The Property Cast: How can landlords spot a bad letting agent?

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In this episode of The Property Cast, founder of the HFIS group, Eddie Hooker, is joined by the Head of Redress at the Property Redress Scheme, Sean Hooker, and special guest Nathan Emerson – CEO of Propertymark – the leading membership body for property agents.

With the private rented sector on the cusp of a major overhaul, this episode explores Propertymark’s perspective on all things lettings.

Eddie, Sean and Nathan kick off by discussing what makes a bad agent. There are two types, says Nathan – but how can landlords spot one? And what are the most common agent errors? Nathan provides his top tips for landlords when it comes to choosing a letting agent.

Changes

How does Propertymark view the big changes that are coming for the rental sector? And what aspects of reform are likely to have the biggest impact on landlords and agents?

The trio discuss topical issues from antisocial behaviour and pets, to whether landlord redress is the right way to raise standards in the private rented sector. We hear a lot about landlords exiting the market, but how can landlords be encouraged to invest? What would Nathan do if he could change one thing to keep landlords in the sector?

On the way to Wembley

Finally, the Propertymark One conference is coming up on 27 June at the OVO Arena in Wembley. Open to both members and non-members, and bringing several disciplines together under one roof, it will be the biggest event Propertymark has ever staged.

What can delegates expect? Tune in to find out more and to hear Nathan’s answer to The Property Cast’s closing question – ‘You’ve got £20k to invest in improvements to your rental property – what changes would you choose to make, and why?

View Full Article: The Property Cast: How can landlords spot a bad letting agent?

Build-to-rent sector stalls as completions slump

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The number of build-to-rent (BTR) completions in the UK has slumped by 56% in a year – with the decline being blamed on the London market, research reveals.

Property developer Stripe Property Group has analysed the historic data on the annual BTR completions in London and elsewhere to better understand the emerging residential sector.

View Full Article: Build-to-rent sector stalls as completions slump

Controversial Renters Reform Bill to be published next week – possibly

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The long-awaited Renters’ Reform Bill which could lead to a massive shake-up of the private rented sector (PRS) is set to be published next week.

However, there is no confirmed date and no mention of it in the Parliamentary timetable for next week.

View Full Article: Controversial Renters Reform Bill to be published next week – possibly

Airbnb returns to its roots with ‘Rooms’ but will initiative silence critics?

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Airbnb is going back to its roots by launching Airbnb Rooms, an updated version of its original aim to let guests stay in a room within someone else’s home.

The platform explains that in the current cost-of-living crisis, and years of being isolated, visitors are looking for “ways to connect with people and have authentic experiences”.

Founders Joe Gebbia and Brian Chesky (main pic) came up the idea of allowing people to rent out a spare room for the odd night or two after they charged three guests $80 each to sleep on airbeds in their San Francisco apartment in 2007. The concept has since grown to more than four million hosts across the world.

This year, Airbnb is expecting more than 300 million guest arrivals but it, along with the rest of the short-lets sector, has come under increasing scrutiny from communities, councillors and MPs – particularly in coastal resorts – who claim it is depriving residents of long-term rented accommodation. This move would seem to go some way to addressing that.

Host passport

The platform explains that every Airbnb Room will feature a Host Passport, which helps guests get to know their host before booking their stay, including a larger personal photo and background information.

It has created a rooms category with more than one million listings, showing whether the bathrooms are shared or private, if the bedroom door has a lock and whether people other than the host will be there during a stay.

“With Airbnb Rooms, we’re getting back to the idea that started it all – back to our founding ethos of sharing,” says Chesky.

“Airbnb Rooms are often more affordable than hotels, and they’re the most authentic way to experience a city.”

View Full Article: Airbnb returns to its roots with ‘Rooms’ but will initiative silence critics?

LATEST: Renters’ Reform Bill due next week after Coronation, says Gove

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The Renters’ Reform Bill is finally due to be published next week – four years after it was first discussed.

As predicted, the draft legislation will begin life a few days after the King’s coronation, Housing Secretary Michael Gove confirmed on Sky News this morning.

Gove said: “We’re introducing new legislation, it will be out next week and it will change the way in which the relationship between landlords and tenants work, providing tenants with new protection which should ensure that they’re better protected from arbitrary rent increases.”

Many in the sector are now bracing themselves in readiness for what the Bill could contain, and which is expected to a different name.

