What will new ‘decent homes standard’ ask of landlords? Here’s our ‘sneak peak’

admin    Uncategorized     agents

Landlords are waiting to find out how they will need to bring their properties up to the ‘decent homes standard’ announced in the government’s Levelling Up White Paper.

However, its extensive guidance for social landlords gives a good indication of what might be expected as this is likely to be the basis for the new rules covering private landlords.

Under the definition, a home is considered decent if it doesn’t have one or more serious category one hazards. It also needs to be in a “reasonable state of repair” and would fail the test if one or more of the key building components – external walls, roof structure and covering, windows/doors, chimneys, central heating boilers, gas fires, storage heaters, plumbing and electrics – are old (older than their standard lifetime) and, because of their condition, need replacing or major repair.

A property isn’t in a reasonable state of repair if two or more of any other building components are old and, because of their condition, need replacing or major repair.

‘Reasonably modern’

Properties need “reasonably modern facilities and services” and those which lack three or more of the following would fail: a reasonably modern kitchen (20 years old or less); kitchen with adequate space and layout; reasonably modern bathroom (30 years old or less); an appropriately located bathroom and WC; adequate insulation against external noise (where external noise is a problem); and adequate size and layout of common areas for blocks of flats.

A home without one or two of these is still classed as decent, and landlords wouldn’t need to modernise kitchens and bathrooms if their property meets the remaining criteria.

Lastly, properties need to “provide a reasonable degree of thermal comfort” through both effective insulation and efficient heating – although this definition could well be superseded by any upcoming changes to EPC ratings.

Government guidance also notes that landlords are not expected to make a home decent if this is against a tenant’s wishes as work can be undertaken when it is next void.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – What will new ‘decent homes standard’ ask of landlords? Here’s our ‘sneak peak’ | LandlordZONE.

View Full Article: What will new ‘decent homes standard’ ask of landlords? Here’s our ‘sneak peak’

Japanese knotweed, danger is downgraded…

admin    Uncategorized     agents

The large herbaceous perennial with its bamboo-like appearance became infamous in Britain for it’s threat to buildings. Its rapid growth, its size and most importantly the damage it can do, made it the villain of the horticultural world, and it became feared by property owners and mortgage lenders alike.

Until recently, the presence of the invasive plant coming within seven metres of a home could cut up to 15 per cent off the property’s value. It meant banks and mortgage lenders were reluctant to lend to buyers given the threat to the property.

However, rather like Covid, it seems, this threat is being downgraded.

Japanese knotweed is no longer seen as such a serious threat to property valuations, that’s according to new official guidance put out by the Royal Institution for Chartered Surveyors (RICS) for its chartered building surveyors.

The new guidelines from the respected professional body says that knotweed should not affect the value of a home unless it is causing visible damage. The guidance, due out by the end of March, claims there’s now a better understanding of the threat level of the plant which means surveyors no longer have to flag it up as a risk, in most circumstances.

Experience has shown, according to the new guidance, that the invasive weed “rarely causes” substantial damage to homes, and is less of a risk than other species such as buddleia and bamboo*.

Surveyors are being asked to “flag-up” the presence of knotweed if it is visible within 10ft of a property and where there are signs of damage. They are advised to investigate to determine whether any damage is caused by the plant or something else, but in any case it is unlikely to affect mortgeability either way says the guidance.

The RICS says:

“Substantial structures on sound foundations are unlikely to suffer structural damage due to Japanese knotweed.”

It has been estimated that knotweed, a plant that is difficult to kill and irradiate, grows up to 10ft, and has been costing the UK economy millions a year in treatment and in home devaluations.

The plant tends to lie dormant in winter months before resuming its rapid growth in the summer, while there is a danger of it reaching buildings and crossing neighbour boundaries, sometimes resulting in litigation between property owners.

Government report on knotweed

A UK government report published last year gave credence to the view that Japanese Knotweed may not be as big a threat to buildings as previously thought. These were the conclusions reached in the government’s report and pointed to what the future might hold for Japanese Knotweed and those affected by it.

