Gove returns to Government and re-commits to the Renters’ Reform Bill

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Secretary of State for Levelling Up, Housing and Communities, and Minister for Intergovernmental Relations, Michael Gove, has reaffirmed his department’s commitment to reforming the private rented sector (PRS).

It will follow closely the recommendations in the Government’s policy paper “A fairer private rented sector” which was followed by a consultation process and was updated 2 August 2022.

Further, at the weekend the minister suggested private renters could be eligible for targeted financial support in cases of hardship. Tenants could also be eligible for cash rent refunds under the legislation if landlords fail to meet the basic standards of repair with the introduction of the Decent Housing Standard for private rentals.

The legislation in detail

As reported before on these pages, the proposed new legislation will follow some basic principles which aim to produce a higher quality Private Rented Sector. The Government says it is committed to delivering a fairer, more secure, and higher quality Private Rented Sector:

– All tenants should have access to a good quality, safe and secure home

– All tenants should be able to treat their house as their home and be empowered to challenge poor practice

– All landlords should have information on how to comply with their responsibilities and be able to repossess their properties when necessary

– Landlords and tenants should be supported by a system that enables effective resolution of issues

– Local councils should have strong and effective enforcement tools to crack down on poor practice.

The cash-back threat is a “big stick” to be wielded as a mean of focussing landlords minds on this issue of standards when it will be enforced by local authority inspectors. It aims to redress the balance in power between landlord and tenant and remove the threat of eviction for complaining about conditions.

Twelve point plan

As the legislation passes through Parliament things will inevitably change, but the legislation will be presented alone the lines of the 12-point plan of action presented in the White Paper:

1 – There is to be a drive to halve the number (said to be around 20 per cent of rental homes) of non-decent rented homes by 2030. They will all be required to meet the Decent Homes Standard for the first time, in the private sector.

2 – There will be a drive to speed-up the shift to quality rental accommodation improvements starting with those most in need. Pilot schemes will be run with selected local councils to find the best means of enforcing standards, working with landlords to speed up adoption of the Decent Homes Standard.

3 – The long standing commitment (and in the Conservative manifesto) to abolish the Section 21 ‘no fault’ eviction process and provide a “simpler, more secure tenancy structure.” Fixed term tenancies will go, so that a tenancy will only end if the tenant ends it, or if the landlord has a valid ground for getting back possession. The aim is to provide tenants with some security of tenure, such that they can challenge poor practice and living conditions without fear of eviction, while it will reduce the costs associated with unexpected moves.

4 – The grounds for possession under Section 8 of the Housing Act 1988 as amended will be reformed and extended “to make sure that landlords have effective means to gain possession of their properties when necessary.” The Government promises to “expedite landlords’ ability to evict those who disrupt neighbourhoods through antisocial behaviour and introduce new grounds for persistent arrears and sale of the property.”

5 – Rent increases will be restricted to once per year. Rent review clauses in agreements will be banned and tenants will be given powers to “challenge excessive rent increases through the First Tier Tribunal.”

6 – A private landlord-tenant Ombudsman scheme will be introduced which all private landlords must join. This will act as a “fair, impartial, and binding resolution to many issues and be quicker, cheaper, and less adversarial than the court system.” The system of imposing rent repayment orders will be strengthened and, as referred to above, tenants will be repaid rent for non-decent homes.

7 – The Government promises to focus on improving the services of HM Courts and Tribunal Service (HMCTS), working with the Ministry of Justice to target unacceptable delays in proceedings. The will be a drive to strengthen mediation and alternative dispute resolution processes “to enable landlords and tenants to work together to reduce the risk of issues escalating.”

8 – The Government will introduce a new Property Portal to improve the availability of information online for tenants, landlords and local councils. Here, responsibilities will be spelled out to help all three parties with compliance, and help local councils crack down on criminal landlords. Subject to the Information Commissioner’s Office (ICO) approval the Database of Rogue Landlords, will list a landlord’s offences for all to see.

9 – Local authority powers will be strengthened the fines regime and crack down on criminal landlords. There will also be increased monitoring of the effectiveness of local authorities in policing the PRS in this way.

10 – Blanket bans on renting to families with children, benefit claimants and other vulnerable groups, such as prison leavers, will be outlawed. There could be increased support for landlords who take on people in some of these categories.

11 – Tenants will be given the right to request a pet in their property, “which the landlord must consider and cannot unreasonably refuse.” There may be an amendment to the Tenant Fees Act 2019 to so that landlords can request tenants have pet insurance.

