BREAKING: 1000s of landlords caught up in Purplebricks deposits fiasco

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Estate agency Purplebricks has revealed that thousands of landlords have been caught up in its IT glitch that saw the tech fail to communicate the proscribed information in relation to tenancy deposit protection in time to tenants.

Between 800 and 3,700 landlords are estimated to be involved after Purplebricks this morning revealed that its exposure to the problem could cost the company between £2 million and £9 million.

These are the potential costs of reimbursing tenants three times their tenancy deposits for not serving them the proscribed information in time.

The law requires that landlords or their letting agents must tell tenants ten key pieces of information about both them and the deposit within 30 days of receiving the deposit.

Purplebricks and its landlords are exposed because, should the tenants wish to, they can apply to a county court and be paid three times their original deposit as a ‘fine’.

Landlords also face restrictions on how and when they can evict a tenant if the tenancy deposit protection rules have not been followed.

Statement

Purplebricks has released a statement this morning revealing that it is talking to tenants – it has two weeks to sort the problem out – to ‘correct’ the original communications process.

“The company believes that it is prudent to provide for any potential future claims which could arise under the Housing Act in relation to this regulatory process issue,” the statement says.

“Early provisional estimates by the Company suggest a potential financial risk in the range of £2m-9m.

“Purplebricks is now in the process of finalising the level of provision required and associated disclosures and has therefore taken the decision to delay its results for the half year ended 31 October 2021 which were due to be published on 14 December 2021.”

Read more about tenancy deposit protectin schemes.

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VIDEO: Paul Shamplina and Vanessa Warwick tackle the ‘wealth creation’ property sector

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Property commentator Vanessa Warwick has said she will continue to be an advocate for ‘authentic property and wealth educators’ who provide quality training at a reasonable cost and has welcomed the PEAS initiative launched recently by the Property Investment Bureau.

She sat down with Paul Shamplina for a video interview filmed at a property sector gathering a few days ago to discuss this topic.

“As we know, the wealth creation industry is totally unregulated and that makes it a very, very dangerous place for consumers, particularly as those who are attracted to it tend to be younger, more naïve and slightly vulnerable people,” says Warwick.

When asked how she would like to see the wealth creation sector policed, Warwick proposed a three-point plan.

This includes social media platforms taking more responsibility for removing content that misleads consumers, the sector being regulated along the lines of the financial service industry’s FCA scheme, and potential students being vetted before signing up for expensive courses to ensure that they qualify for BTL finance.

In the video Warwick describes many of the educational courses on offer as akin to “buying a ticket to see a Unicorn”, highlighting how training courses can cost the same as the deposit on a property, and says too few students realise that property investment requires capital.

Shamplina agreed, saying: “Getting into property needs some money to get started, otherwise it’s just a pipedream.”

Redress

The evictions expert also said that he’d urged the recently launched PEAS scheme to include redress within its membership requirements so that customers of PEAS accredited educators, if they want all of some of their money back, had an independent third-party adjudicator to gain redress via.

“You have to start regulation somewhere and if we don’t then eventually Trading Standards are going to get involved, or the government will legislate,” he said.

As mentioned in the interview, the New Statesman recently ran an article examining ‘landlord influencers’ on social media, highlighting how many market their courses to young people with promises of easy riches through property, with many using their luxury lifestyles as part of their marketing.

Watch the video

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Landlords frustrated over council’s handling of selective licensing delay

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Southend landlords are frustrated by their council’s licensing registration system which doesn’t make clear that the scheme has been put on hold or how much it will cost.

It was scheduled to start on 1^st December but councillors at the Essex town council complained they lacked details about how it would work.

But landlords hoping to get an early bird discount aren’t being told that there has been a delay, including Josie Hawes, from Billericay, who runs a family business with 10 rental properties, one of which is within the new licensing area.

She tells LandlordZONE that she spent two days filling out forms without realising the scheme was on hold.

Josie adds: “I only found out about the delay by looking at news articles when I was confused about only being charged £3.

“I then emailed the council who said that only the payment had been put on hold until it goes back to cabinet to confirm cost. I used their specific selective licensing email address and that doesn’t even work.”

Licence applications

Southend Council’s website says it is currently unable to accept payment for licence applications but that it will accept applications online and will pre-approve those submitted.

It adds: “When the payments are able to be processed we will contact you…you will still receive your discount if a valid application is received by 1st April 2022.”

Ian Gilbert (pictured), leader of the council, says: “Those landlords who have applied since 1^st December have been charged a nominal fee to recognise their application, but until approval from the council we cannot provide an accurate cost. We will update landlords as soon as we are able.”

