‘Ministers must tackle tenants who abandon homes and cost landlords £1,000s’

admin    Uncategorized     agents

Property sector bosses have urged the government to give landlords stronger laws to take back possession of their property if it has been abandoned.

In a letter to Housing Secretary Michael Gove on behalf of the Housing Coalition, Propertymark suggests that he includes provisions for abandonment in the Renters (Reform) Bill to give landlords stronger protections.

An abandoned property costs income and raises insurance costs as well as additional challenges such as a responsibility to safeguard possessions left behind and preventing the property becoming a target for vandalism and anti-social behaviour.

As the legal tenancy is still in place, a tenant can return to the property at any time, meaning that the home cannot be re-let or occupied by anyone else.

Read a LandlordZONE Forum discussion on the subject

Under the Renting Homes (Wales) Act, if a landlord believes their property has been abandoned, they must try to contact the tenant for one month but can then end the tenancy if they have sufficient evidence.

Financial risks

Propertymark says this approach recognises that a landlord is very unlikely to try and take back possession of a property unless they are certain that it has been abandoned, because the legal and financial risks to them are too great.

It suggests the UK government could include similar provisions in the upcoming bill.

Alternatively, the government could bring into force the provisions on abandonment under Part 3 of the Housing and Planning Act 2016. These measures would allow private landlords to recover possession of abandoned residential properties more easily but have not yet been enacted.

“Unlocking these properties currently stuck in limbo would help maximise the number of homes available for rent, reduce the risks associated with unoccupied properties, and give greater income security to landlords, supporting them to increase standards and keep rents fair,” says Propertymark CEO Nathan Emerson (main picture).

View Full Article: ‘Ministers must tackle tenants who abandon homes and cost landlords £1,000s’

Developers’ greed resulted in them “cooking their own goose”

admin    Uncategorized     agents

For many years some housing developers in the UK were involved in a leasehold housing scam; they found a very lucrative second income stream, but this was all at the expense of innocent buyers.

Usually these were young inexperienced couples who were easy prey when it came to getting them to sign on the dotted line. These people thought they were buying a new home, they didn’t realise it still belonged to the developer.

Homeowners who bought into leasehold housing developments saw their ground rents and service charges rising far faster than they ever expected. Some were told they could purchase the freehold later at low cost, but when they tried they found the cost was out of reach, running to many thousands of pounds. Some then found themselves trapped and unable to sell their property because of the liabilities surrounding the high charges.

House the developers’ system worked

This is how it worked: The developer sells the house – usually enticing the buyers to use their own solicitors – with a leasehold title rather than freehold. Then the developer sells the freehold on to an investment company, which provides the investor with a long-term income and a large pay-out for the developers.

Leasehold ownership, where you buy and own the property but not the land it sits on, makes sense if it’s in a block of flats, where the individual flats are owned by many different people. But the arrangement does not make sense for stand alone houses.

Developers were allowed to sell their homes on a leasehold basis, which means they could then charge high and escalating ground rents. This is an annual charge leaseholders must pay the freeholder, plus they can charge extortionate fees if the leaseholder needs to get permission from the freeholder for alternations to the property.

What is leasehold and freehold?

Land titles in England hark back to the feudal times of William the Conqueror, 1066. The term freehold is mentioned in the Doomsday Book and means the permanent, unencumbered and absolute tenure of land or property with freedom to dispose or alter it at will – it’s about as near as possible to full ownership as it gets in England because ultimately all the land is owned by the Crown.

Land gave people power in the Middle Ages and powerful families wanted a mechanism to retain ownership of their land while away from it, and maximising their earnings from it. Leasehold gave them that mechanism, allowing others to occupy their land, for a specific or extended period of time, but they could get their land back at some point and earn an income from it in the meantime.

Long-leaseholds are useful, and in some respects necessary, in a multi-occupied buildings. Someone must coordinate maintenance work, including safety matters and repairs to the structure / common parts, because left to individual flat owners it simply would not get done. The building would fall into ruin and destroy value for all the leaseholders.