Previous to that, in May 2019 the House of Commons Science and Technology Committee published a report “Japanese Knotweed and the built environment”. This followed a detailed inquiry prompted by the publication of new research by Dr Mark Fennell, Professor Max Wade and Dr Bacon in July 2018 (Fennell et al) which suggested that Japanese Knotweed may pose no greater threat to property than that of other plants.

What is Japanese Knotweed?

It is a large, highly aggressive and invasive weed, sometimes referred to as “elephant ears, “donkey rhubarb” or “monkey weed”. It grows in a variety of conditions and can commonly be seen alongside train tracks, on river banks and on waste ground.

The plant has large hollow stems similar to bamboo and large, green, heart shaped leaves. Its roots (rhizomes) have been thought to grow as far as seven metres horizontally and two metres deep underground – it is this extensive root spread that makes the plant so difficult to remove once established.

The only means of destroying Japanese Knotweed is to kill the roots. This can only be achieved by either multiple applications of herbicide or full excavation. If even a few centimetres of root are left in the ground, the plant can regrow.

Japanese Knotweed is classed as a controlled plant under the Wildlife and Countryside Act 1981. Whilst is not illegal to have the plant on your own property, it is illegal to allow it to spread on to adjoining property, including allowing the roots to spread underground. Under the Environmental Protection Act 1990 the plant is classed as “controlled waste”, meaning that it is illegal to dig it up and remove it from your property unless it is disposed of at a licensed landfill site.

A landmark legal case

In a 2018 legal case, Network Rail Infrastructure Ltd v Williams and another involved Japanese Knotweed growing on a railway embankment owned by Network Rail, and the claimants owned affected bungalows.

The Court of Appeal made it clear that the presence of Japanese Knotweed will not, in itself, provide grounds for a diminution of value claim, but encroachment of the plant onto neighbouring land will probably entitle the neighbour to damages. This is not because of any reduction in value, but because it interferes with the ability to fully use and enjoy the land. It has yet to be seen how courts would approach the quantification of such loss.

*Mortgage lenders have some concern about Japanese knotweed and its impact on the built environment. But stories about knotweed have become a popular media favourite, often exaggerated. It can undoubtedly damage the built environment, but usually in buildings by exacerbating an existing weakness such as cracks, crumbling mortar, decaying tarmac etc. It can lift paving slabs, block paving, etc, but damage to building structures is rare.

Buddleia is in fact responsible for more structural damage than Japanese knotweed. Seeds can grow in the smallest of cracks, even without access to soil. It is particularly damaging to the railway network, where it weakens bridges, interferes with overhead power lines and obscures signals.

Bamboo roots are very strong and not easily broken. They are thin and fibrous and can be found to a depth of up to 1m. They can be destructive to the built environment lifting paving, distorting or penetrating soft or decaying tarmac. They can also find their way into a buildings if there is a point of access available, and can grow through retaining walls and spread beyond boundaries.

So in those respects these two plants can be worse than Japanese knotweed.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Japanese knotweed, danger is downgraded… | LandlordZONE.

View Full Article: Japanese knotweed, danger is downgraded…

Landlord insurance premiums driven up by inflation

admin    Uncategorized     agents

After two decades of low property insurance premium rates, prices are being driven up by inflation. Steve Barnes, Associate Director at Hamilton Fraser Total Landlord Insurance, explains how inflation combined with other factors have created the perfect storm, and what this means for landlords.  

Historically, property insurance premium rates have been under-priced. This is because, although claims costs have been rising over the past couple of decades, insurance rates have not increased proportionately. This is now beginning to change as premiums are starting to rise to reflect the changing nature of risks, rising inflation and other economic factors, that property owners are exposed to today.

Inflation, the economy and the impact on insurance premiums

Inflation, which is measured by the Consumer Price Index (CPI) rose by 5.1 per cent in the 12 months to November 2021. This is the highest level in over a decade, according to figures released by the Office for National Statistics (ONS). And this figure shows a sharp upward trajectory in the latter half of 2021.