Read more about Southend’s licensing activities.

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Test Case: Council advising tenants to stay put after valid s21 notice served

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This is a Local Government and Social Care Ombudsman case involving an unnamed landlord (LandlordX or MrX) and Brentwood Borough Council.

The case revolves around a common situation where the landlord required possession of the property after serving a valid section 21 notice under the Housing Act 1988, as amended, giving 2 months’ notice, but the tenants refusing to leave.

The landlord took his tenants to the County Court which made out a Possession Order in July 2019, but the two tenants still refused to leave, supported in their stance by the Council advising them to stay put.

The landlord complained to the Council stating that he had incurred extra costs, loss of rental income and was put to unnecessary time and trouble of applying to the Court for a warrant of eviction. Landlord X wanted the Council to apologise and pay him £1,389.50, his own calculation based on his loss of rental income, his Court costs and an amount to recognise his distress and time and trouble.

Background to the case

Landlord X had let a property to two joint tenants under an assured shorthold tenancy agreement.

In February 2019 the landlord decided he would not renew the tenancy when it expired on 28 March 2019. He informed his tenants in writing of his decision.

The landlord wanted to accommodate a relative in the property from 1 August and told his tenants that he wanted to be flexible and allow them to stay on until 31 July. But the tenants contacted the Council in February asking for housing advice, following which they received a standard letter saying their case had been allocated to a named case officer in the Housing Options service.

The letter contained the following statement for private renters:

“We would not normally consider you to be homeless until a Possession Order from the Court has expired. If you leave accommodation available to you because a legal Notice has been served, you will likely to be found to have made yourself intentionally homeless and no duty to provide accommodation will remain.”

The Council closed the case in mid-March because the tenants did not reply to a message from the case officer and at the end of March they stopped paying rent. By May they were served Section 21 and Section 8 Notices giving notice to terminate their tenancy, by which time the rent arrears amounted to £1,900. They were given notice that the landlord would make a claim for possession if they did not leave the property by 11 July 2019.

The tenants contacted the Council again in May for housing advice and assistance as they said they were in danger of being made homeless. An officer from the Council’s Housing Options team then sent a standard letter to the tenants informing them of their legal rights and the Council’s homelessness duties:

“If you are renting privately you have a legal right to remain in the property until a written legal Notice expires AND a Possession Order is granted by the Court AND until the time and date of eviction detailed on the eviction notice.”

The case officer contacted the landlord in May and he confirmed that the tenants were still in his property and that he intended to recover possession and that the rent arrears were £1,900, but the officer did not contact the landlord again after May to review the situation.

The Possession Order was made on 26 July ordering the tenants to leave the property by 9 August and to pay the rent arrears which were now £4,771, plus the landlord’s costs of £451.71 and a daily charge until they left the property.

The case officer had contact with the tenants by August but was not sent the Possession Order. The case officer did not contact the landlord to get information to decide whether it would be reasonable for tenants to remain in the property. On 16 August the landlord sent the Council the eviction notice made on 13 August. It said bailiffs would evict them on 11 September.

Eventually the tenants sent sent the Council a copy of the Possession Order and on 30 August the tenants accepted an offer of temporary accommodation and moved out on 5 September. But the landlord said he did not have a forwarding address for the tenants and they still owe him more than £5,000 rent and his Court costs.

The landlord’s claim was that by advising his tenants to remain in his property until the eviction date, the Council caused him to lose more rent and incur further Court costs. This prolonged matters and caused him avoidable distress and time and trouble. He cited the advice in the Homelessness Code of Guidance for councils when he complained to the Council, but it did not take this on board in its response.

He submitted a formal complaint but the Council did not uphold it. It advised him to complain to the Housing Ombudsman Service if he was dissatisfied with its final response. Acting on that advice the landlord contacted the Housing Ombudsman service. They advised him in December 2019 that they had no powers to investigate a complaint made by a private landlord against a local council.

The Local Government and Social Care Ombudsman

The landlord later complained to The Local Government and Social Care Ombudsman in July 2020 after contacting his MP and a government department.

In response to the Social Care Ombudsman enquiries the Council acknowledged some fault in the way it had handled the case. It accepted that it could have been more pro-active in contacting the landlord to request information rather than relying on the tenants to provide it. That would have prevented some delay.

The Council offered to pay the landlord £1127.52 for the loss of rental income. This is for a period of 36 days from 31 July 2019 to 4 September 2019. It is calculated at a daily rate of £31.32 based on the monthly rent of £950.

