LATEST: Bailiff freeze spreads to another big County Court in London

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A large County Court in London has written to its legal clients to warn them that some of their scheduled evictions face being cancelled or rescheduled.

The announcement has been made by the Civil and Family Court in Barnet (main picture), one of the major hubs handling evictions in North London.

It says, as the Ministry of Justice (MoJ) press office has confirmed to LandlordZONE in recent days, that the delays are being caused by some court-appointed and paid bailiffs pulling out of ‘high risk’ evictions where they face possible injury to life and limb.

In these cases, the MoJ is struggling to provide personal protection equipment such as stab vests and other body armour and these evictions are therefore being stopped or delayed.

Rebooked

Barnet court says it is “sorry that this may affect your scheduled appointments but will ensure they are rebooked as soon as reasonably practicable”.

While this extraordinary situation would in normal times raise eyebrows, given the already long lead times for many landlords seeking to evict tenants, it has lead evictions expert Paul Shamplina (pictured), founder of Landlord Action, to warn that the bailiff system is now at risk of a severe crisis.

Saying the problems go back many years and that this latest blow is exacerbating existing structural weaknesses in the courts system, he adds: “This is just the beginning and without intervention the problem is going to get worse and worse.

“The historic lack of investment in the courts is now being compounded by changes in regulations and rising interest rates, sparking a landlord panic to exit the rental market.”

Landlord Action is calling on judges at County Courts to start granting leave to transfer more eviction cases with serious arrears to the High Court to share the burden of rising workload, as an increasing number of County Court bailiff evictions are being suspended.

Daren Simcox, CEO of High Court Writ Recovery, a private bailiff firm specialising in High Court writs and evictions across the UK, says the number of County Court bailiffs employed by courts to attend evictions has been waning as government policy has affected team sizes, meaning some bailiffs now cover multiple courts resulting in unmanageable workloads.

View Full Article: LATEST: Bailiff freeze spreads to another big County Court in London

MARKET: High rents consign younger tenants to the house of mum and dad

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First-time renters accounted for just 4.6% of new tenancies during the first five months of the year, as more would-be tenants rely on the hotel of Mum and Dad.

With average monthly rents topping £1,000, young adults can save £12,290 by living rent-free with their parents each year, according to Hamptons, which reports that rising rents mean the share of tenants leaving the family home has been steadily falling in Great Britain since 2015.

Then, first-time renters made up 6.1% of all tenants who moved into a new home – equating to 71,860 new rented households in England – while during the first five months of 2023, this fell to 4.6% – about 43,280 new rented households.

Hamptons estimates that if young adults continued to move from the family home into rental accommodation at the same pace they did eight years ago, it would mean there would have been an extra 104,550 households looking to rent in England between 2016 and 2023.

Staying at home

As rents have risen, would-be tenants are staying at home for longer to build up their savings to afford a larger home or rent with friends. 

It says 32% of tenants who moved out this year rented a studio or one-bed in Great Britain, down from 37% last year, while the proportion who left the family home and rented a prperty with at least two bedrooms rose from 63% in 2022 to 68% this year.

Aneisha Beveridge (pictured), head of research, says young adults are staying at home for longer to save up, with some skipping the rental market entirely and going on to buy a home instead.

She adds: “The good news for tenants is that rental growth is starting to cool, and we expect that to continue throughout the remainder of the year.”

Read more about rising rents.

View Full Article: MARKET: High rents consign younger tenants to the house of mum and dad

Landlord defeats HUGE rent repayment claim by tenants who owe HER £17k

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A landlord in Dartford has batted off a huge rent repayment order (RRO) claim made by her tenants after a judge dismissed the case during a virtual Property Tribunal hearing.

Manjit Sanghera, who co-manages the family detached property on the outskirts of the Kentish town with her husband, had faced an RRO claim of £14,400 despite the tenants owing her nearly £17,000 in rent.

The tribunal’s three judges heard claims by tenants Osaretin and Oghomwen Osagiede that Sanghera and her husband had ‘harassed’ them during their tenancy, which commenced in June 2020.

The tenants said their landlord’s frequent and unannounced visits to the property were interfering in their right to ‘quiet enjoyment’ of the property, although only two instances of unplanned door knocking were evidenced – one of which was a welcome chat and the other a visit to assess the repair of a damaged garage door.

The tribunal, after hearing detailed evidence from Sanghera and her letting agency as well as the tenants, dismissed the RRO, noting that the tenants had failed to prove their landlords’ ‘bad behaviour’.