Leasehold house sales banned

Thankfully for buyers, from 30 June 2022 The Leasehold Reform (Ground Rent) Act 2022 banned ground rent charges on new residential leases in England and Wales. The government has said it has been working to abolish ground rents for a number of years as part of a suite of reforms to the leasehold system. It says that ground rents “provide no clear service and can be set to escalate regularly, with a significant financial burden for leaseholders”.

But to the consternation of leaseholders, the Government’s stated plans to abolish leasehold home ownership altogether have been watered down by the Secretary of State for Levelling Up, Housing and Communities, Michael Gove, after he previously pledged to get rid of the ‘feudal’ system.

Some leaseholders still feel cheated because, as some argue, it is now a “two-tier system” because although those who buy leaseholds now have been helped, existing leaseholders are still stuck with the problem of mortgage lenders being really risk-averse.

Michael Gove said earlier this year: “I don’t believe leasehold is fair in any way. It is an outdated feudal system that needs to go. We need to move to a better system and to liberate people from it,” but it seems he has since backed down on such a drastic reform of the system.

However, some changes are expected to be introduced over the coming months. One is to help leaseholders choose their own property managers, to cap existing ground rents and prevent building owners charging leaseholders for the legal costs involved in legal disputes.

It was probably inevitable that once the Government went into the complications and vested interests involved in removing leaseholds, the idea of abolishing them had to be binned – Commonhold is one alternative but despite being available to leaseholders for many years, it’s never taken off.

So, how do the new rules will work?

Buyers of houses or flats on long leases, after 30 June 2023, don’t need to pay ground rent. If the freeholder demands ground rent, it can only be charged at “one peppercorn”, effectively a zero amount.

These new leasehold rules apply to retirement housing as well from 1 April 2023, though exceptions are made for some community-led housing and business leases. Existing leaseholders who voluntarily decide to extend their leases will also have their ground rent set to zero.

Continuing campaign

The change in the law was brought about with the help of a pressure group headed by northern leaseholder Katie Kendrick, whose battle began when her young family bought a new £214,000 house in Ellesmere Port, Cheshire through the Help to Buy scheme.

Trouble began when she found it would cost her nearly £3,000 for permission from the freeholder, an investment company, to do a kitchen extension. This prompted her to band together with two other leaseholders to start the campaign which has resulted, after a 9 year struggle, in getting the change in the law.

However, she’s not done yet, she intends to continue her campaign to get leaseholds totally abolished, and to help publicise this a play, entitled “Fleecehold”, tells the personal stories of how three women (Kendrick and two leasholder friends) took on the powers behind a system that dates back to 1066 and William the Conqueror.

Kendrick started the National Leasehold Campaign (NLC) which now has 27,000 members and they intend to stage banner campaigns outside of new developers warning buyers about leaseholds.

As the law stands today it still allows freeholders and developers to levy charges on the people who bought nearly 5 million homes. They are leaseholders with a right to live in their homes long-term, for example 99 to 150 years, but control lies with the freeholder.

Buyer beware

Buyers of leaseholds should educate themselves about the ins and outs and pitfalls, because it’s not just young couples who buy leaseholds, many landlords fall into this category when they purchase flats.

It’s important that prospective buyers and leaseholders thoroughly review lease agreements, make sure they understand the terms and associated costs, and seek legal and financial advice before committing to a leasehold property purchase.

View Full Article: Developers’ greed resulted in them “cooking their own goose”

Are Policy Makers Pushing Landlords Under The Proverbial Bus To Win More Votes?

admin    Uncategorized     agents

It’s hard not to come to the conclusion after reading the most popular articles, discussions and comments in multiple landlord news portals that landlords are being blamed, disregarded and punished from all sides; being squeezed out of the market, blamed for all wrongs and paying costs that are simply unfair.