Crash helmets

Tenancy expert at PRS Mediation, Julie Ford, posted: “Crash helmets on people! We’ve got a good idea of what’s going to be in there, we’ve seen the consultation and Bill in its original form and seen the white paper but what it’s actually going to look like, who knows?

“We know Section 21 will be abolished and we need to get ready for that, but what else is going to be in there? We’ll have to wait and see.”

Fun week

NRLA chief executive Ben Beadle commented: “Secretary of State Michael Gove confirms that we will see the long awaited #rentersreform bill next week. A fun week ahead beckons!”

The government first announced its proposals in on ‘a new deal for renting: resetting the balance of rights and responsibilities between landlords and tenants’ back in 2019, followed by a White Paper last year.

After a protracted consultation, suggested measures are set to include abolishing Section 21, a property portal, requiring private rented properties to meet the Decent Homes Standard and establishing a new ombudsman covering private landlords.

Last month Michael Gove held a roundtable meeting with key representatives from the private rental sector to discuss the reforms, including the NRLA, Generation Rent, Shelter, the Local Government Association, and National Housing Federation.

View Full Article: LATEST: Renters’ Reform Bill due next week after Coronation, says Gove

BLOG: Can ‘guaranteed rent’ attract more landlords and fix the social housing crisis?

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As the largest accredited supplier of properties to local authorities in London and Essex, Leigh Young (pictured), Co-founder of the Elliot Leigh Guaranteed Rent Scheme, talks about how a shift in mindset could help some landlords navigate the current and future market challenges.

We have, like most other organisations in the buy-to-let sector, seen a significant shift in landlord sentiment over the last few years, with one of the biggest driving forces being fear.  

Fears over how the changes already brought in will financially impact them, such as the Tenant Fees Act and cuts to mortgage interest relief, and worries about the impending changes such as scrapping of Section 21 and implementation of minimum EPC requirements.

When we started Elliot Leigh 20 years ago, it was with the view of alleviating fear for landlords. As landlords ourselves, we could see the impact of void periods, refurbishment cost and rent arrears.

Elliot [Altman] had a property in Tower Hamlets, but since it was let to students, he would only receive income for 10 months of the year, then have a two-month void period, as well as the repair costs. W

hen he offered it vacant to a local authority, he was suddenly able to guarantee his income for 52 weeks of the year and eradicate the ‘fear’. This was the start of Elliot Leigh.

Fixed rent

Our scheme was set up to guarantee landlords a fixed amount of rent each month, regardless of whether their property is occupied or not, reducing the financial risk by offering assurance of a regular income stream, and avoiding the possibility of rent arrears.

The properties, being let to local authorities but fully managed by us, attracted landlords who wanted to avoid the hassle of finding and managing tenants, as well as the risk of rental arrears or void periods.

Today, the complexities around being a landlord present a host of new, and frankly justified, fears, which go beyond voids and rent arrears.

That includes compliance, finding reliable tenants, access, legislation, eviction, financial balancing…the list goes on.

We’ve seen some landlords deciding the industry is no longer for them, but we’ve also spoken to landlords who want to evolve in order to remain as landlords. However, they can see that incoming legislation, in particular the abolition of Section 21, may reduce their security and choice.

Eradicated

But despite the impending changes, the buy-to-let market will not be eradicated. There are millions of people who rely on it for housing – in the social sector alone there are over 1.2 million households waiting for a property and nearly 100,000 households living in temporary accommodation.

Even with ambitious building plans, we are years away from being able to significantly reduce that number. Ultimately, each landlord’s circumstances, why they became a landlord, their risk tolerance, their financial position today and aspirations going forward are individual, but in my view, despite the challenges, there is still opportunity.

Desperate need

Local authorities are in desperate need of more properties from private landlords in order to address the shortage of housing in their areas.

They are responsible for ensuring that there is an adequate supply of affordable housing for their residents, and right now most are failing, causing a chronic housing crisis.  One of the key ways they can change this is by working with private landlords to provide suitable properties.

Many landlords are considering existing the market over fears that new legislation will make it harder for them to evict tenants, leaving them trapped.  

We know that some private landlords are reluctant to work with local authorities because they’re worried about regulation, bureaucracy, or the perceived risk of renting to tenants who may have difficulty paying rent or may cause damage to their property, but local authorities are keen to alleviate landlords’ concerns and attract them back to the social sector.  