Coupled with rising inflation, the BCIS Materials Cost Index (BCI), which reveals the overall cost of materials, soared by 20.3 per cent in the 12 months to November 2021. Construction material costs in the UK are at their highest since the early 1980s, based on the annual growth of the index.

The combination of the rising cost of building materials and inflationary pressure on the economy in the aftermath of COVID-19, is being further exacerbated by labour shortages. While demand for new building works remains high in the UK, resources are hard to source and increasingly more expensive due to reduced supply. The shortage in skilled labour is triggering wage rises, with some builders reporting a rise in up to 25 per cent to attract the skills they need.

The result of all these factors combined is that rebuilding costs are spiralling. The cost of rebuilding a property after it has been damaged has risen dramatically because of escalating materials and labour costs.

Many economists and central banks are hoping the rising inflation we are currently seeing will soon ease. But even in the short term, as the market reacts to the steep increase in both inflation and the cost of materials, it’s vital that landlords make sure they are adequately insured. Buildings and contents insured will be automatically index linked at renewal, but it’s really important that they are adequate in the first place. At Hamilton Fraser Total Landlord Insurance, we would always make sure that your sums insured are maintained at adequate levels in this period of high building inflation.

In the long run, sustained higher inflation will result in higher payouts, and this will feed through into the pricing of premiums. To mitigate this, some insurers may reduce the amount of cover. So, it’s very important to check the small print and any exclusions, to make sure that you are still protected against the specific risks that affect buy to let, such as malicious damage, which unfortunately is on the rise.

What other factors are causing property insurance premiums to rise?

Rising inflation and market factors such as the costs of materials and labour are not the only things having an impact on insurance premiums. Insurers are seeing an increase in both the frequency and cost of claims across all types of cover, due to a number of additional factors. Most notable is the impact of climate change.

Climate change is leading to more frequent severe weather events across the UK, such as named storms and flooding. In 2020, the year that brought the pandemic, storms Dennis and Ciara alone resulted in an estimated cost of over £500 million to insurers. That year, we experienced a 95 per cent increase in storm claims compared to the previous year.

Insurers haven’t even factored in some of the worst surface flooding that we have ever experienced in 2021. The true cost will take time to come through, but this could easily match if not surpass the storms of 2020. This increase in severe weather is a key reason for the rise in premiums, as well as reductions in coverage such as flood exclusions.

Claims from plumbing leaks and frozen pipes have also increased in recent years, and these account for one in three of Hamilton Fraser’s claims. The damage caused by something like a burst pipe can be devastating – insurers in the UK pay out £1.8 million for this type of claim every single day.

Changing methods of construction and design are also a factor. Modern buildings are often less able to withstand fires, floods and storms and the trend for open-plan buildings has made it harder to contain fires once they take hold. The costs of settling personal injury claims has also risen, and in our increasingly litigious society, there is always the risk of false claims being made. If a tenant or a visitor has an accident that causes a life changing injury, the landlord could be liable for medical expenses and loss of income for the rest of the victim’s life, which can run into millions of pounds.

What can landlords and tenants do to minimise risks associated with rising insurance costs?

Landlords can’t do much to influence the level of inflation or the rise in extreme weather events. But fortunately, there are some steps you can take to minimise the impact of the rise in insurance premiums.

1. Carry out risk mitigation measures

Do all you can to make sure the property is safe, such as carrying out regular maintenance, signing up for flood alerts, making regular inspections and taking precautions when the property is unoccupied.

• Start your renewal process early

In the current climate, there are likely to be fewer quote options, so don’t leave it until the last minute to renew your insurance, or you may find your provider is no longer offering a policy which meets your needs.

• Make sure you’re not underinsured

Alarmingly, the average degree of underinsurance is 40 per cent. Underinsurance is a serious risk to property owners and can even result in an insurer turning a claim down. In the current market, insurers are more likely to refuse claims or pay out less than the amount being claimed for. It is therefore very important not to reduce your rebuild value, particularly with the increase in the costs of materials and labour. It’s a good idea to get a professional valuation so that insurers have confidence that they are charging the correct premium for the risk being covered.

