Scotland’s Cost of Living Act has led to rent rises

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Propertymark has told Scottish Parliament’s Local Government, Housing and Planning Committee that the Cost-of-Living Act 2022 has led to rent rises and landlords leaving the private rented sector (PRS).

The organisation’s head of policy and campaigns, Timothy Douglas

View Full Article: Scotland’s Cost of Living Act has led to rent rises

Scots rent cap will shrink stock and push up rents warn letting agents

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The Cost of Living Act is prompting greater numbers of landlords to quit the sector in Scotland or increase rents between tenancies to cover future costs.

Giving evidence to the Scottish Parliament’s Local Government, Housing and Planning Committee on the temporary legislation, Propertymark explained that the majority of letting agent members continued to see landlords exit the market.

It told MSPs that when asked in November 2022, 83% said landlords would be inclined to increase rents between tenancies, because of the Act, to cover impending and rising costs; by February, this had risen to 94%. Meanwhile, 78% of agents now reported an increase in notices to sell due to the temporary measures, up from 68% last November.

Temporary pause

The Scottish government has indicated that it plans to continue both the temporary pause on the enforcement of eviction orders in certain cases and the rent cap for tenants in the PRS beyond the initial expiry date of 31st March, but recently pedaled back from a ‘freeze’.

Timothy Douglas (pictured), Propertymark’s head of policy and campaigns, says the crux of the housing problem is that demand is far outstripping supply, yet the legislation is having the opposite effect – of pushing landlords out of the sector.

“Rent increases have never been a significant factor in the private rented sector, yet this legislation and the threat of further rent controls is forcing landlords to put up rents between tenancies to cover any future cost implications,” adds Douglas.

“Costs have increased for tenants, but also for landlords. Those on variable mortgages have seen their payments increase much higher than 3%, not to mention the other costs involved in property management.”

Pic credit: Scottish Parliament/Twitter

View Full Article: Scots rent cap will shrink stock and push up rents warn letting agents

Ending a 12 months fixed tenancy agreement?

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Hello. I have a situation that commenced last month and I got some good pointers from here. Tenants are on a 12 month fixed contract ending in Oct 2023. However, due to domestic violence (DV), one of the parties wanted her name removed from the tenancy.

View Full Article: Ending a 12 months fixed tenancy agreement?

My experience of moving to Portugal and the associated tax benefits

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I have been asked to write an experienced based article on the benefits of moving to Portugal for portfolio landlord owners.

Whilst I lack the expert tax knowledge of the organisers of this forum, they have confirmed that I’ve been able to accurately summarise several of the key tax incentives of moving to Portugal.

View Full Article: My experience of moving to Portugal and the associated tax benefits

LAW: Landords who illegally evicted tenants landed with £22,300 rent repayment order

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A landlord pair who assaulted one of their tenants while trying to illegally evict her from their unlicensed HMO have been handed a rent repayment order totalling more than £22,300.

Guangyu Chen and Xing Guo argued that their poor English and understanding of the PRS was an excuse for not having a licence for the property in Hulse Avenue, Barking, but a First Tier Property Tribunal ruled that a simple Google search should have revealed the licensing requirements and labelled them “careless”.

Four of the five tenants gave evidence that bailiffs had entered the house in August 2021, helped by the landlords, and removed the lock.

Physically assaulted

They went into one of the tenant’s rooms without permission, removed her possessions and physically assaulted her, the Tribunal heard.

Later that month, they wrote to three tenants purporting to give them notice after finding out about the HMO licensing requirements, but this was not a lawful notice.

Chen and Guo said they were not aware of the notice requirements prior to evicting the tenants and relied on their former solicitors, Ennon & Co, for advice.

The tribunal judge said if it had been dealing with the licensing offences only, it would have awarded 50% of the rent, less deductions for the rent repayment order.

“However, the attempted unlawful evictions, lack of proper notice and the assault on one of the applicants raises the level of seriousness significantly,” he explained.

Taking these factors into account, it made the amount of the rent repayment order for three tenants to be 90% of the net rent paid and for the tenant who had been a victim of assault, 100% of the rent paid.

Read the judgement in full.

View Full Article: LAW: Landords who illegally evicted tenants landed with £22,300 rent repayment order

Test Case: enforcing legal protections for leaseholders

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New leaseholder protections in the Building Safety Act 2022 came into force on 28 June 2022, with new financial protections for leaseholders in buildings above 11 metres or five storeys, those with historical safety defects.

The new Building Safety Act 2022 was introduced following the Grenfell Tower disaster in 2017 which killed 72 people. It is one of several pieces of legislation and guidance being implemented by the Government to enhance Building Safety following the May 2018 Hackitt Review, containing recommendations on fire safety and building regulations by Dame Judith Hackitt.

Secondary legislation accompanying the Act came into force on 21 July 2022, providing further detail and guidance on how the measures in the Act will work and ensuring that the full range of leaseholder protections have their full effect.

The guidance provides leaseholders with a plain English explanation of the implications of the leaseholder protections in the Building Safety Act.