Mitigate risks

Guaranteed rent as a way to mitigate the potential risks associated with the abolition of Section 21 could be one aspect which draws landlords back in.

It will require cooperation and collaboration between various stakeholders, including local authorities, private landlords, housing associations, and tenants.

But by working together, it’s possible to address the shortage of affordable housing, offer a greater pool of safe, secure housing, as well as provide landlords with a solution which enables them to be hands-off with a stable income stream, without concerns over incoming legislation.

View Full Article: BLOG: Can ‘guaranteed rent’ attract more landlords and fix the social housing crisis?

An open letter to Sadiq Khan and his plans for a rent freeze

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Calls by London Mayor Sadiq Khan for a rent freeze in the capital have led one resident to pen an open letter in the hope of a response.

Rob Thomas is a mortgage market researcher, and he was prompted to write to the mayor after reading on Property118 that Mr Khan had signed a letter urging a rent freeze ‘because landlords can afford it’

View Full Article: An open letter to Sadiq Khan and his plans for a rent freeze

Government plan to remove HMO license rules for housing asylum seekers

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Critics are lining up to condemn a government plan to remove the HMO licencing regulations for landlords who will house asylum seekers.

Housing and refugee charities have condemned the move as ‘shameful’ and an ‘assault on human rights’.

View Full Article: Government plan to remove HMO license rules for housing asylum seekers

Why so many landlords have waited until now to incorporate their property rental businesses

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These are the top six reasons why so many landlords have waited until now to form a Limited Company and sell their property rental business to it in exchange for shares. This process is commonly known as ‘incorporation’.

Reason #1

The pain associated with the Section 24 restrictions on finance cost relief was much more bearable when interest rates were much lower and profitability was so much higher.

View Full Article: Why so many landlords have waited until now to incorporate their property rental businesses

Rent-to-Rent craze adding to UK’s renting crisis

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Rent-to-rent is a controversial property investment model now being promoted by many property investment trainers and online influencers.

Simply put, it involves would-be property investor landlords (as well as some rogue property companies) renting off a legitimate property owner / superior landlord and subletting the property to individual tenants.

There are many rules and regulations that landlords must follow when renting out a property and these arrangements often skirt by them in relation to things such as evictions, deposits, safety and overcrowding. People that enter into this kind of operation (novices as well as some rogue operators) often either are oblivious to the rules or they have no intention of complying with them.

Profits can be multiplied many times more than standard lets, by maximising the number of rooms within a property, rooms that can be let to tenants as an HMO – house in multiple occupation.

Expensive property training courses

These schemes can be made to work in UK cities because of the excess demand for renting in the current market, but that’s not always the case. Many novice investors, after attending expensive property training courses costing them thousands of pounds, have found themselves failing to fill properties that they have been enticed to rent.

Having committed to guarantee rents to the owners, these newbies inevitably get themselves into terrible financial difficulties and often not only fail to pay the owner the promised rent, they let down their own tenants.

What’s more, many of these properties are hastily divided up into multiple rooms, sometimes without the owner’s knowledge or consent, and very often without the necessary HMO licence, or meeting current safety standards. HMOs, under the regulations applying to houses in multiple occupation in England, must operate to higher safety standard than single lets.

These rent-to-rent schemes offer an enticing way to make money quickly without the need for any capital outlay. No money down as would be the case with a traditional property investment. They are a godsend to the property gurus, who often promote the idea to novices after taking big course fees, only to have most of them fail when they try to put the idea into practice.

What’s more, some of the promoters have moved on from the training rooms to online Zoom courses and the so call “property influencers” are now promoting rent-to-rent on social media platforms.

Horror stories abound where tenants have been squeezed into multi-occupied properties with undersized bedrooms and with as many as ten or twelve tenants piled into one property. Overcrowding is rife with limited access to facilities like bathrooms and kitchens.

Unsuspecting superior landlords

Unsuspecting owners / superior landlords are finding themselves the target of legal action because their properties have been operating as licensable HMOs without their knowledge.

Some have been left high and dry with claims for rent repayment orders from tenants, or they can’t remove tenants in their properties when the under-landlord absconds leaving a trail of destruction, with much expensive damage inside the property from unauthorised alterations.

