The Conservative’s home owning democracy is shot through with failure

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After 13 or so years of Conservative rule the Conservative promise of a stable home owning democracy has failed to materialise. They have got themselves into a bind over housing.

Potential home buyers find it impossible to afford a deposit as well as pay interest rates that are double what they were last summer, while renters can’t even find suitable homes, let alone reasonably priced ones.

Writing for Business Times, an international business journal, Alex Wickman says:

“Every Conservative leader in living memory has made the same basic promise to UK voters: work hard and you will earn more, buy a bigger house and one day pass it on to your children. Thirteen years after the party returned to power, some allies of Prime Minister Rishi Sunak fear the dream is dying.”

The Conservative’s commitment to build 300,000 houses per year goes back to October 1950 when Winston Churchill declared to a packed hall of delegates, this would be the target, a programme that was credited with securing the election for the Conservatives in 1951.

Move forward seventy-one years, with net migration reaching 500,000 and rising, and these targets have never been met. Mortgage rates are spiking and huge numbers of deals have been withdrawn. Unless your earnings are high enough, or you’re luck enough to have the “bank of mum and dad”, first time buyers can forget about securing an affordable mortgage.

Now Rishi Sunak has decided to drop compulsory housebuilding targets to avoid a nasty backbench rebellion, a capitulation which comes bang in the middle of a national housing crisis and which many Conservative MPs worry that it shows weakness.

That leaves renting as the only option for many people. But renting is becoming unaffordable as well. In the major cities where most job opportunities exist for young people, rental prices are getting beyond the reach of many, that’s if they can secure a rental at all.

Recent governments have seen social housing decline, leaving the private sector to take up the mantle of housing low income families. But at the same time the Government has squeezed the profits of private landlords (Section 24 removed mortgage interest relief), and imposed increasingly strict regulations, including giving tenants greater security of tenure. That’s not to mention the cost and disruption involved in bringing older properties (by far the majority in the private rented sector) up to the proposed EPC rating level “C”.

All of this, along with the latest tax changes like the reduction in capital gains tax allowances, and landlords are selling up in droves.

Individual Conservative politicians are in dispare: they watch in horror as the housing market in the UK slides inexorably into a deeper crisis. As Wickman says, “…some party strategists and MPs worry that won’t just mean defeat at the general election expected in 2024, but could mark a generational shift in British politics.” The slide would end the hopes that Rishis Sunak can turn things around to salvage the Conservative vote.

Higher interest rates and fewer properties will make buying a house even harder, and with landlords selling up and others passing on their higher costs to tenants, millions of younger voters will be stuck with soaring rents and nothing much to show for it. Stepping onto the housing ladder is going to be harder than ever.

The genesis of the UK housing crisis is well known. Many years of house price growth during a period of cheap mortgages and a scarcity of housing have pushed the cost of the average English home up to around 9 times average annual earnings. This compares to around 3.5 times in 1997.

The supply of homes available to buy rather than rent remains well below the level of demand, while around 15 per cent of the homes that do get built do not even meet the government’s decency standards. Basically new UK housing is overpriced, scarce and often of poor quality.

A fall in house prices due to increased mortgage costs will not solve the crisis either. The underlying shortage will limit the fall and the continuing exodus of landlords will keep rents high.

View Full Article: The Conservative’s home owning democracy is shot through with failure

SHOUT OUT: NRLA asks landlords with rent-to-rent experience to help in landmark case

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The National Residential Landlords Association (NRLA) wants to hear from landlords who have let property on a rent-to-rent basis so it can contribute to a high-profile case at the Supreme Court.

It believes the outcome of the upcoming Rakusen v Jepsen appeal has potential implications for superior landlords as it will rule over whether the landlord – in this case, the tenant – should be responsible for a rent repayment order (RRO) or if a superior landlord, or any landlord in the chain, should be held responsible.

Rakusen v Jepsen concerns a landlord who agreed to let their licensable property to a rent-to-rent company, however, a licence wasn’t applied for, and the former tenants sought a RRO against the superior landlord – not the rent-to-rent company.

Read more about the case.

The Upper Tribunal ruled that an order could be applied for against the superior landlord, however the Court of Appeal found in the landlord’s favour.

“All too often, the superior landlord may be surprised to find that the rent-to-rent company has failed to meet one or more of their legal responsibilities. In some cases, they may even be surprised to discover their tenant is subletting at all,” explains NRLA chief executive Ben Beadle (pictured).

