Joint tenancy agreement?

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Hi, my tenants have a joint tenancy agreement (4 of them), 6 months then rolling on contract. One of the tenants wants to move out before the 6 months expires.

If they find another tenant, do they need a new agreement for another 6 months or can the new one be added to the agreement as an addendum?

View Full Article: Joint tenancy agreement?

45% of tenants are struggling to pay rent – ONS

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An Office for National Statistics (ONS) survey has revealed that 45% of renters and homeowners say they are struggling to pay their rent or mortgage. 

It also found that 52% are not having problems paying and 2% didn’t know.

View Full Article: 45% of tenants are struggling to pay rent – ONS

COMMENT: Will Labour come round to loving landlords?

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With Labour’s predilection for bashing landlords (though the current Conservative Government needs no encouragement on that), you would expect a Labour government to double down on landlord bashing. But will they? Will reality dawn on the new shadow housing minister, announced this week as Angela Rayner? Will she grasp the reality of the problem?

Its a long time coming but Labour just might see the light on the private rented sector (PRS)

Harry Phibbs writing for ConservativeHome says, 

“…socialists in general do have a tendency to want to get rid of something without giving much thought to the practicalities of the replacement. One could make the opposite criticism of Conservatives, that temperamentally pessimistic, they are too passive in accepting what officials tell them, too deferential to the status quo.”

One group that true socialists have traditionally wanted to “smash” has been the rentier class, and the “fat-cat” buy-to-let landlords fall right in the middle of their sights on that. But even this Tory government has joined in the fray, making life rather difficult for the small-scale landlord, to say the least.

The small-scale landlord

In England private rented housing is mostly provided by small-scale landlord investors. Of the individual landlords (85%) own between one and four properties, with just under half (45%) owning only one rental property. The remaining 15% of individual landlords own five or more properties, that’s according to the latest available English Landlord Survey.

The small-scale landlord is a tremendous source of housing. They provide their own capital to buy, rent, build and renovate properties so that the right rental accommodation is there for those who need it: the young professionals, increasingly it’s also young families, older singles and couples, even pensioners form a large cohort of renters now, and there’s the very low income and down and outs.

The need to make a profit 

Naturally landlords need to charge a market rent and to make a profit – a dirty word in the far left Marxist camp. It’s not the landlord’s fault that property values have increased to the point where most young people around the globe struggle to buy housing.

Landlord bashing can only have one result: they leave the market. This exodus diminishes supply and drives up rents. That’s exactly what’s been happening. The National Landlords Association reports that over 150,000 properties left the buy-to-let sector last year. 

According to Paul Shamplina of Landlord Action, in a recent podcast shows that bailiff evictions increases last year are as follows:

– Section 8 evictions increased by 27%

– Accelerated Section 21 evictions increased by 47%

– Accelerated Section 21 evictions in Wales increased by 157%

– There’s been a 275 increase in bailiff warrants

– Evictions have been slowed dues to a lack of bailiff capacity and PPE equipment

– The social / temporary housing crisis in local authorities is also slowing up evictions

Landlords selling up

A lot of this increase is now down to landlords wanting to sell up. Rents are higher than ever and so is the unpopularity of the private landlord in the public eye.

Has nobody in government up to now, or those across the aisle on the Labour benches, studied elementary economics 101. It is said that the new establishment intelligentsia dominating Whitehall, on both sides, have studied PPE at Oxford? Perhaps they only read Marx?

With mass immigration putting even more pressure on housing, reducing rents will only be achieved by increasing housing supply, but a sclerotic planning system puts paid to that. Given the right incentive the small-scale landlord will find a way, they will come forward to provide their own capital, provide the housing that’s needed, and compete for tenants. They will not do that without incentive. 

Enter Labour MP, Sir Chris Bryant, MP for Rhondda, who has produced a new report “The New Housing Crisis: in the Rhondda

In Wales, the Labour Government has been particularly keen on “bashing” their landlords. But eagle eyed Sir Chris has spotted that the policies the Welsh Parliament has been following have caused a few problems, to put it mildly. His efforts have produced a report that unsurprisingly concludes that, as Harry Phibbs says, there are “many fewer properties to let.”

