FREE webinar: Will it become more difficult to evict tenants next year?

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Many landlords will not have clocked the huge changes coming down the line within the Government’s Renters (Reform) Bill due to become law next year – but help is at hand.

Evictions expert Paul Shamplina and legal senior Paul Sowerbutts (main picture) are to host a free live webinar on the 30^th August 2023 which will explain the changes and what they mean for landlords, jointly hosted by LandlordZONE and Landlord Action.

It is important to underline how serious the proposed changes to eviction law will mean for landlords wishing to gain possession of their properties, whatever the reason.

No fault

At the moment, landlords have the option to use a ‘no fault’ route or Section 21 notice as it is better known, which enables them to evict a tenant even if there is ‘no fault’ on the tenant’s part.

But this element of eviction law is going to be abolished and although the Government has promised to make it easier to evict badly behaved tenants and those in serious arrears via the courts, many believe once the bill becomes law, overall it will become more expensive and take more time to remove tenants from properties.

Shamplina says: “In this exclusive webinar, in partnership with Total Landlord, we’ll be discussing the latest and greatest news on evictions, tackling topics of concern surrounding Section 21 being abolished, changes to the court system, current Government policy on the private rented sector and the freeze on bailiffs activity that has been widely reported including by LandlordZONE.”

Readers can sign up to watch the webinar for free via this registration form.

Read more about the Renters (Reform) Bill.

View Full Article: FREE webinar: Will it become more difficult to evict tenants next year?

Lodger or tenant?

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Hello, my situation is a bit complex and I hope I will get some answers here.  I was leaving alone in my 4 bedroom house and took on some lodgers to live with me.

In 2020 I got a job in another country and spent time going back and forth to my house in London.

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UK’s rental market shrinks by 400,000 homes in just seven years

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The UK’s private rented sector (PRS) has seen a significant decline in the number of homes to rent since 2016, one leading real estate advising firm reveals.

According to CBRE, it estimates that 400,000 rental properties have been sold in the past seven years

View Full Article: UK’s rental market shrinks by 400,000 homes in just seven years

Tech firm that helps landlords sell rented homes to sitting tenants secures first funding

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A free service that helps landlords manage their portfolios more profitably but also sell individual properties to sitting tenants through an innovative funding model has secured its first big cash injection to develop the platform.

Homely says the undisclosed investment will value the firm in the ‘double digit’ millions.

The business has a three-pronged approach; to help landlords and tenants manage properties better; enable tenants get on the property ladder; and help landlords sell their properties to existing tenants.

It also claims to help both small and large portfolio landlords by offering more efficient financing opportunities, reduced vacancy rates and increased tenant retention.

Launched in 2021, Homely’s overall aim is to work with landlords, home owners, renters and finance firms to grease the wheels of renting, being a landlord, getting on the property ladder and home ownership through both tech and partnerships with finance firms such as Aviva.

Obscure

The company providing the funds to move Homely from obscure tech platform to household name is UST, a Indian-based global provider of tech to digital platforms.

Lewis Scott (main picture, inset), CEO of Homely, says: “At such a crucial moment for the property market, this first round capital raise will allow Homely to help more people on their journey to homeownership.

“When it feels like buying a home, or qualifying for a mortgage, is moving further and further out of reach, Homely is committed to providing innovative solutions, underpinned by technology.”

View Full Article: Tech firm that helps landlords sell rented homes to sitting tenants secures first funding

REPORT: London rental stock shrinks by 41% as landlords quit sector

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London’s rental market is contracting dramatically as landlords exist the market, a new joint report by estate agency Savills and the London School of Economics has highlighted.

Its report, which included London Property Licencing on its advisory board, reveals a 41% reduction in the number of London properties available for private rent since the Covid-19 pandemic ended.

“London’s private rented sector, which provides homes for over one million households, is heavily reliant on private landlords,” says Abigail Davies, Director, Savills.

“Many have high levels of borrowing who find themselves at the sharp end of the turmoil in the mortgage market.”

The two groups which funded the report, Capital Letters and London Housing Directors’ Group, say the contraction in supply, along with the ongoing gap in the Local Housing Allowance and fast-rising rents, make Government intervention to prevent rising homelessness more important than ever.

The report highlights how the availability of large homes with four bedrooms declined the most (-46%) while overall asking rents increased by 20% since March 2020.

Broken

“This research is the latest evidence of how the capital’s broken housing market is worsening the unsustainable and increasingly unmanageable pressures we face in London,” says Cllr Darren Rodwell (pictured), London Councils’ Executive Member for Regeneration, Housing & Planning.