These schemes, often more accurately described as “scams”, are coming to the attention of local authorities and central government in greater numbers. Pressure is now mounting for greater regulation of the practice, with laws needed to protect tenants and owners from these novice operators as well as rogue landlords. They often operate rent-to-rent properties while evading prosecution.

Rent-to-rent or subletting is not a new practice. There are some genuine companies in the field who have done this sort of thing successfully and responsibly for many years. They rent off owners, let the property in a legal way, guarantee the owner their rent and return the property in a tenantable state. Some of these operators are local authorities who need rentals for homeless people.

But this latest craze, which has snowballed into a torrent of rent-to-rent schemes in London, letting out rooms often in substandard and illegal conditions, either as long-term room lets or Airbnb style short-term tourist lettings.

Rogue operators abound

The rogue operators in this field pay scant regard to the letting regulations, while making a small fortune by packing tenants into a single property – a large terrace house in London with 10 of 12 people inside (not unheard of) could be returning upwards of £8,000 per month (£416,000 per annum). No wonder the temptation is there.

Agents are being inundated with enquiries from would be rent-to-rent operators, most of whom have been on courses costing thousands, run by so called “property gurus”, self-promoted property experts with a large social media presence.

Novices are being told they can be financially free within 12 months, able to give up their day job in a matter of months, if only they will pay a large course fee to get some expert training to be come a rent-to-rent operator, no need for any money to get started!

Few manage to realise their dreams when it comes to putting these ideas into practice. The people to gain mostly are the snake oil salespeople offering the training. On the other side of the coin the property owners are finding themselves in serious trouble, when rogue operators and novices alike leaving them in the lurch with illegally let HMO rentals.

Hard on tenants and owners

When the preverbal does hit the fan, tenants are usually served with eviction notices because the property is unsafe and the owner is served with a summons to attend court for a licencing offence and perhaps a rent repayment order, the rent-to-rent operator nowhere to be found.

Often rogue rent-to-rent operators use companies, but when things go wrong the tenants can’t pursue these companies for rent repayment orders (RROs) because it would be a waste of time, money and effort, these companies have no assets – all earnings are withdrawn as soon as they are made.

The tenants could sue the rightful owners if they can find who they are, often they can’t. However, a recent supreme court ruling has somewhat eased the owner / superior landlords’ position.

Rent Repayment Orders

Tenants of rent-to-rents can pursue landlords in court when they break the letting rules and they can use a legal procedure known as a “rent repayment order”. Under this arrangement landlords can be forced to repay up to one year’s rent.

But but if the rent-to-rent operator does it though a shell company, and the tenants had not direct connection with the owner, they have little chance of getting any recompense. In any case, the recent Supreme Court ruling has confirmed that as the law now stands the tenants can only pursue their immediate landlord – that being the rent-to-rent company. The superior landlord being one step removed cannot be pursued.

The Supreme Court case

In the case of Rakusen v Jepsen and Others, Mr Rakusen (the Superior Landlord) granted a tenancy of his London flat to Kensington Property Investment Group. This company in turn had sublet the property to several tenants.

The number of tenants present meant the flat became licensable as a house in multiple occupation (HMO), but Kensington had failed to apply for an HMO licence. The tenants decided to pursue Kensington for a rent repayment order (RRO) because they had not complied with the law.

Unable to get any satisfaction this way, the claim was made against the superior landlord Mr Rakusen, and it eventually landed at the Supreme Court. The argument was about whether the tenants could claim the RRO against a superior landlord, or whether their only option was to claim against Kensington with whom they had a letting agreement.

The unanimous finding of the Supreme Court on 1 March 2023 was that an application for an RRO can only be made against an immediate landlord, Kensington in this case. There could be no cause of action against the superior landlord.

So, rent-to-rent companies such as Kensington, those renting from property owners and sub-letting to their own tenants are liable themselves. Many are rogue operators using shell companies with few if any assets. They often fail to abide by regulations and treat tenants appallingly, failing to maintain and carry out repairs – they operate as “ghost landlords” who are very hard to contact.

Tenant charities are angry about this ruling and are hoping the reforms coming in the long awaited Renters Reform Bill will make changes to the statutory rules, making owners of properties involved in rent-to-rent arrangements liable for the condition of their properties and subject to liability for RROs.

View Full Article: Rent-to-Rent craze adding to UK’s renting crisis