Sir Chris says:

“Landlords lack incentives to invest in the rental market due to caps on rent, reduction in tax relief for buy-to-let landlords and spiralling maintenance costs. This has led to a decrease in the number of new landlords entering the market, resulting in a shortage of rental properties for those who cannot afford to buy. Planning permission processes can also be lengthy and costly, and there are often restrictions on building in certain areas, making it difficult for developers to build new rental properties in areas where there is high demand.”

Hallelujah, has the penny finally dropped? 

To say there is a crisis in the housing market in South Wales is something of an understatement. 

Bryant goes on the say: 

“On a buy-to-let property, you must pay tax on the rental income. You pay differing rates depending on your income, between 20 per cent and 45 per cent. You must pay stamp duty tax when purchasing the property and capital gains tax when selling it. Previously, borrowing money through a buy-to-let mortgage could be a tax advantage. 

“However, now landlords can no longer deduct any of the mortgage expenses from their rental income to reduce the tax bill, with credit only being refunded at the basic 20 per cent tax rate, not at the top rate of tax. This means that landlords who are higher-rate taxpayers will pay double what they were required to prior to 2017.”

That’s not the only problem, as Bryant goes on to say:

“There are concerns that landlords may leave the sector if no fault evictions were to be outright abolished. The process for evicting tenants and being able to buy and sell properties will become more difficult and the process longer. The UK government’s plans to scrap no-fault evictions in the Renters Reform Act.”

Wow, what a revelation!

So the Tories, who are hell bent on abolishing the Assured Shorthold Tenancy, removing the unpopular Section 21 eviction – something to which the media and the housing charities between them have created pariah status – and bringing in indefinite tenancies. They are going down the exact same road that this Labour MP now warns against!

Landlords are not all “fat cats”

We’ve long ago moved on from the traditional land owning aristocracy, the absentee landlord and indeed the Scrooge type Rackman landlords who throw widows and orphans out on the street. Most landlords today are middle income workers who have invested in property because there’s been little alternative returns in banks and building societies.

Property has been, or had been, a safe bet, producing a good income with regular capital growth: an ideal vehicle to build an alternative pension pot for those without the benefit of an index linked pension our civil servants are blessed with. In providing this valuable housing resource landlords provided much needed rental housing without the need for government funding.

Chris Bryant says: 

“Many ‘buy-to-let’ properties had been bought to provide retirement income for landlords with just one or two properties to rent. Such landlords assumed that they would be able to continue deducting the interest costs of their buy-to-let mortgages against rental income – and that tenants on housing benefit would see their benefit rise in line with inflation.”

The UK Government has produced a hostile environment for the private landlord residential, but in Wales, as in Scotland, those devolved parliaments have placed extra burdens on their landlords, as well as on those housing associations providing social housing. 

“The Welsh Government’s new Welsh Housing Quality Standard 2023 has raised the benchmark that rental properties have to meet in a way that many Rhondda properties cannot meet,” Says Sir Chris Bryant.

He goes on:

“Bedrooms now must meet a minimum space requirement. As most properties in the Rhondda were built long before these regulations were in place, bedrooms in several properties are too small, making it illegal to rent them out and impossible or prohibitively expensive to alter.”

The Welsh Government has also widened the entitlement to accommodation, via local authorities, while imposing policies that reduce the accommodation available:

“The Welsh Government’s initiative to end priority need, while well-intentioned, has driven a sharp increase in the number of households deemed a priority. Whereas previously Local Authorities were only required to house those considered to be “Eligible Homeless and in Priority Need. 

“The amendment to the “Priority Need Order” placed a new duty to accommodate those who are deemed homeless. Using Rhondda Cynon Taf County Borough Council as an example, the number of applicants the Council now has a duty to assist through the provision of temporary and permanent accommodation has increased by 50%.”

Virtue signalling

The politicians in the Welsh government have been falling over themselves with their virtue signalling, setting out all the letting rules in a nice new Renting Homes (Wales) Act 2016. As Harry Phibbs writing for ConservativeHome says: 

“Each one showing they are more “caring” that the last by demanding ever larger bedrooms be found for an ever increasing number of people. Then just leave it to some poor sod at the Rhondda Cynon Taf County Borough Council housing department to deal with the impossible task of implementation.”