12 – This point was to encourage the development of innovative market-led solutions to passport deposits, but it has since been revealed that deposit passports have been dropped from renting reform White Paper due to “lack of enthusiasm from landlords, tenants and letting agents.”

Legislation of this sweeping nature will take time and there could be many amendments before it becomes law, but much of it is coming to a buy-to-let near you!

Another major issue facing landlords

As if these changes where not enough facing small-scale landlords, the coming changes to Energy Efficiency Standards in rentals is also a major challenge for many landlords with older properties – the cost could be considerable. Some of them will need considerable additional investment to bring them from their present minimum EPC rating of “E” up to “B” and beyond to “C”.

From 1 April 2018 rules came into force, making it unlawful to let properties, both domestic and commercial, on a new lease with an EPC rating lower than E.

From 1 April 2020 band “E” was applied to all existing privately rented residential properties. The minimum energy efficiency standard, (MEES) requirements will extend to all existing commercial leases from 1 April 2023 and this rating is to rise in future. Currently EPC band “C” is mooted for the end of this decade be this could be brought forward to as early as 2025.

When the new legislation is eventually passed it is very likely that tenants will be in a position to sue their landlord for having properties below the current standard, whatever that is at the time – that of course will concentrate minds.

A Michael Gove told the BBC’s presenter, Laura Kuenssberg, on Sunday:

“Before I left government in the summer, we had put in place plans both to deal with social landlords that are not doing their job effectively, and also to deal with the very small but noxious minority of private landlords who are not treating their tenants properly.

“We will bring forward that legislation to deal effectively with them.”

Gove said his “blueprint for renters” will see the end of Section 21 evictions, what he says is this is “one of the biggest causes of family homelessness.”

Section 21 has been the legal process where landlords, after serving a 2 month notice, once the tenancy term has ended, the tenant can be removed without a court hearing – it’s all done by processing documents and eviction is guaranteed. It usually takes around 6 months to complete an eviction using Section 21.

What is now being proposed is a system where landlords will be encouraged to go through a process of mediation and other forms of dispute resolution before resorting to court action, which under Section 8 would require a court hearing. The courts are already overbusy.

Additional grounds for eviction are to be added to the exiting 17 grounds but even so, mediation and/or court action will probably take longer and take the decision out of the landlord’s hands – it removes the certainty of section 21, which landlords value.

To be objective about this, evictions are relatively rare and most landlords never need to use one, but when there is an intractable problem, landlords need to know that the system works for them.

If the new system succeeds in reducing the number of below standard rental houses then so much to the good, but if the system results in landlords being disadvantage to a large degree, either by giving tenants the power to hold them to ransom, by long delays in deciding on evictions, or being stuck with unruly tenants without the possibility of release, then the number of landlords and therefore, the provision of rental accommodation, will dwindle and add to more pressure on a housing sector already in crisis.

View Full Article: Gove returns to Government and re-commits to the Renters’ Reform Bill

LAW: ‘Guardian’ buildings CAN be classed as HMOs, rules judge

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Having guardians living in a property does not mean it can’t be classed as an HMO, an upper property tribunal has ruled.

Global Guardians Management and Global 100 Ltd appealed against a fine handed out by Hounslow Council and rent repayment orders made by a first-tier property tribunal on the basis that the property – the Stamford Brook Centre – was not an HMO because occupation by guardians meant it did not have sole residential use.

They also argued that Global Guardians Management had not been granted a tenancy of the property by owner NHS Property Services Limited and that Global Guardians and Global 100 did not manage or have control of the property.

However, they failed to convince the judge who found that Global Guardians had exclusive possession and was able to exploit it for its own gain, first by converting the building to residential use and then by licensing up to 30 residential occupiers to live there.

Benefit

“The benefit – which NHSPSL sought – of protecting the property from trespassers and vandalism was secured by means of the occupation of the property by others,” he ruled.

The first tier tribunal had mistakenly found that both Global Guardians and Global 100 were in control and managing the property, said Justice Fancourt but while it could not be concluded that Global Guardians received a rack rent, Global 100 – who certainly did receive a rack rent – was a person in control.

Giles Peaker, (pictured) at Anthony Gold Solicitors, says Global Guardians were indeed managing the property, although under the Companies Act rather than for the first tier tribunal’s reasons. “But Global 100 weren’t, as neither owner nor lessee of the property,” he explains.

“As a result, both Global Guardians and Global 100 remained liable for the council’s penalty notices, if not on wholly the same grounds as the FTT had held.”