“On the basis of the evidence before the tribunal the [tenants] have failed to satisfy it beyond reasonable doubt that the [landlord] carried out acts likely to interfere with [their] peace or comfort of the property,” the judges said.

Eviction

Sanghera attempted to remove the tenants including issuing them a Section 21 notice of eviction in June 2021, which they contested over the serving of a How To Rent Guide and Gas Safety Certificate, and a Section 8 has now been issued after the rent arrears built up.

The judges sided with the Osgiedes on one point – that their boiler had not worked properly for many months despite requests to fix it and that on several occasions they were without hot water for themselves and their son.

But the tenants have not paid any rent since January 2022 and Sangera highlighted how she had been forced to use her savings to pay her own bills after the Osagiedes stopped paying rent, which was one of her major sources of income after her husband retired.

The tenants have until next week to appeal the decision.

Read more about RROs.

View Full Article: Landlord defeats HUGE rent repayment claim by tenants who owe HER £17k

Good landlords have nothing to fear – Polly Neate

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Polly Neate, the chief executive of the housing charity Shelter, says that good landlords have nothing to fear from the Renters’ Reform Bill which could ‘transform the lives of millions’.

Writing in the Sunday Times, Ms Neate says that since the deregulation of private renting in the Housing Act of 1988

View Full Article: Good landlords have nothing to fear – Polly Neate

The perfect storm for landlords and tenants has arrived

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A financial expert is predicting misery for the property market in the months to come with rising interest rates hitting both landlords and potential first-time buyers.

Sarah Coles, the head of personal finance at Hargreaves Lansdown, says that with house prices and sales falling

View Full Article: The perfect storm for landlords and tenants has arrived

How we restructured to become debt free and super tax efficient

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On paper, my spouse and I were worth £3,000,000 but the reality was that we had no savings, no money whatsoever to live on after paying our tax bills, and this was despite having rental income of £300,000 a year coming in.

View Full Article: How we restructured to become debt free and super tax efficient

Quitting landlords could fuel further drop in house prices

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Buy-to-let landlords will influence house prices if a large number choose to sell up, according to rating agency Moody’s.

The firm is predicting that prices will fall by 10% in the next two years due to persistently high inflation and the recent spike in lending rates.

Rental income

Landlords can pass on the costs of complying with regulatory requirements to ensure rental income supports mortgage payments, but for an average mortgage, this would mean raising rents by almost 20%, according to Bank of England estimates, says Moody’s. Rents are currently increasing by about 5% while it points to anecdotal evidence that landlords are choosing to sell properties instead, putting additional downward pressure on house prices.

The turbulent mortgage market has seen HSBC announce a removal of all its new business residential and buy-to-let products, with the deals set to be available again on Monday, with potentially higher mortgage rates. Amid fears of a further interest rate rise, it follows a similar announcement made by Nationwide, which raised fixed rates for new borrowing to maintain sustainability. Nearly 10% of mortgages have been taken off the market due to concerns about increasing interest rates, according to Moneyfacts.

Limited edition

Meanwhile, Paragon Bank has launched a range of limited edition buy-to-let mortgages. Nil fee five-year fixed rates are available for those purchasing or re-mortgaging single self-contained properties, with rates starting at 6.35%, or HMOs at 6.60%. Alternatively, landlords can choose a five-year fixed rate with a flat fee of £2,995, with rates starting at 6.05% for SSCs, or 6.30% for HMOs. The five-year fixed-rate deals are available at 65% loan-to-value on loans up to £500,000.

Commercial director Louisa Sedgwick says: “We’ve listened to brokers who have told us that nil and fixed fee options should appeal to landlords wanting higher loan amounts, up to £500,000, alongside the certainty of fixing rates for five years.”

View Full Article: Quitting landlords could fuel further drop in house prices

Holiday home owners top the rental income chart

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The average annual holiday let income exceeded buy-to-let income for the first time in 2020-21, reaching £15,600 compared with £13,400, according to HMRC.

Ten years ago, holiday lets generated about £9,600 a year compared with £12,800 for buy-to-let but the gulf has grown wider, pushing holiday let income up by an average of 63% in the past decade compared with just 5% for buy-to-let.

Available data

A Freedom of Information request by Hamptons reveals that 63,000 individuals (rather than a company) received income from 65,000 furnished holiday let properties in the UK according to the latest available data — up from 46,000 receiving income from 50,000 properties in 2011-12.

It also wanted to test the theory that some longer-term landlords had moved across to the short-let market because it was more lucrative. The results show that while some have, the numbers are still fairly small – just 1.5% of all landlords are also holiday let owners, up from about 1.3%.