Bryant’s comments might just be a sign Labour is starting to see the light, to confront the harsh realities of the housing market? Labour might never learn to love landlords; it’s probably not in their DNA, but they just might have swallowed the fact that bashing landlords is counter productive. 

Harry Phibbs reports that even Labour dominated London Councils are lamenting the shortage of rented accommodation that had resulted from the extra costs and burdens imposed on landlords. 

London Councils represents the 32 borough councils in London and most of them are Labour. 

Cllr Darren Rodwell, the Labour leader of Barking and Dagenham Council has said:

“Action on this issue can’t wait and the government must step in to solve this crisis now.” The “dwindling supply” has left councils facing “growing homelessness pressures”. 

Punishing the landlords has been very effective, it’s driving them away. But the consequences of the politicians’ actions, of both stripes, it would seem, were never fully thought through.

View Full Article: COMMENT: Will Labour come round to loving landlords?

Government U-turn on ‘extra time’ for landlords to meet tougher EPC rules

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The government has insisted it is committed to raising energy efficiency in the PRS from EPC band E to C by 2028.

Contrary to her boss’s comments earlier this summer, Housing Minister Baroness Scott of Bybrook gave peers the assurance when asked what she had made of Michael Gove’s remarks, given that the PRS had the fewest decent homes.

In July, the Housing Secretary suggested there could be a delay in bringing in energy efficiency plans for the PRS. Citing financial pressures on landlords, he told The Telegraph that the government should relax the pace of changes to EPC targets.

The previous month, Energy Minister Andrew Bowie admitted that landlords would have to wait many more months to find out the details of government proposals to raise the minimum EPC for rented properties.

And new Energy Security and Net Zero Secretary Claire Coutinho has already been encouraged to focus on driving through new EPC rules as the green debate begins to heat up.

No clearer

The NRLA says the sector urgently needs certainty on the timeline for upgrades. Policy director Chris Norris (pictured) adds that landlords are no clearer on what is required of them.

“Ministers must put in place a plan which sets out financial measures which can help landlords deliver improvements,” he tells LandlordZONE.

“Crucially, this strategy must recognise that the PRS contains a higher proportion of older properties, which are usually more costly to upgrade.”

The imminent rule changes are prompting landlords to consider quitting the sector, particularly as there are fears that some will pay out more for green improvements than they could make in lifetime energy savings. Others are only seeking out rental properties to buy that already meet the likely minimum MEES certificate, according to Paragon Bank.

View Full Article: Government U-turn on ‘extra time’ for landlords to meet tougher EPC rules

HMRC Rules Simplified: Transferring Your Business to a Company – A Guide for UK Landlords

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As a UK landlord, you might not be overly excited about tax regulations, but there’s one set of rules that could significantly impact your financial future: transferring your property business to a company. This move could help you save on taxes and streamline your operations

View Full Article: HMRC Rules Simplified: Transferring Your Business to a Company – A Guide for UK Landlords

Landlords could go to prison if they don’t meet new energy rules

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The government is considering imposing prison sentences on landlords and property owners who do not comply with stringent new energy efficiency regulations – a move that has infuriated some MPs.

In a bid to meet its net-zero targets

View Full Article: Landlords could go to prison if they don’t meet new energy rules

Government issues damp and mould warning within new landlord guidance

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Private landlords are to be held accountable for damp and mould in their homes including unlimited fines for those who flout the rules, new guidance from the Government has made clear.

Three Government bodies have jointly issued the lengthy advice document (see links at bottom), which makes it clear that private landlords as well as housing associations and councils are to be policed more heavily over the quality of their homes. This includes facing unlimited fines for those who ignore the various laws governing damp and mould.

This follows the case last year of toddler Awaab Ishak whose death from complications prompted by damp and mould in his council home brought the issue into the political limelight.

‘Lifestyle choices’

Housing minister Michael Gove (pictured) says in the guidance that landlords must not blame tenants for damp and mould – a hotly debated area within the LandlordZONE Forums – saying: “Damp and mould in the home are not the result of ‘lifestyle choices’, and it is the responsibility of landlords to identify and address the underlying causes of the problem, such as structural issues or inadequate ventilation”.