The final decision

The Ombudsman found the Council was at fault and this caused injustice to the landlord. The Council agreed to provide a suitable remedy. The Ombudsman said:

“I welcome the Council’s willingness to offer a financial remedy. The Council has agreed to complete the following actions within one month:

• Apologise in writing to [the landlord] Mr X;
• Pay him £1127.52 for the loss of rental income;
• Reimburse the Court costs for the warrant for eviction;
• Pay £100 for time and trouble because it misdirected Mr X to the wrong Ombudsman service;
• Share the final decision with officers in the Housing Options Service and produce a briefing note to ensure they are aware of the relevant advice in the Homelessness Code of Guidance.”

There is some useful information here to help landlords who find themselves in this or a similar situation when councils advise tenants to stay put, or they delay in taking action.

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LATEST: Councils warn that landlord exodus to Airbnb is causing ‘perfect storm’

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The flight of landlords from the traditional rental market to Airbnb is creating a growing housing crisis, councils have warned.

A survey by the District Councils Network (DCN) has revealed that 76% of councils said a lack of spare capacity in the private rental sector had caused a rise in housing waiting lists, while 48% said it was causing significant pressure on their housing services.

Several trends are driving this particularly within holiday resort areas including an historic shortage of council housing, the pandemic, the staycation boom and landlords quitting the sector as additional taxes and regulation take their toll.

The research also found that the consequent rise in rents was putting pressure on tenant finances and leading to a rise in applications to council hardship funds, a problem that will increase as the Government maintains its Local Housing Allowance freeze next year.

The DCN, which represents some 200 district councils, is calling on the Government to increase investment in council housing and give councils the tools they need to create their own permeant housing for those facing hardship.

Perfect storm

Cllr Sam Chapman–Allen (pictured) Chair of the DCN, says: “This survey reveals a perfect storm of problems creating a crisis in the private rented sector across the country.

“Now the Government’s Eviction Ban has ended, this is a problem that could get worse, with councils also seeing increase in the numbers of tenants needing housing support due to increased evictions due to rent arrears.”

Eleanor Bateman, Policy Officer for Propertymark, says: “Concern about a shrinking private rented sector is not a new conversation, but it is one that is not being acknowledged.

“If the situation continues to be ignored by decision makers fixated on taking a piecemeal approach to legislation we shouldn’t be surprised if the number of people on housing waiting lists skyrockets.

“With the removal of Section 21 on the table, unrealistic energy efficiency targets, and the attraction of short-term letting, the UK Government will find that the private rented sector continues to diminish, and homelessness will rise.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Councils warn that landlord exodus to Airbnb is causing ‘perfect storm’ | LandlordZONE.

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The best Landlord Portfolio Exit Specialist to sell your properties

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The current and planned legislation and tax implications are affecting landlords throughout the UK wanting to cash in and sell their properties. It’s why so many Property118 landlords are reaching out to Landlord Sales Agency to sell.

As a specialist company

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New challenges as buy to let celebrates 25 years

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Since they were first launched in 1996, buy to let mortgages have notched up 25 years on the market as the year 2021 comes to a close. 2021 also marks a significant milestone for Total Landlord Mortgages parent company, Hamilton Fraser, as they celebrate 25 years of operation.

Landlords have rented out homes for centuries, but the boost that changed the industry was the buy to let mortgage. Launched in response to increasing demand for rental properties, coupled with rent deregulation in 1988, buy to let mortgages allowed individual landlords to respond to this demand and provided easier access to funds. This opened the way for more private landlords to invest in property.

The result, a quarter of a century on, is that 4.2 million homes are owned and rented out by an estimated 2.5 million landlords. But there are big challenges in store for 2022 as landlords grapple with the cost of energy efficiency upgrades and the outcome of the Government’s long-awaited Renters’ Reform Bill, which is expected to bring in some of the most significant changes landlords and tenants will have seen since the 1990s.

Bank base rates are still at an all-time low, call Total Landlord Mortgages today on 0333 224 8918 or request a call back to secure the best deal.

