tenants renting from private landlords.

Depending on your property and its location, the LHA rate may be closer to your rent expectations than you might think. But there are also other upsides to consider.

Landlords working with Capital Letters can access a significant incentive payment of up to £4,000 when your property is let, which – unlike a deposit – is kept by the landlord. We offer a free tenant finder service, and support new tenants with benefit claims and setting up utilities and managing their tenancy.

Our tenancy sustainment service is also there for our landlords, to ensure that the tenancies are successful and work for both parties.

According to researchers from the University of York, who recently surveyed 1000 landlords and agents, some landlords are seeing a business opportunity in letting to people receiving benefits.

“Landlords who were letting at the bottom of the market tended to pursue cost minimization rather than rent maximization. The most common tactic for reducing costs was minimizing turnover and voids which meant attracting and retaining good tenants through charging a lower-than-market rent.”

We work regularly with one agent who tells his landlords that tenants backed by the benefits system may be a safer bet in uncertain economic times. Admittedly he’s an agent not an economist but he may have a point!

By working with Capital Letters, you can get all the upsides of letting to families on benefits while minimising the risks. Please do give this opportunity your consideration.

Sue Coulson is the CEO of Capital Letters, which works with landlords and two-thirds of the councils in London to find settled homes for families in the private rented sector.

www.CapitalLetters.org.uk/landlords

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Say yes to DSS – why landlords should let to families on benefits | LandlordZONE.

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Would you have helped? Tenant with two dogs reveals battle to find rented home

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A young renter has told LandlordZONE how offering to take pet damage insurance helped convince a landlord to accept her two dogs, after receiving countless rejections.

Catriona Clarke (pictured) and her partner were beginning to despair of ever finding a pet-friendly home in Cambridge as letting agents told them before each potential viewing that their animals weren’t welcome.

“It was so dispiriting and humiliating to be told ‘no’ all the time,” she tells LandlordZONE. “Our dogs Izzy and Leo are small and well-behaved, and Izzy is Leo’s support dog, who’s blind.”

They finally viewed the perfect house where a landlord had said that pets were acceptable, only to narrowly miss out to another applicanmt – and pet-free – couple.

The agent admitted that dogs had been the deal-breaker and Catriona’s despairing Tweet got a response from AdvoCATS charity boss Jen Berezai, who suggested they create a dog CV with photos and take out the pet damage insurance.

After the other couple didn’t pay the holding deposit, the landlord agreed to offer Catriona the property instead.

“I’m sure doing that helped us,” she adds, “but children would probably cause more damage than most pets.”

A recent NRLA/Battersea Dogs & Cats Home poll found 60% of landlords are concerned about damage but that 42% would be most likely to change their minds about allowing pets if a tenant offered to get their own insurance.

A change to the current capped deposit legislation and demonstrating responsible pet ownership would also help convince 33% and 31% respectively.

Berezai says the survey shows many landlords would be more willing to allow pets provided there was some protection from potential pet damage.

“By amending the Tenant Fees Act to allow a landlord to stipulate pet damage insurance must be held or request a separate, financially capped pet deposit, many, many more rented homes will open up to pets – which benefits both landlords and tenants,” she says.

The AdvoCATS charity has signed up 42 MPs who support its Heads for Tails! Report calling on the government to amend the Act and hopes the proposal will be included in the upcoming Renters Reform Bill.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Would you have helped? Tenant with two dogs reveals battle to find rented home | LandlordZONE.

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Double Your Money With Property Investment – Property Elevator #6

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Yogesh Patel returns for £400,000 to be invested into his Property Investment Deal, claiming it will double your money in returns. Will one of the 5 Property Angels invest, or has Yogesh broken too many hearts after his visit last season?

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OPINION: The EPC ratings system is “not fit for purpose”

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Every since I started to market one of my commercial buildings around 10 years ago now, I began to doubt the efficacy of the EPC rating system.

The guy that came along to do the inspection told me himself he had just completed a 6 week course, or whatever it was, to train to be a building inspector. He explained to me how the computer system would calculate the dreaded EPC rating once he went away and entered all his data.

I say dreaded because I knew the building would probably produce a low rating, solid walls, 3 combination boilers that I had installed 15 years ago and no double glazing, though there was roof / ceiling insulation.

Low rating

Sure enough the rating was low, I can’t remember now what it was but probably a D or even an E. But it was the EPC system’s recommendations that shook me. It was suggest I fit solar panels on the roof! Not a mention of uprating the boilers to condensing ones, or insulating the walls, let along fitting double glazing? When I questioned him, he said, that’s what the computer says. It was truly bizarre!