Join the thousands of landlords fighting back with our help on their side

From the short-sighted ‘market cooling’ policies that have backfired causing a shortfall of rented accommodation and higher interest rates as thousands of landlords exit the market;  to local authorities advising tenants to ignore court judgements and to stay put until bailiffs are appointed with complete disregard for the imposed stress and financial cost to landlords;  to the introduction of the new Housing Loss Prevention Advice Service which many experts fear could result in tenants using free legal representation as a risk-free stalling process which could cost landlords thousands more in court costs and legal fees;  it seems that scapegoating landlords and expecting them to pay the cost for failed policies is faster, easier and more of a vote winner than making any serious attempt to understand and fix the real problems renters face.

Unfortunately, with a general election looming and anguish from the ‘Renters’ Wall’ growing in electoral sway, it is unlikely that the problems are going to get better any time soon and landlords will continue to be the brunt of blame and policy.

Matthew Lynn, columnist for the Daily Telegraph said recently, “The war on landlords has already backfired badly, sending rents spiralling out of control. And now it is driving inflation higher too. The worst part of it all is that there is no sign whatsoever that the Government realises it is to blame.”

So with public opinion, government policy and free support stacked against landlords, what can they do to balance the needs of the tenant with the cost to the landlord?

Help For Landlords

Many landlord associations are calling for a more balanced response from the government, taking the interests of the tenant and landlord into account, and for housing associations to support their calls to make sure policies designed to protect tenants do not routinely have an adverse effect for the majority of landlords.

However, with interest rates still rising, fixed term mortgages ending, and the recently launched free help for tenants wanting to challenge landlords seeking possession; the best option for many landlords is to sell up as soon as possible (before S21s are abolished and the more ‘challengeable’ S8s are the only option available to seek enforced possession).

As experienced by vast numbers of landlords commenting on articles and asking for help, one option to sell a buy-to-let property is either wait for tenants to vacate or use an S21 to give 2 months’ notice to tenants to quit but realistically landlords should be prepared for tenants to ignore the notice and any subsequent court instruction to leave while LHAs advise tenants not to move until a bailiff notice has been served. Also, once a tenant has been served notice, they often choose to stop paying rent for as long as the process takes with many commentators sharing experiences of losing £10K+ in court costs, lost rent, repair bills and legal fees just to get the property back.

Another option for landlords with good tenants is to sell with their tenants in situ by advertising the property as suitable for investors. Many high street agents are happy to promote properties in this way but most will not get help landlords to ensure all certificates are in place and/or help a tenant to be rehomed if they are willing.   

The Landlord Sales Agency is different – it was set up by landlords for landlords with the USP of using their vast experience as landlords to help other landlords find a better way to sell without the expense, delay and unpleasantness of litigation. We are the support landlords need in their corner to help balance the needs of the tenant with the cost to the landlord.

We also help landlords sell multiple properties together and our average sale time is less than 28 days. We have been warning landlords about the problems they are currently facing since George Osborne introduced the early policies in 2015 and we have accumulated a database of thousands of buy-to-let investors looking for tenanted properties.

Find out what we can do for you today and start planning what you want 2024 to hold for you.

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View Full Article: Are Policy Makers Pushing Landlords Under The Proverbial Bus To Win More Votes?

Are Policy Makers Pushing Landlords Under The Proverbial Bus To Win More Votes?

admin    Uncategorized     agents

It’s hard not to come to the conclusion after reading the most popular articles, discussions and comments in multiple landlord news portals that landlords are being blamed, disregarded and punished from all sides; being squeezed out of the market, blamed for all wrongs and paying costs that are simply unfair.

View Full Article: Are Policy Makers Pushing Landlords Under The Proverbial Bus To Win More Votes?

Tenant has stopped communicating – what to do?

admin    Uncategorized     agents

Hello, Our tenant stopped lines of communication in March. We were communicating by way of email and text, occasionally we tried a phone call but she texted us and said use email and text as her preferred method.

It says on her contract we can email etc.

View Full Article: Tenant has stopped communicating – what to do?

NEW: Landlords feeling economic heat, new mortgage arrears data shows

admin    Uncategorized     agents

If the Government needs evidence that landlords are struggling in the current economic climate, then the most recent mortgage arrears and repossessions figures should be sober reading within the dusty rooms of Whitehall.