• Provide detailed information and stick to the conditions of your policy

As interpretations are likely to become stricter, don’t give your insurer any reason to deny your claim. Provide as much detail about your property as possible, for example alarm and lock specifications. This will enable underwriters to apply discounts where they are able to, rather than assuming a worst case scenario. In the event of a claim, make sure you follow the claims process properly and contact your insurer immediately after an event to improve your claim chances.

• Check your standard excess

Consider increasing your excess as this will reduce your premiums without affecting your level of cover. This might be a sensible option if you rarely make claims.

The residential and commercial property markets have been steadily ‘hardening’ even before COVID-19 and the subsequent rise in inflation. Increases in premiums and excesses have been seen every quarter since the end of 2018, and this has been coupled with an increasingly risk averse approach and more stringent terms from insurers. You can read more about that in Hamilton Fraser’s article, Six risks in a hardening insurance market and how to avoid them. The key thing for landlords to understand is that it is crucial to check your insurance cover properly to make sure you’re fully protected and not to be tempted to reduce coverage. This is not the time to cut corners when it comes to cover if you want to avoid the pitfalls of property underinsurance.

If you have questions about the rise in insurance premiums, or would like to discuss landlord insurance with one of our experts, feel free to contact the Hamilton Fraser Total Landlord Insurance team. 

Call Total Landlord Insurance today on 0800 63 43 880 quoting code LZ2022 or get a quote online in under 4 minutes.

You can also visit our Knowledge Centre, where you will find a library of content packed with useful advice for landlords to help you minimise your risks and make a success of your business.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Landlord insurance premiums driven up by inflation | LandlordZONE.

View Full Article: Landlord insurance premiums driven up by inflation

Property Partnership 2% Stamp surcharge as Overseas buyer?

admin    Uncategorized     agents

Hello all, To explain my situation, I am a UK citizen, but currently living in Hong Kong.

I already have a number of properties in my own name (bought before I left the UK) and am now looking to establish a company with my cousin

View Full Article: Property Partnership 2% Stamp surcharge as Overseas buyer?

SCOTS: ‘Our landlord register hasn’t worked – so be careful as you plan yours, Mr Gove’

admin    Uncategorized     agents

Scotland’s landlord leader says the “postcode lottery” over how its country’s register is administered means it has failed to weed out bad practices or use the opportunity to communicate with private landlords.

Scottish Association of Landlords chief executive John Blackwood (pictured) is encouraging housing secretary Michael Gove to think carefully about how he can properly achieve the aims of its proposed national register for England – announced today in the government’s levelling up White Paper.

Private landlords in Scotland are legally required to apply for registration with their local authority and get a registration number to show they’ve been approved – which is renewed every three years.

Council control

Its landlord registration scheme delegates maintaining the register to 32 local authorities, which isn’t an ideal situation, says Blackwood, as many landlords own properties in different authorities which means they have to pay multiple registration fees.

More importantly, Blackwood tells LandlordZONE that because of the postcode lottery used to administer the scheme, it isn’t always weeding out bad practice.

You don’t know how many rogue landlords aren’t registering, while there are only a small number who are refused registration,” he says.

“When it was set up, we hoped that the register would be a way for local authorities to communicate with landlords and keep them updated with information about their rights and responsibilities.

Missed opportunity

“But some authorities simply use it to keep a list of landlords which is a missed opportunity. A national register would have an advantage and should be easier to maintain.”

However, one clear benefit is the ability for the public to search the register to find out how to contact the owner of a let property.

Blackwood adds: “The UK government needs to carefully consider what the purpose of the register is and how its effectiveness will be monitored as there is no point it just creating a register of names and addresses for the sake of it.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – SCOTS: ‘Our landlord register hasn’t worked – so be careful as you plan yours, Mr Gove’ | LandlordZONE.