If the court were to change the position adopted by the Court of Appeal, then authorised rent-to-rent arrangements will likely become less common, leading to a lower availability of budget accommodation to rent on a room by room basis, says the NRLA.

Landlords will also be unprotected from unauthorised rent-to-rent arrangements.

Unconscionable

“It seems unconscionable that a landlord should be subject to a financial penalty to a sub-tenant, whose existence he might not even be aware of, as a result of the dishonesty or failures of the tenant,” adds Beadle.

The NRLA wants to make a submission to the court before the hearing on 26^th January and has an online survey https://www.nrla.org.uk/rent-to-rent-survey for landlords to fill in.

View Full Article: SHOUT OUT: NRLA asks landlords with rent-to-rent experience to help in landmark case

Adding a second guarantor to existing tenancy agreement?

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Hello, There are two parts to this question: 1). I’d like to add a second guarantor to an existing tenancy agreement BUT – the tenant is the son of the guarantor, and the tenant lacks mental capacity, so the guarantor has also signed on behalf of their son in their capacity as a Deputy of the Court of Protection (CoP).

View Full Article: Adding a second guarantor to existing tenancy agreement?

Rogue letting agent jailed after ripping off landlords in shocking case

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A letting agency boss in the West Midlands has been jailed for two years and four months after ripping off landlords and tenants who used his firm.

Bhavander Singh Sanghera, of Jesson Road, Walsall ran EBS Properties Ltd trading as Martin & Co Wolverhampton but, following a local Trading Standards investigation, was found to have defrauded customer landlords and their tenants as well as telling his staff to make exaggerated maintenance and repair claims.

Following a court hearing, Sanghera was found guilty of three counts of fraud or fraudulent trading, which he had pleaded guilty to, along with four further charges under the Consumer Protection from Unfair Trading Regulations 2008.

He has now been sentenced to 28 months in jail for the fraud offences and is awaiting sentencing for the unfair trading offences. He has also been disqualified from acting as a company director for eight years.

Utility bills

The fraud offences involved ‘double charging’ tenants for utility bills at two adjacent rental properties (main picture) owned by Sanghera, and the use of falsified contracts and forged signatures to justify his actions.

Sanghera was also found to have falsified a check-out document to justify withholding a £845 deposit, and ordering employees of his estate agency to add excessive mark-ups on maintenance costs issued to landlords in order for his franchise to meet monthly targets.

Read more about deposit protection law.

The 50-year-old, who also owned a maintenance company, Genuine Interiors, fabricated invoices for work which was not carried out, such as the removal of personal belongings.

In addition, the court heard that friends and family of employees were urged to post fake positive reviews on his firm on social media and sending misleading property photos to a deposit protection scheme in order to justify withheld deposits.

Under the consumer protection from unfair trading offences, the court was told that during 2016, EBS Property did not advise the tenant that the utilities of one property were linked to another and that they would be paying for both utility bills, nor were they informed that the landlord of the property, Sanghera, was also the director of the letting agency.

Sanghera’s firm was also found to have issued retaliatory eviction notices after tenants complained to Wolverhampton Council.

Trust broken

Cllr Steve Evans (pictured), cabinet member for city environment and climate change, adds: “People put their trust in agencies like the one run by Sanghera to find them a home.

“They should not have that trust broken by the type of unscrupulous behaviour this case has highlighted.

“Crimes of this sort have such a huge financial and emotional impact on their victims. 

“Sanghera has shown a repeated pattern of fraudulent behaviour at the financial and emotional expense of both his tenants and his staff. I’m very pleased that justice has now been served in this case.”

Read more about rogue letting agents.

View Full Article: Rogue letting agent jailed after ripping off landlords in shocking case

NEW: Huge reform of estate agency firms STILL being considered four years on

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The government has confirmed it is still deliberating whether to bring in property agency qualifications and minimum standards in the sector, almost four years after the Regulation of Property Agents (RoPA) published its recommendations.

RoPA’s report outlined proposals back in July 2019 after it was tasked to advise the government on a new regulatory framework to help raise professional standards in the industry.

Housing Minister Lucy Frazer (main picture) says she is considering the recommendations; last May, Frazer’s predecessor Eddie Hughes, gave the same response.