The government says it is committed to protecting leaseholders from the “unfair burden of remediation costs” to make their units safe. The Act ensures that those who built defective buildings take responsibility for remedying them, that the industry contributes to fixing the problem, and that leaseholders are protected in law from crippling bills for historical safety defects.

The Act makes it clear that developers must pay to fix buildings they had a role in developing or refurbishing, even where they no longer own the building. The Act also ensures that building owners who are or are associated with the developer must pay for the remediation of historical safety defects.

The courts have been granted new powers to extend liability to associated companies. This, the government says, ensures that civil cases for claims against defective buildings can be brought against companies associated with a developer, preventing the use of complex corporate structures to avoid liability.

New legal protections for leaseholders

The Act contains various new leaseholder protections aimed at leaseholders in multi-occupied residential buildings, preventing them having to bear the costs involved in remediating historical building safety defects.

The Act limits the amount of service charge costs payable by leaseholders to repair defects and gives leaseholders the right to seek a “remediation order” from the Property Tribunal requiring the building owner landlord to carry out certain works.

Leaseholders will also have the right to seek a “remediation contribution order” requiring landlord owners to contribute to costs that they may already have incurred, or will incur in the future, to repair building safety defects.

An early test case

The First Tier Tribunal (The Property Chamber) has made the first remediation contribution order under the Building Safety Act 2022. The Tribunal ordered a landlord to repay amounts paid by the leaseholders of a multi-let building under the service charge, which were used to fix historic fire safety defects.

This case involved a high-rise block in Sutton containing 15 leaseholders in flats with 999 year leases. The landlord – also the developer of the building – was aware that the cladding and balconies on the building were fire hazards and appointed contractors to carry out the necessary remediation work.

The landlord kept the leaseholders informed about the costs of the works but planned to apply for a grant from the local authority to cover the costs of the work. The landlord subsequently successfully secured funding for the remedial works to the main building cladding, but the balconies were excluded from the grant. Subsequently the cost of this work was claimed from the leaseholders under the annual service charge.

Property Tribunal

The leaseholders took the matter to the Property Tribunal arguing that the cost for the balcony repairs came within the service charge limits specified in the Building Safety Act. The leaseholders’ representation to the Property Tribunal applied for a “remediation contribution order” to get back the money they had already paid under their service charges.

A remediation contribution order

The First Tier Tribunal (Property Chamber) made out its first “remediation contribution order” under the Building Safety Act 2022 in this case, likely to be the first of many. The Tribunal ordered the landlord to repay the amounts it had charged to the leaseholders of the multi-let building under their service charges.

The remediation contribution order was made out in favour of the leaseholders. It required that the developer-landlord to repay the leaseholders for the balcony repair costs billed under the annual service charge.

According to the judgment, the Tribunal had considered the full details of the Building Safety Act, and had agreed that both the building and the defects claimed for by the leaseholders fell within the Tribunal’s remit as they relate to a fire safety risk.

The Tribunal concluded that the defects involving the balconies were the responsibility of the landlord or its “associates” and not payable under the service charges. So the leaseholders were entitled to be repaid.

As part of their claim on developer-landlord and its parent company, they had joined in to their application two individuals: two directors of the developer-landlord organisation. In this respect the Tribunal found that individuals could not be joined in the action as the Act only applies to a “body corporate or partnership”, and not to individuals.

The lessons in this case:

This case is perhaps the first of several expected resulting from the safety remedial actions in relation to high rise blocks. In this case the claims brought by the leaseholders were successful, seeing the Tribunal exercising its powers under the Building Safety Act for the first time.

The judgment sends out a clear message and warning to developers and landlords that charging leaseholders for remedial works, work brought about by their own omissions and previous breaches of safety standards, will not be tolerated.

A remediation contribution contract

The government has published a “developer remediation contribution contract” with a deadline of 13 March 2023 for developers to voluntarily enter into that contract. Under this contract they will agree to remediate unsafe residential buildings that they have been connected with over the last 30 years, and further, reimburse any tax payer money already spent on doing so.

The developer remediation contract requires developers who sign it to “identify, assess and remediate and/or mitigate buildings as soon as reasonably practicable, and to report to the department on progress quarterly. It also requires developers to take steps to keep residents informed about the progress of the works.”

It is said that if developers enter into remediation contribution contracts on a wide scale there may in future be less need for leaseholders to resort to The Property Tribunal to enforce the protections offered under the Building Safety Act.

The government has estimated that under the remediation contract developers will commit £2 billion to fix buildings they have developed or refurbished over the past 30 years. This is additional to the Building Safety Levy payable by developers and will be chargeable on all new residential buildings in England requiring building control approval. The government has estimated that the “remediation contract” and Building Safety Levy will raise £5 billion to make buildings safe.

View Full Article: Test Case: enforcing legal protections for leaseholders

Are our MPs the worst hypocrites or are they just clueless?

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As landlords, we face the bizarre situation of being taxed on our overall turnover and not on the profits that we make – unlike any other business in the country.

Making a profit isn’t necessarily a bad thing because we provide a home and have expenses that need to be met when doing so.

View Full Article: Are our MPs the worst hypocrites or are they just clueless?