View Full Article: SCOTS: ‘Our landlord register hasn’t worked – so be careful as you plan yours, Mr Gove’

Lenders keen to cater for First Time Landlords

admin    Uncategorized     agents

The choice of buy-to-let deals available to first-time landlords (FTL) has grown at a time when demand is rife for rental properties, according to the most recent research by Moneyfacts.co.uk.

As product availability has recovered in the wider buy-to-let (BTL) sector following the impact of the pandemic

View Full Article: Lenders keen to cater for First Time Landlords

Existing Decent Homes Standard is not the right vehicle

admin    Uncategorized     agents

Responding to proposals in the Government’s ‘Levelling Up’ White Paper that private rented homes will be required to meet the Decent Homes Standard, Ben Beadle, Chief Executive of the National Residential Landlords Association said:

“Every tenant should have the right to expect properties to be safe and secure.

View Full Article: Existing Decent Homes Standard is not the right vehicle

Levelling Up White Paper – S21 abolished – Landlord register – Decent homes standard

admin    Uncategorized     agents

Section 21 ‘no fault’ evictions will further be abolished, ending the unfair situation where renters can be kicked out of their homes for no reason.

We will consult on introducing a landlords register, and will set out plans for a crackdown on rogue landlords –

View Full Article: Levelling Up White Paper – S21 abolished – Landlord register – Decent homes standard

BREAKING: Levelling up White Paper confirms ‘crack down’ on landlords

admin    Uncategorized     agents

Housing secretary Michael Gove has confirmed a raft of renting reform proposals within the government’s levelling up White Paper, although today’s announcement remains thin on detail.

But what it lacks in depth it makes up for with ambition; the document includes dozens of radical proposals including a heavy focus on landlords.

As expected, there is to be a national landlord register, a crack-down on rogue landlords, the implementation of a national ‘decent homes standard’ and moves to abolish section 21 ‘no fault’ evictions.

Other measures that were within the renting reform consultation such as the lifetime deposit scheme, are not included.

Local pride

Gove clearly wants the private rented sector to be part of the government’s efforts to level up the UK economically and in relation to opportunity, health, education, policing and devolved decision making and government spending to conclude 12 key ‘missions’ by 2030.

The government also wants to get more renters on the property ladder; and the government’s ambition is for the number of non-decent rented homes to have fallen by 50%, with the biggest improvements in the lowest-performing areas.

“Not everyone shares equally in the UK’s success,” says Gove (pictured).

“For decades, too many communities have been overlooked and undervalued.

“As some areas have flourished, others have been left in a cycle of decline. The UK has been like a jet firing on only one engine.

“Levelling up and this White Paper is about ending this historic injustice and calling time on the postcode lottery.”

Reactions from landlords

Ben Beadle (pictured), Chief Executive of the National Residential Landlords Association says: “Every tenant should have the right to expect properties to be safe and secure.

“The existing Decent Homes Standard however is not the right vehicle with which to achieve this important goal.

“At present, this standard, designed for the social rented sector, does not reflect many of the differences between it and the private rented sector. This includes the types and age of properties in each.

“We will work with the Government to ensure whatever standards expected of the sector are proportionate, fit for purpose and can be properly enforced. Without this, criminal landlords will continue to undermine the reputation of the vast majority of responsible landlords doing the right thing.”

“The White Paper has also re-announced plans to end Section 21 repossessions, consult on a national register of landlords and develop plans to better tackle rogue landlords.”

Shelter commentary

Osama Bhutta, its Director of Campaigns (pictured) says: “Today’s commitment from government is a crucial step forward and offers hope to the millions of people being held back by the housing emergency.

“You cannot level up the country without safe and secure homes. The devil will be in the detail, so the government now needs to set out how it will deliver on its promises.

“Renters have had a rotten deal for years. Far too many have been forced to live in shoddy conditions, afraid to complain for fear of eviction.”

Read the White Paper in full.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – BREAKING: Levelling up White Paper confirms ‘crack down’ on landlords | LandlordZONE.

View Full Article: BREAKING: Levelling up White Paper confirms ‘crack down’ on landlords