Read the judgement in full.

View Full Article: LAW: ‘Guardian’ buildings CAN be classed as HMOs, rules judge

EPC cavity wall insulation?

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Hello, I hope someone can advise, appreciated if so.

We have a nightmare of a freeholder. We recently had one of our flats have an EPC certification. The main improvement to bring it to where it needs to be (c) was having Cavity wall insulation

So

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LATEST: Official report rejects case for rent controls in Northern Ireland

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Independent research published by the Northern Ireland Assembly has failed to back expanded powers within new legislation that enables its politicians to implement a rent decrease of up to 10 per cent and/or a rent freeze for up to four years.

Under the provisions within the Private Tenancies Act (Northern Ireland) 2022, the Assembly commissioned the Chartered Institute of Housing to produce a report on the Department’s behalf into the rent control powers.

The 70-page report, in summary, argues that rents are ‘relatively affordable’ when compared to Britain and Ireland, and that ramping up rent controls were likely to “create systems with negligible impact, complicated and unclear outcomes, or at worst undesired effects”.

CIH, having looked at other countries which have implemented rent controls including Holland and Berlin, surmised that they led to lower stock levels and that, if they were implemented in Northern Ireland, up to 60% of landlords would sell up some or all of their properties.

“The report’s findings are just what we expected – a failure to provide any evidence that further rent control is required in Northern Ireland,” says Timothy Douglas (pictured), Head of Policy and Campaigns for Propertymark.

“Tenants themselves say it is ‘neither easy nor difficult’ to be able to afford their rent and the most up-to-date data on market rents quoted in the report shows affordability is actually improving.

“Our own polling and research shows the biggest reason landlords are giving for selling rental properties is rising costs.

“This will be exacerbated if their rental income is cut or frozen. We also know that as many as half of the properties sold do not return to the rental market.

“The report acknowledges what we’ve been saying all along – that the best way to maintain affordability is to have enough homes to rent, privately and in the social sector.

“The new Northern Ireland Assembly must therefore ditch this rent control agenda and focus its efforts on delivering the quota of new housing across all tenures that was promised in the ambitious Housing Supply Strategy.”

Read the report in full.

View Full Article: LATEST: Official report rejects case for rent controls in Northern Ireland

Interest rates have gone up, but here’s why Landlords don’t need to panic

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Landlords have been under a lot of pressure recently, with interest rates going up, house prices dropping, and changes in government, anxiety levels have been at an all-time high. But despite the current state of affairs, we still have options to help us get through this patch without panicking.

For many Landlords, selling has been the best option. This doesn’t mean that they’ve had to say goodbye to their entire portfolio, most landlords have opted to sell the majority and keep a few core profitable buy-to-lets ticking over to weather the storm.

Market worries

One of the concerns some landlords have had with this option is a) they’re worried what price they’ll be able to get for their portfolios in this current market and b) what to do about a market which appears to have less buyer interest than back in June.

As specialists, and trusted partners of LandlordZONE, this is where we’re here to take away the stress. At Landlord Sales Agency, we’re experts in selling landlord portfolios, no matter what condition, and no matter whether there’s tenants in, out, or renovations, refurbs and certificates that need doing or getting.

We’re also aware of the current market, which is why our team of specialists have the best strategy to get you the highest price possible so you can take a step back, and recoup the costs before next year’s economic uncertainty.

Most of our landlords are happy to work with 85% of the current market value, and for this we take the whole portfolio off your hands and deal with every single issue to get it sold within 7 to 28 days. At first glance this might seem conservative, however it’s a huge win when Estate Agents are unlikely to sell for more, and if they can, by the time they sell the market will have dropped again.

Put simply, 85% of 100% value in this current market is the highest you’ll get compared to waiting until next year and potentially getting 85% of 90% when the market drops.

Added to this, our formula 1 style team of portfolio exit specialists are here to help with whatever you need, and ensure that everything runs smoothly and fast so you can sit back and relax knowing you’ve got a great price for your buy-to-lets and zero hassle to worry about from this point onwards:

• We have a list of buyers who will buy your properties without having to evict tenants. This dramatically cuts down the time it takes to sell, plus means that you can continue collecting rent all the way up until the actual sale. For those properties that require evictions, we personally help your tenants relocate, or help them financially to find a new place.

• No matter how many houses you have, or in what condition, we’ll take them all off your hands, and get you the highest price for your portfolios in less than 21 days. We sell entire property portfolios, or partial portfolios in bulk in one go.