OPINION: It’s time Facebook took action to stop rent scams on Marketplace

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Facebook is facing mounting calls to more effectively police its Marketplace classified listings platform after numerous investigations by national media outlets.

The most recent was last night (23rd February) when ITV News highlighted the growing number of tenants being ripped off by ‘fake landlord’ prepayment rent and deposit scams.

These come in various forms but essentially criminals steal pictures and videos from portals such as Rightmove or estate agent websites and use them to advertise real properties to rent which do not belong to them.

After taking advance payment for deposits and rent often totalling thousands of pounds, the renters turn up to their properties to collect their keys and begin their tenancies only to discover it’s all a fraud.

The scams involve two key strategies – advertising properties to rent under market value, tapping into many tenants’ desperate need for affordable properties; and taking advantage of people who need to move home quickly.

This includes students, people escaping abusive relationships, foreigners starting new jobs in the UK – the list goes on.

Both strategies mean tenants tend not to question why they can’t see the property before moving in, and the more sophisticated scammers rent Airbnb properties to enable ‘viewings’ to take place, too.

Rip Off Britain

Last night’s ITV investigation follows a BBC Radio 4 You and Yours probe the week before, and a BBC Rip Off Britain piece in May last year and a further investigation by the broadcaster the year before.

Such criticism appear to fall on deaf ears at Facebook, which usually says it will investigate individual properties that appear to be fake listings, but has yet to significantly tighten up its Marketplace security to prevent such scams.

LandlordZONE has contacted Facebook requesting comment on its approach to scammers but so far, the company has not responded.

I should point out Facebook is not the only platform to host scammers – we have written regularly about other scams on Gumtree and Google.

Bad name

But the wider point here is that all this dodgy activity gives the private rented sector a bad name and reinforces the view of many that vulnerable tenants are open to scam activity on multiple levels including rent-to-rent tenancies, rogue agents and so on.

It is time that landlords and agents, whose property pictures are used by criminals to lure in victims, urge the Government and companies like Facebook to do something about this before a growing scam scandal becomes a tragedy.

It is particularly shameful that Facebook appears reluctant to tackle the problem and put its vast profits – £20 billion last year – at risk.

Nigel Lewis is editor of LandlordZONE.

 

View Full Article: OPINION: It’s time Facebook took action to stop rent scams on Marketplace

Call for a rent freeze because ‘landlords can afford it’

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An open letter has been signed by rent activists, trade unions and several Labour Mayors, including Sadiq Khan, calling for the housing minister Michael Gove to implement a private rent freeze and an eviction ban in England to help tenants in the ‘current rental crisis’.

View Full Article: Call for a rent freeze because ‘landlords can afford it’

EXCLUSIVE: ‘End of an era’ for Shamplina as he steps back from popular TV show

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Evictions expert Paul Shamplina has revealed that he’s stepping back from his long-running role in TV series Nightmare Tenants, Slum Landlords.

Shamplina, who as well as heading up Landlord Action is Chief Commercial Officer at parent company Hamilton Fraser, says it’s time to move on after filming some 70 episodes since 2015 for the programme’s six series.

“Also, even if Channel 5 were to commission another series of the show then – although the programme has been interesting and exciting to be a part of – I won’t be appearing on it or any other evictions programmes going forward,” he adds.

“Everyone needs to be sensitive at the moment about tenants, who have taken a battering in recent months as the shortage of stock creates ever-rising rents although of course landlords are facing difficulties too.”

International reach

Many will be sorry to see Shamplina exit the show. As well as a keen fanbase in the UK including some 1.5 million viewers of some episodes, it has been seen in Europe, New Zealand and Australia and been on Netflix in the USA.

“Sometimes it’s tough – I’ve been spat at by one disgruntled tenant – but it can also be amazing, and I helped one viewer propose to his girlfriend after he contacted me and asked for help,” he says.

Carlton TV

Shamplina’s TV talents were discovered after he helped out on a one-off programme about evictions for Carlton TV during the early noughties, later also appearing on other specials for other broadcasters such as ‘War at the Door’, ‘Tenants from Hell’ and several BBC Inside Out investigations.

“What people forget is that all the cases on Nightmare Tenants, Slum Landlords were real even though they were at the extreme end of tenant and landlord experiences within the private rented sector (PRS), so often landlords in particularly were very brave to get involved.”

Although it’s the “end of an era” for Shamplina, his evictions business has never been busier and his team handles thousands of cases every year.  

Evictions

“Last year was the busiest, with 2023 expected to be even more so, given the cost of living crisis and a big rise in landlords exiting the industry,” he says.

“I’m also going to have a full diary this year because the sector will soon see significant changes when the Government’s PRS reforms go live which will adversely affect both landlords and letting agents,” he says.

“I’ll be at the centre of efforts to educate and support them about those changes through my public speaking and regular appearances on Ian Collins’ Talk Radio show.”

Shamplina says he will continue to appear in other TV and radio programmes as a PRS and buy-to-let expert and says he’s keen to do some presenting work too and has some ‘irons in the fire’ on that front. Watch this space.

Read more about Nightmare Tenants, Slum Landlords.

View Full Article: EXCLUSIVE: ‘End of an era’ for Shamplina as he steps back from popular TV show