I’m not condemning every EPC inspection. When they are carried out by a competent assessor, and I’ve had some done since by chartered surveyors that gave me much more confidence, but the fact remains that the algorithm built in to the EPC calculation produces misleading results.

A flawed system

The Government is looking to have as many homes and commercial buildings as possible to be EPC rated at band C or above by 2035. But what experts are telling us is that as property owners go green they are being punished by a ‘Flawed’ energy performance certificate system. It means that upgrades can actually lower a property’s rating.

In the worst case scenario, property owners and householders risk spending tens of thousands on energy efficiency upgrades that can actually make their properties less valuable, thanks to the Government’s “flawed” Energy Performance Certificate (EPC) system.

When owners come to sell in 10 or 15 years’ time they could find themselves trapped as banks would mark down values. Cheaper mortgages would be difficult to access, despite having spent money making their properties more energy efficient.

Inconsistencies in the EPC rating system

Inconsistencies in the existing EPC calculation mean that property owners currently can pay out thousands of pounds for work that, when they come to sell, they find actually lowered their EPC rating.

The energy sector has been scathing about the system. The EPC rates buildings from A to G but experts are saying the current system is “not fit for purpose” because the rating is based on the cost of energy used, not on the actual carbon emitted into the atmosphere. It results in a system that punishes people for installing heat pumps because they use more electricity and LPG gas because it’s more expensive than natural gas – it incentivises the use of mains gas over electricity or LPG.

Tom Spurrier, of the UK Green Building Council, a leading industry body, has said:

“We have currently got a metric that incentivises gas because it is cheaper.” If you install a heat pump, which is powered by electricity, your EPC rating may actually fall. Properties with Liquid Petroleum Gas (LPG) are also marked down because the gas is more expensive than mains gas.

Landlords affected first

If the Government wants all private homes to be EPC band C by 2035, private landlords are going to be affected first because of plans to introduce a band C requirement for new lets by 2025, and for existing lets by 2028.

Owner occupiers will also be hit and landlords will be required to have an average band C ranking for their portfolios by 2030, leading to homeowners in the worse-performing properties paying higher mortgage costs. There is a risk that private homes that cannot meet the target could become un-mortgageable.

Commercial landlords

In the case of commercial buildings, a Government consultation envisages a phased implementation with an interim milestone of an EPC rating of C by 2027, leading on to an EPC rating of B by 2030. The thinking behind having an interim milestone is to encourage landlords to take action before 2029-30, while providing some flexibility to allow landlords to plan and implement improvements into their tenancy cycles.

Each milestone would follow two year ‘compliance windows’: 1 April 2025 – 31 March 2027 for an EPC rating of C and 1 April 2028 – 31 March 2030 for an EPC rating of B. At the beginning of each window, landlords will have to present a valid EPC.

By the end of each window, landlords would have to show that they have achieved the relevant threshold or have registered an exemption. Any exemptions would need to be refreshed at the start of each compliance window. The intention is that, even where an exemption is registered, landlords should demonstrate that the building has achieved the highest EPC rating that is possible to deliver cost-effectively.

It is made it clear that landlords can bypass the two stages and go straight to B if it is more cost-effective and minimises disruption for tenants when doing refurbishments and improvements.

Room for improvement

There are some rather bizarre outcomes to the present EPC system that need to be tackled if the above targets are to hold any credence with property owners and energy specialists.

David Simms, a small-scale developer and landlord in London told The Daily Telegraph that when he redeveloped a block of flats in Clapham, he paid out £10,000 to install energy-efficiency improvements, including insulating the building.

“The EPC rating went from a B to a borderline D because we put in electrical heating. It was like being kicked in the face,” he said.

The solution, according to the EPC assessor, was to revert the heating system back to overnight storage heaters. This was despite the fact that this would increase the total energy usage.

On another redevelopment cited by Mr Simms, he installed double glazing, energy-efficient lighting and an electric boiler. Again, the EPC rating fell from D to E and he says, “The assessor told me if it had been a gas heating system it would have gone to a B.”

These sorts of anomalies in the EPC rating system go directly against the Government’s aim of reducing, then eventually banning, the use of natural gas boilers and encouraging heat pumps, for which they are offering £5,000 grants.

Jess Ralston, of the Energy and Climate Intelligence Unit, a non-profit organisation, told The daily Telegraph:

“EPCs are so focused on cost, they forget the environmental impact. If you install a heat pump, you will be punished.”