• We’ve got an extensive list of over 30,000 private buyers and relationships with the top property buying companies. Most of our portfolios sell within a week which is exactly what landlords need right now. We simply don’t have time to waste.

We sell properties either in one go as a full portfolio or as single units, depending on your instruction. Unlike traditional estate agents, or other property buying companies, both methods are extremely fast. We work quickly to collect information about rent, tenant history, running costs and ensure all certificates are in place to guarantee the sale is not delayed.

If any certificates are missing, we have a team of engineers, builders and experts who will get all the certificates and paperwork done for you. The stress is completely removed out of the sale, and seller involvement is kept to a minimum so you can relax knowing it’s in swift and extremely capable hands.

Furthermore, we take our promise to ‘solve any landlord problem’ so seriously that, as a result of the number of enquiries we’ve received from landlords with cash flow problems, we can also use the equity tied into property to offer an interest-free loan of up to £20,000 to be repaid on completion.

We know what it’s like right now to be a landlord who needs to sell, and we’re here to help.

We’re so confident in what we do, we can afford to go the extra mile to really help landlords get through this tough patch, and get the highest possible price for their property portfolio.

So if you want to exit the market, talk to us today.

Contact Landlord Sales Agency

View Full Article: Interest rates have gone up, but here’s why Landlords don’t need to panic

Cost of living crisis – how landlords can protect their income

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With the cost of living crisis happening in the UK, some tenants are likely to find it more difficult to meet their rental payments. This means it’s essential for landlords to take steps to protect their income during these tough times. Here we share seven tips on how landlords can do this.

Tenant affordability checks

Make sure the tenant you have already or are about to take on can afford the property and keep up regular dialogue with them. If you work with a qualified letting agent they will be used to checking out tenants to make sure they have the income needed to cover the rent.

Keep your property in great condition

To secure the best rental income and reduce any void periods when the property isn’t let, make sure your property is in great condition and really appeals to what local tenants want.

No deposit option

If you haven’t already, it is worth comparing taking a deposit versus offering tenants a ‘no deposit’ option. This can help you access more tenants, some of whom may have the income to support the rent, but not necessarily the savings to pay for a deposit upfront.

With our no deposit option at Leaders, it means landlords will be indemnified for the equivalent of 7 weeks’ rent, whereas if you take a standard deposit, that’s capped at 5 weeks.

Regular rent reviews

It’s key to make sure you regularly review rents to maximise your investment without overstretching your tenant’s affordability. Not choosing to increase rents for existing tenants, especially if they stay for some years, can oddly cause problems later on.

Not only could you be losing money that could be spent on maintenance or energy efficiency measures, but from a tenant’s perspective, when they do eventually look for a new property, they may feel that rents have ‘skyrocketed’ in comparison to what they’re currently paying.

Reduce risk with landlord insurance

You should purchase landlord insurance in case the worst happens to cover any problems, whether this is from something like a fire or flood, to damage caused by tenants or their visitors.

It’s not just food and energy bills that are rising, the cost of repairs to properties has also gone up and it may be a shock if you have to pay out unexpectedly.

Expert tax advice

It’s always important to check you are paying the minimum amount of tax you need. Property tax is complicated and isn’t separate to your other earnings, so do seek expert property tax advice this year to make sure you have reduced your tax bill by all the costs you can.

If you want advice on protecting your landlord income in these uncertain times, get in touch with your local Leaders branch.

View Full Article: Cost of living crisis – how landlords can protect their income

Meet Mark Smith (Barrister-At-Law) Landlord tax planning strategies – pin Canary Wharf

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Our Hon. Legal Counsel, Mark Smith, Head of Chambers at Cotswold Barristers, will be presenting an overview of several landlord tax strategies at the pin meeting Thursday 3rd November.

The Canary Wharf meeting will be held at The Hilton London Canary Wharf

View Full Article: Meet Mark Smith (Barrister-At-Law) Landlord tax planning strategies – pin Canary Wharf

Live-in landlord advice?

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Hi All, I recently purchased my first property and decided to rent a few rooms out to help cover the cost of running the place. I’m a live-in landlord and registered to vote there, this is in the Portsmouth area.

View Full Article: Live-in landlord advice?

Bridging loan transactions hit record high

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A total of £214.7 million in bridging loans was transacted by contributors during the third quarter – the third consecutive quarterly increase and a 20% rise on Q2, research reveals.

The latest Bridging Trends figures show this is the highest contributor lending amount since they began recording data in 2015.

View Full Article: Bridging loan transactions hit record high