Lenders have reported that the number of private landlords in arrears with their buy-to-let (BTL) mortgages has increased by 28% over the past three months.

There were 8,980 buy-to-let mortgages in arrears of 2.5 per cent or more of the outstanding balance in the second quarter of 2023.

Half of these mortgages in arrears were what UK Finance counts as ion the ‘lightest arrears’ band or those between 2.5 and 5 per cent of the outstanding balance.

It says this shows that problems are coming down the line – ‘lightest arrears’ are 41 per cent greater than in the previous quarter.

The figures also show landlords are being hit harder than home owners, with arrears building fastest among landlords.

For example – there were 81,900 homeowner mortgages in arrears of 2.5 per cent or more of the outstanding balance in the second quarter of 2023, seven per cent greater than in the previous quarter compared to 28% for landlords.

Stark

“Percentage increases are always going to look stark when starting from a low base,” says Sonia Fernandes, Principal, Mortgages at UK Finance.

“However, this does not take away from the fact that early arrears, 2.5 per cent – five per cent of balance, has increased for both homeowner mortgages and BTL.

“And for BTL landlords who are missing their mortgage payments, we are not seeing signs that this is because of rental arrears.

“As long as renters are able to keep up with their payments, lenders will typically allow them to stay in the property for the remainder of their lease, even if the landlord has missed their mortgage payments.”

Read the figures in full.

View Full Article: NEW: Landlords feeling economic heat, new mortgage arrears data shows

Landlords exiting PRS prompts 35% rise in Section 21 ‘no fault’ evictions

admin    Uncategorized     agents

Shelter has urged the government to make scrapping Section 21 a priority after new Ministry of Justice data showed a 41% rise in the number of households removed from their homes in England due to no-fault evictions.

Between April and June, 2,228 households were evicted under Section 21 accelerated procedure repossessions by county court bailiffs, up from 1,578 in the same quarter last year. 

Private landlords started 7,491 court claims to evict their tenants under Section 21 this quarter, up 35% in a year.

The Renters (Reform) Bill has been slow to progress through Parliament and Shelter wants the government to prioritise this when MPS returns from recess in September.  

Paul Sowerbutts (pictured), Head of Legal at Landlord Action, says: “Scrapping Sectrion 21 without due process would be a knee jerk reaction.

“Whilst some landlords are struggling due to interest rate rises many are only to aware of the difficulties their tenants face wanting to keep good tenants.

“An historic ban like this needs to be carefully considered in terms of what takes its place. It is in everyones interest that this is properly debated so the correct balance is struck as there may not be another opportunity to consider this for a generation. Legislate in haste, repent at leisure.”

Leave the market

Chris Norris (pictured), policy director for the NRLA, says: “The NRLA wants to see every tenancy sustained wherever possible.

“However, growing numbers of landlords seeking to repossess properties comes at a time when increasing numbers are deciding to sell up and leave the market.”

Abuse the system

Shelter chief executive Polly Neate (pictured) says landlords can too easily use and abuse the current system.

“Some will hike up the rent and if their tenants can’t pay, they will slap them with a no-fault eviction notice and find others who can,” she adds.

“We speak to renters all the time who feel like they have zero control over their own lives because the threat of eviction is constantly hanging over them.

“The moment Parliament resumes, the government must get rid of no-fault evictions which have made the prospect of a stable home little more than a fantasy for England’s 11 million private renters.” 

View Full Article: Landlords exiting PRS prompts 35% rise in Section 21 ‘no fault’ evictions

Where will tenants go when EPC work is carried out on properties?

admin    Uncategorized     agents

Hello, regarding the proposals to upgrade all properties to an EPC ‘C’ rating, where are the tenants of a two-bed back-to-back going to live whilst the work is carried out? Don’t forget that pets are as important as kids in many families.

View Full Article: Where will tenants go when EPC work is carried out on properties?

Abolishing Section 21 will be a ‘disaster’ warns leading northern landlord

admin    Uncategorized     agents

Removing Section 21 will be a disaster – and the threat is causing good landlords to quit the sector, says one fed-up investor.