Poor service

Answering a written question from Conservative MP Tom Hunt, she said the government was committed to making sure that homeowners and tenants were protected from abuse and poor service.

“This commitment includes raising professionalism and standards amongst property agents (letting, estate and managing agents), protecting consumers while defending the reputation of good agents from the actions of rogue operatives.”

RoPA’s report made recommendations on a model for an independent property agent regulator, a single, mandatory and legally enforceable code of practice for property agents and a system of minimum entry requirements and continuing professional development for property agents.

Frazer added: “We welcome the ongoing work being undertaken by the industry itself to raise professionalism and standards across the sector, including on codes of practice for property agents. We will continue to work with industry on improving best practice.”

Propertymark has called on the government to respond to the report and implement its recommendations.

View Full Article: NEW: Huge reform of estate agency firms STILL being considered four years on

Poor areas drive PRS growth – with record rent paid in 2022

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An analysis of the latest census data shows that between 2011 and 2021 the number of households renting privately increased by 151,800 in the 10% most deprived areas of England and Wales, compared to an 80,100 rise in the 10% least deprived areas.

View Full Article: Poor areas drive PRS growth – with record rent paid in 2022

EPC and legal obligations?

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Hello, We all know that you are legally required to obtain an EPC on a property you let, and you are also required to give a copy to the tenant before they enter and AST etc…but…

Are you legally required to actually show this to the Council?

View Full Article: EPC and legal obligations?

Leaseholder refusing to contribute towards ‘Major works’?

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Hello, Firstly thanks for taking the time to read my article/questions.

I have recently acquired a property and freehold which comprises of 5, 1 bedroom flats. 3 of which are owned by myself two of which have separate individual owners.

View Full Article: Leaseholder refusing to contribute towards ‘Major works’?

LATEST: Ministers say new PRS Ombudsman must tackle mould complaints

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The Government has announced plans to tackle mould within the private and social housing sectors through updated guidance and iniatives.

Announced late on Friday before a midnight deadline set by the Coroner during the inquest looking into the death of toddler Awaab Ishak, the initiatives from both the Department of Levelling Up, Housing and Communities and the Department of Health confirm that the private rented sector’s new housing ombudsman will lead the battle against mould.

A single Housing Ombudsman for the private rented sector (PRS) has been on the table since June last year when the ‘Fairer Renting’ White Paper was launched, a document that will form the basis of the Renters Reform Act due to be introduced to parliament this year.

This new ombudsman will oversee complaints by private tenants about a range of issues including mould and is one of several proposals and updates published by the Government over the weekend, the rest covering the social rented sector.

This announcement follows the recent inquest into the death of toddler Awaab Ishak during which the Coroner noted that the extreme mould within his family home was a major contributor to the tragedy.

Sharp relief

The joint statement from secretaries of state Michael Gove and Steve Barclays says: “Awaab’s case has thrown into sharp relief the need for renewed action to ensure that every landlord in the country makes certain that their tenants are housed in decent homes, and they are treated with dignity and fairness.”

Other measures include ensuring mould is included within the existing ‘housing health and safety rating system’, specifying time limits landlords must meet on investigating hazards, and acting where there are health concerns.

Ben Beadle, (pictured) Chief Executive of the NRLA says: “The tragic death of Awaab Ishtak provides a stark reminder that tenants should rightly expect that wherever they call home is safe and secure. Most private landlords provider this.

“Whilst we work constructively on the Government’s review, at present there are almost 170 laws affecting the private rented sector and ministers are planning to develop a Decent Homes Standard. This is not an unregulated market. The problem is that a minority of rogue and criminal landlords are able to get away with their actions because of a lack of resources for councils to enforce [these laws].”

Lifestyle

Richard Blakeway (pictured), the social Housing Ombudsman for England, appeared on Good Morning Britain ahead of the Government’s statement, saying that some social landlords are wrong to blame tenants for ‘lifestyle choices’ that help create mould.

But his comments prompted one private landlord, Terri Baxendall, to say on social media that social tenants still have ‘maintenance duties’ when living in properties.

As LandlordZONE columnist Tom Entwistle recently pointed out, the energy price crisis is likely to see more tenants across both social and private sectors turning off their heating to save money, which in turn will increase problems with mould.

View Full Article: LATEST: Ministers say new PRS Ombudsman must tackle mould complaints