However, the figures will no doubt fuel critics’ argument that investing in holiday properties is driving up prices in rural hotspots and creating a chronic shortage of rental properties. Six mostly Labour MPs are sponsoring an Early Day Motion that would establish a Short Term Holiday Let Licensing Scheme across England.

Business rates

For a property to qualify as a self-catered holiday let in England – let for at least 70 nights a year and available for at least 140 — owners can switch from paying council tax to business rates. However, if their annual business rates bill is less than £12,000 and they only rent out one property, they pay no tax.

David Fell, a senior analyst at Hamptons, says the number investing in holiday lets rose dramatically during the pandemic because so many more people were confined to staycations as a result of international travel restrictions. “While Covid undoubtedly distorted the market, the longer term upward trend in revenue predates Covid, and it’s a trend the government has been increasingly worried about,” he adds.

View Full Article: Holiday home owners top the rental income chart

Should Landlords Sell Their Buy-To-Let Properties in 2023?

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The buy-to-let market has long been an attractive investment avenue for those seeking steady income, but the increasing burden on landlords from legislative changes, market conditions and financial burdens are causing many to sell up. We’ll explore some of those factors to help landlords make an informed decision as to whether to sell or retain buy-to-let property.

A Changing Legislative Landscape

In recent years, the regulatory environment surrounding the buy-to-let market has become increasingly stringent. Landlords face several changes:

EPC Target Changes

As part of the UK government’s commitment to achieving net zero emissions by 2050, it has set new Energy Performance Certificate (EPC) targets whereby landlords must upgrade the energy efficiency in their buy-to-let properties. At present, properties need an (EPC) rating of at least ‘E’ to be legally let. But, starting from 2025, properties must attain a minimum EPC rating of ‘C’. This rule change will initially affect new tenancies, encompassing all tenancies from 2028.

The Renters Reform Bill

The Renters Reform Bill represents the most significant potential legislative change in the private rented sector in decades. A government white paper released in June 2022 outlined the contents of the Bill, which is now going through parliament and includes:

• Scrapping of Section 21 evictions
• Introduction of periodic tenancies
• Prohibition of blanket tenant bans
• Creation of a landlord ombudsman and property portal

These changes will inevitably lead to increased costs, reduced profitability, and extra administrative burdens for landlords. So, it’s no surprise then that more landlords are selling their buy to let properties than buying.

Additional Financial Burdens

Although there are benefits of owning a buy-to-let – a steady rental income and property appreciation over time – recent financial fluctuations have meant landlords have had to bear additional burdens that impact their profitability.

Increasing Interest Rates

Rising interest rates, which are predicted to reach upward of 5% by autumn 2023, will consequently affect mortgage rates. This will hit the two thirds of landlords reliant on a mortgage, meaning those landlords planning to refinance their buy-to-let properties in 2023 should expect higher costs.

Rental Market Stability

The stability of the rental market is a significant factor to consider. Shifting economic conditions, namely the cost-of-living crisis, have resulted in financial strain for renters at a time when landlords need to put up rental prices. This can lead to high tenant turnover, which involves additional costs and expensive vacant periods.

Capital Gains Tax

Recent years have witnessed substantial appreciation in the property market, providing landlords with the opportunity for significant gains when selling their buy-to-let properties. But, the decision to sell a buy-to-let may not be as financially rewarding as expected as landlords may be subject to capital gains tax when selling a rental property for a price higher than the initial purchase cost. Changes to the tax-free allowance for capital gains tax were implemented in April 2023, whereby the allowance of £12,300 per person was replaced by a new allowance of £6,000. From April 2024, this allowance will decrease to £3,000, which means that landlords who decide to sell their properties in the new tax year might face higher capital gains tax payments.

When considering whether to sell or hold onto a buy-to-let property, landlords must assess its financial viability and evaluate their own specific circumstances. Factors such as rental income, expenses, mortgage rates, and potential returns should be carefully weighed against increasingly stringent legislative changes. For tips and advice on selling a buy-to-let property, check out www.quickmovenow.com/advice/selling-a-buy-to-let-property

View Full Article: Should Landlords Sell Their Buy-To-Let Properties in 2023?

Landlord Crusader: Why we shouldn’t keep quiet about the Renters Reform Coalition

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I can’t keep quiet! Two stories on the same day on Property118 highlight what is wrong with the private rented sector – and if everyone concerned took a step back to understand the other side’s point of view, it would make everything a lot better.

View Full Article: Landlord Crusader: Why we shouldn’t keep quiet about the Renters Reform Coalition