2021 – A year in buy to let

With the seasonal break approaching, Hamilton Fraser Total Landlord Mortgages reflects on a year in buy to let and looks forward to what the new year has in store:

• January – Leasehold reform benefits landlords and millions of homeowners stuck with escalating ground rents and extortionate service charges, as the Government pledges to rein in developers
• February – The Government launched its pilot mediation service for landlords and tenants going through the eviction process. The pilot has now ended, but you can still contact the Property Redress Scheme mediation service, which was also set up during the pandemic, for advice

• March – Chancellor Rishi Sunak extends the stamp duty land tax holiday in England for three months (until June 30) in his spring budget

• April – From 1 April, a law was introduced that states every private rented home in England must have an electrical safety report

• May – The Queen gave her annual speech, laying out three key pieces of legislation for the property sector. Also this month, ‘breathing space’ regulations were introduced, increasing fear amongst landlords that they wouldn’t be able to pursue tenants who had fallen into arrears

• June – Rightmove reported that the Government’s green dream of making millions of homes more energy efficient may fall flat due to one in six homes not being able to be refurbished to the required standard

• July – The Government’s latest English Housing Survey was released, it showed that 83 per cent of private renters are currently happy with their homes, contradicting claims from housing charities about poor standards

• August – Preston, Lancashire, is ranked the best city for buy to let with a yield of 2.98 per cent, data from an estate agency discloses

• September – The stamp duty land tax holiday ended at the end of the month

• October – Eviction deadlines in England revert to pre-COVID arrangements of two months’ notice for landlords and one for tenants

• November – The Government’s plans to scrap Section 21 ‘no fault’ evictions are delayed until the spring, housing officials announce

• December – Property professionals and industry pundits predict the next 12 months will see the average price of a home in England surge past the current record of £288,000

• January 2022 and beyond – Continuing double-digit growth in property values is expected. Rising home prices will add to the current 10 per cent annual growth in 2021, according to Nationwide’s house price index

The pandemic and government’s response continued to impact the economy and the private rented sector in many ways in 2021 – read more about the numerous changes to laws, rules and regulations in Hamilton Fraser’s annual round up.

Fears for interest rates as inflation rises in 2022

The stamp duty holiday spurred much of the growth and an exodus from city centres to larger homes with more land in the suburbs and beyond, as many switched from office commutes to working at home due to COVID restrictions.

Meanwhile, the Bank of England has held interest rates at the record low of 0.1 per cent since March 2020 and is resisting pressure to raise them to control inflation.

A poll of 50 economists conducted by news agency Reuters forecasts rates will not rise until the second half of next year unless inflation rages out of control.

The Bank of England’s target is two per cent inflation, but the figure stands at 4.3 per cent and is expected to rise before falling as the economy gets back on track after Brexit and COVID disruption.

With bank base rates still at an all-time low, has there ever been a better time to lock in some incredible rates? Call Total Landlord Mortgages today on 0333 224 8918 or request a call back to secure the best deal.

Read more about what is happening with the economy and what lies ahead in Hamilton Fraser’s Economic and property market update for 2022.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – New challenges as buy to let celebrates 25 years | LandlordZONE.

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National Audit Office – PRS regulation report critical of government’s lack of planning

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The National Audit Office has produced a report to consider the extent to which the regulation of private renting in England supports the Department for Levelling Up, Housing & Communities aim to ensure the sector is fair for renters: Click here

The NAO is critical of Government and Local Authorities lack of holistic planning for the PRS and the patchy support for renters.

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Landlords collared for fuel poverty in PRS and urged to install smart meters

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Landlords have been blamed for saddling tenants with higher energy bills which leaves them struggling to pay their rent.

Fuel poverty charity National Energy Action says private renters often face higher energy costs as they tend to live in the least efficient homes. “It’s therefore no wonder that 65% say they worry they may struggle to pay their energy bills,” says director of policy and advocacy, Peter Smith.

“Landlords have a big role to play in helping to make the impact of higher prices more affordable and therefore increasing the chances their tenants can make the rent.”

Smart Energy GB research found that almost two-thirds of UK renters are worried about paying their energy bills this winter and 80% reckon landlords could do more to make their homes more energy efficient.

Smart meter

It says 28% don’t feel their landlord supports them enough when it comes to managing their energy use, while 67% believe that having a smart meter would help them manage their energy costs.

Some renters have been put off doing this as, not only did they think their landlord wouldn’t like it (16%), they were also concerned they might lose their deposit (14%).

Iagan MacNeil, head of policy at Smart Energy GB (pictured), adds: “It is a bill payer’s right to have a smart meter, so we hope that landlords responsible for the energy bill will consider installing a smart meter or work with their tenants to get them installed in their rental properties.”

Smart Energy GB and Propertycheckists.co.uk have come up with five tips for landlords to support their tenants: get a smart meter, check what eco features the property has already, use LED lighting, fit thermostats on radiators and if renovating or upgrading a property, fit insulation.

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NRLA calling for development of a meaningful national redress scheme

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Responding to the National Audit Office report published today on the regulation of the private rented sector, Ben Beadle, Chief Executive of the National Residential Landlords Association, said:

“Regulation of the private rented sector needs to ensure that homes are safe and meet all required standards.

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