When the EPC system was designed back in 2007, said Mr Ralston, electric generation was very different to now. Ten years ago, electricity use produced more than twice as much carbon as natural gas, but now it is half that of gas.

Mr Spurrier says that:

“In terms of overall net zero, we need to switch as much as we can to electricity, But because the EPC system has not changed, it incentivises property owners to do the opposite. Pressing ahead with EPC targets without reform will be extremely problematic. We don’t want to embark on a policy using a tool that is not fit for purpose.”

David Adams, of the Energy Efficiency Infrastructure Group, an industry body, says:

“The EPC system is completely inadequate to tell you how good a dwelling is and how much improvement it needs. People now may have completed on a house and be completely unaware of the liabilities they are taking on.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – OPINION: The EPC ratings system is “not fit for purpose” | LandlordZONE.

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Ministry of Justice Consultation to enhance legal support for those facing eviction or repossession

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The Ministry of Justice 8 week consultation sets out a new approach to the delivery of legal aid for housing possession proceedings. The proposed changes will improve access to legal aid for anyone at risk of losing their home and provide holistic advice to individuals most in need.

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Rent increase hostage to windows?

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Hi, My tenants have not had a rent increase for the last 3 years and I need to do this now. Unfortunately, they are refusing the rent increase and tenancy renewal unless I fix the windows.

The windows have some mist collecting between the two panes of double glazing.

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Demand for rental properties at ‘highest level ever’, landlords tell survey

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Landlords say demand for rental properties is at a historical all-time high, a poll by the NRLA has discovered.

The survey of private landlords across England and Wales, conducted in partnership with the research consultancy BVA/BDRC, found that 57 per cent confirmed that demand for homes to rent had increased in the third quarter of 2021 – up from 39 per cent in the second quarter of the year.

At the beginning of the first Covid lockdown in the second quarter of 2020 just 14 per cent of landlords reported tenant demand having increased.

In a sign of recovery in the market, landlords operating in London have seen a significant increase in demand compared to the levels reported throughout the pandemic as workers returned to the capital.

Workers return

68 per cent of landlords operating in outer London reported demand having increased, up from 25 per cent in the third quarter of 2020. In central London, 54 per cent reported increased demand, up from 16 per cent at the same time last year.

Elsewhere, landlords operating in the South West reported the strongest demand with 79 per cent saying that demand had increased in the third quarter of the year.

This was followed by 74 per cent in the South East (excluding London), 73 per cent in Wales and 71 per cent in the West Midlands.

Despite the booming demand, the same proportion of landlords plan to reduce the number of properties they rent out as plan to increase them at 19 per cent.

Ben Beadle, Chief Executive of the NRLA, says: “As demand picks up following lockdown measures, we need a stimulus to support responsible landlords to provide the homes to rent we vitally need.

“Without this, it will ultimately be tenants that suffer as a result of less choice, higher rents and the resulting difficulties they will encounter when looking to become homeowners.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Demand for rental properties at ‘highest level ever’, landlords tell survey | LandlordZONE.

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Minister rejects calls to clamp down on landlords who evict tenants illegally

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The government has rejected a bid to strengthen the way illegal evictions are dealt with and to give tenants more protection.

During a debate in the House of Lords, shadow spokesperson for communities and local government, Baroness Blake of Leeds, urged them to insert a clause into the Offences under the Protection from Eviction Act which would force the police to provide councils investigating an offence with the information they needed.

She said there was a failure to enforce the law against criminal landlords, due partly to local authority budget cuts which meant there were too few tenancy relations officers.

“Where the police do not recognise the criminality of these tactics on the part of landlords, it leads to underreporting of incidents and to those reported being routinely classed not as a criminal offence but as civil matters or breaches of the peace,” she told peers.

Baroness Jones of Moulescoomb warned that the problem of illegal evictions would only get worse during the winter following the end of Covid restrictions as many frustrated landlords would want to kick people out of their homes, with some knowingly or unknowingly trying to evict them without following the correct procedures.

She said: “Many police wrongly conclude that this is a civil matter and not a criminal one. We know this could not be further from the truth.”

Distressing activity

However, Home Department Minister Baroness Williams of Trafford said that while the distressing activity had no place in society, local authorities and the police already had mechanisms in place to work collaboratively to tackle criminal landlords. She added: “If there is an issue, the solution here is not more legislation.

The existing powers we have are sufficient but I accept that it is incumbent on the police and local authorities to work collaboratively to tackle crime in their areas, including on illegal eviction investigations.”

The amendment was withdrawn.

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