York-based landlord and developer, Matthew Laverack (inset, main pic), believes politicians should stop bashing landlords and make it easier, not more difficult, to provide housing.

While the cost of living may be extremely challenging, so is being a landlord during a time of high costs, onerous regulations and abundant financial risks.

Writing in the York Press, Laverack says Section 21 doesn’t allow landlords to give two months’ notice without reason and was introduced to give certainty to investors who otherwise wouldn’t be interested in private rentals.

“Removing Section 21 is a disaster,” he says. “Landlords make a living renting out homes. They make a loss when homes are empty and don’t give notice unless they have to, when a tenant doesn’t pay and/or behaves appallingly.”

Laverack has had some tenants for more than 20 years who started out with a six-month tenancy.

Throwing out

“We don’t invoke Section 21 because providing homes is our livelihood – throwing out good tenants isn’t what happens,” he adds.

“The housing crisis cannot be solved by rent controls. It is throwing petrol on a fire. It makes more landlords leave the market with few investors willing to replace them. Also, financial institutions will not fund an enterprise with rising costs and a fixed price cap.”

Alternative view: Why abolishing Section 21 isn't all bad news for landlords

Laverack, who has been in the rental and housebuilding sector for 40 years, has previously spoken out against government interference for deterring investors who would have helped meet the demand for housing but decided it was no longer worth the risk.

Read more about Section 21.

Pic credits: Getty/Matthew Laverack/Twitter

View Full Article: Abolishing Section 21 will be a ‘disaster’ warns leading northern landlord

Landlords urged to give views on major changes to Scottish EPCs

admin    Uncategorized     agents

Landlords are being urged to give their views on an overhaul of EPCs (Energy Performance Certificates) in Scotland including making both residential and commercial landlords and homeowners renew them every five years rather than ten.

This is Ministers’ second attempt to reform EPCS. In 2021 they consulted on reforming EPCs to add a metric showing a property’s energy use, but now a second one is due to end on 10^th October.

No changes were made to EPCs following the original consultation but now the government is carrying out a new consultation on more extensive changes to EPCs, with the new EPC regulation brought in during late 2024.

The newly-proposed changes are designed to help homeowners and tenants understand their building’s energy performance, but the Scottish Government believes the current metrics, ratings and format aren’t ‘suitable’ to drive improvements and meet net zero targets by 2045.

Its new consultation – setting out proposals to reform domestic and non-domestic EPCs – includes plans to change the metrics, purpose and validity period of EPCs, the document format and quality assurance procedures.

Stakeholders

Changes would provide “relevant and holistic information” to ensure EPCs provide clear and useful basic information about a building’s energy efficiency for current and prospective building owners and tenants, and other stakeholders.

As well as using a letter to describe a property’s energy efficiency, three new rating types would be added – building fabric, cost and heating type – to give tenants and homeowners a clearer idea of what they are renting or buying.

Also on display will be an ‘emissions rating’ and an ‘energy use indicator’.

This means that landlords will no longer be able to make small changes (such as replacing a boiler) to get a property over the line to a ‘C’ as is the case now, but instead make more substantial improvements that meet the ‘net Zero’ target.

The Scottish government wants feedback ahead of the introduction of revised Energy Performance of Buildings (Scotland) Regulations due in Winter 2023-24 which would mean that revised EPCs would come into force shortly afterwards and in advance of wider Heat in Buildings Regulations planned for 2025.

As in England and Wales, Scottish landlords have until 2025 or 2028 to get their properties to a minimum ‘C’ level depending whether a tenancy is new or existing.

Impact

Any update to the EPC system would have a significant impact on letting agents, sales agents and commercial agents, says Propertymark CEO Nathan Emerson (pictured).

He adds: “Whilst we understand the Scottish Government wants to reach net-zero, attention must be paid to ensuring information contained is clear and concise to allow users to gain the very best understanding.”

Read the consultation.

Landlords have until 10^th October to submit their views via the Government’s consultation hub.

View Full Article: Landlords urged to give views on major changes to Scottish EPCs