Gove’s guidance, which has been issued jointly with his department but also the Department of Health and Social Care and the UK Health Security Agency, stresses how the presence of damp and mould can affect tenants’ mental and physical health, and urges them to swot up on this six pieces of legislation they and their properties must conform to, and how and when to respond to tenants’ complaints.

The guidance also heralds two of the Renters (Reform) Bill’s key components which will be used soon to police private landlords including their management of mould and damp in properties.

These are the Housing Ombudsman which will deal with tenant complaints where the landlord hasn’t taken action, and the Property Portal, where a landlord’s compliance with the Decent Homes Standards, along with other regulations, will be recorded.

Blame issues

“The onus is now firmly on the landlord to identify and deal with any problem,” says Sean Hooker (pictured), Head of Redress at the Property Redress Scheme.

“It is no longer acceptable to blame issues on the way tenants live and normal life such as cooking, washing and drying of laundry have to continue.

“Instead, landlords and their agents must be sensitive to the needs of tenants and work with them to understand and change behaviour where appropriate. 

“They should also thoroughly investigate the underlying causes behind the problems and follow up to ensure things have improved. 

“We at the PRS will be using this guide to hold agents to account and urge the Government to introduce redress for landlord managed properties as soon as possible to proceed a holistic approach across every rented home.”

Read the guidance in full.

View Full Article: Government issues damp and mould warning within new landlord guidance

Record number of UK landlords opt for limited companies when investing – Paragon

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Three-quarters of landlords are planning to acquire a new rental property in the next year and intend using a limited company structure to do so – a record high.

The findings from Paragon Bank, which surveyed nearly 1,000 landlords

View Full Article: Record number of UK landlords opt for limited companies when investing – Paragon

Watch out for ‘secret’ compliance fee clauses in contracts, landlords warned

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A leading housing lawyer has questioned the use of property regulation compliance fees which appear to absolve letting agents of their responsibilities to ensure a landlord’s property is being managed lawfully.

Tessa Shepperson, a solicitor who runs Landlord Law, says one landlord was charged a compliance fee on top of his 12% commission fee and discovered a clause buried in his agency agreement which says: “In consideration of the Landlord paying the Compliance Fee the Agent will indemnify the Landlord for a fine or penalty that arises from the Agent’s failure to ensure compliance with the Landlord’s statutory responsibilities.”

This clause goes on to list a number of conditions, including “getting any necessary permission to let and any HMO or other licenses”.

It adds that “A Compliance Fee Indemnity will not be provided where a liability arises when the Tenant has been in any way obstructive.”

Compliance fee

Shepperson questions whether, if the compliance fee is not paid, the landlord wouldn’t have redress if the agent ignored all relevant legislation and let the landlord in for substantial fines and penalties.

She says: “If the agent took a deposit from the tenant and failed to protect it within the 30-day period, could the agent use the landlord’s non-payment of a compliance fee to defend any claim that the landlord might make against the agent if they are sued by the tenant for the penalty?”

As he owns the property in his name, this landlord – unlike those who put their property into a limited company – could claim protection under the Consumer Rights Act.

She tells LandlordZONE: “Landlords need to read their agency agreement and challenge such a claim, and maybe avoid those agents who use them altogether.”

Small print

Propertymark says compliance is legally required, and all agents have a fiduciary duty to their client, so that if a fee is being charged for this, an agency shouldn’t hide it in the small print of their agreement, president Greg Tsuman (pictured) tells LandlordZONE.

He adds: “Agencies’ models and how their fees are charged vary, however, all fees need to be transparent as it’s important for a landlord to be able to make an informed decision on what services they’re offered and the fees included.”

Visit the Landlord Law blog.

View Full Article: Watch out for ‘secret’ compliance fee clauses in contracts, landlords warned

Considerations for UK Landlords: A Guide to Business Transfers, Professional Fees, and Capital Withdrawal

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Being a landlord in the UK comes with various financial responsibilities and considerations. This blog post will explore three crucial areas, as outlined in HMRC manuals, that landlords should be aware of: transferring your rental business to a company, professional fees linked to your business’s structure

View Full Article: Considerations for UK Landlords: A Guide to Business Transfers, Professional Fees, and Capital Withdrawal