“A bad situation is now becoming disastrous. We’re seeing fast-rising private rents and reduced availability of rental properties against a backdrop of continuing cost-of-living pressures and London’s longstanding shortage of affordable housing.”

Sue Edmonds (pictured), Chief Executive of Capital Letters, adds: “This research makes stark reading, and it is further evidence that our homelessness system is breaking down. This is the worst it has been for 30 years.

“The main issue is supply – there simply aren’t enough homes, and the contraction of the private rented sector, alongside escalating rents, is a severe blow to those who rely on it.”

Read the report in full.

View Full Article: REPORT: London rental stock shrinks by 41% as landlords quit sector

Landlord wins praise for offering ‘only locals’ affordable property in town

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A landlord in the Kent seaside town of Whitstable has won plaudits after deciding to rent her rental property to local people, it has been reported.

Trish Neaves (main picture, inset), who has operated within the town as a landlord for 20 years, says she resisted her letting agents’ advice to convert the flat into an airbnb and has instead decided to rent it for £200 a month less than its market value of £1,300 and restrict applicants to those who hail from the area.

60-year-old Neaves, who is a barrister, told local newspaper the Kent Messenger that while the influx of London second home buyers and Airbnb renters in recent years to the fashionable hotspot had been good for local tourism businesses, it has made affordable rented homes scarce for locals.

“I went to lunch with a friend and her whole family has lived in Whitstable for years and she told me her children found it hard as the properties they would have rented are all Airbnbs or second homes,” she told the paper.#

“It seemed to me, as I have properties in Whitstable, it was important local people had the chance.

“I am conscious that this cost-of-living crisis has made a big difference to people, and if it’s a rent that I’m satisfied with and can help people, then I’m happy to do it.”

Neaves has gone much further than the Government, or local councils, have ever dared to go.

So far just Scotland and a handful of tourist town boroughs in England and Wales have raised council tax for second homes and Airbnbs, while the national Government only recently launched a consultation on proposals to bring in a national register of short-term lets and enable councils to use planning laws to stop landlords switching to Airbnbs.

Pic credit: Getty/Trish Neaves

View Full Article: Landlord wins praise for offering ‘only locals’ affordable property in town

Short term letting to business travellers?

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Hello, does anyone have any experience of letting their property for short-term lets (3 months – 12 months) to business travellers? I have a property which has been refurbed and is empty right now, but at some point in the future

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Landlords renting to illegal migrants face huge new fines

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Landlords face being put out of business with the government trebling the fines for those who rent a home to an illegal migrant.

The government says this will be the biggest shake up of civil penalties since 2014.

View Full Article: Landlords renting to illegal migrants face huge new fines

Sadiq Khan slammed over ‘well worn’ rent control calls

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Like a jack-in-the-box that keeps reappearing with an unwanted message, Assembly Members on the London Assembly are fed up with Mayor Sadiq Khan’s calls to bring in rent controls for the capital’s private rented sector.

They say he is distracting attention away from his own poor performance in the capital and he doesn’t have a plan for what to do with rent controls should he get them.

View Full Article: Sadiq Khan slammed over ‘well worn’ rent control calls

COMMENT: Government has got itself in a muddle over the rental market

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“Bidding wars, tenant CVs, queues outside properties – these phenomena have become common in the rental market across Britain.” So runs the editorial in this week’s Sunday Times.

According to Propertymark, the professional body representing estate and letting agents, there was a 49 per cent reduction in properties available to rent in March 2022, compared to March 2019. The UK average number of properties available to rent decreased from 30.4 to just 15.6 during the period, a clear indication of the loss of available rental space for people to live in.

During this same four-year period, 94 per cent of landlords removing their property from estate agents listings did so to sell. Only four per cent told Propertymark that it was to move to landlord self-management, while others said it was to move to short-term lets. Over half of rental properties sold in March this year alone did not return to the private rented market.

A Government that’s lost its way…

It’s a strong indication that the Government has lost its way, lost control of the property market to the detriment of tenants and buyers – it surely must be a major impediment to the conservatives in the run-up to a general election. The unpopularity with the public on this one issue is on a scale without precedent, and in my view was totally avoidable.

Tory policies have inflicted a great deal of pain on renters: rent rises have averaged just over 5 per cent in the 12 months to June this year, according to the Office for National Statis­tics (ONS). All indications are that rents in some parts of London could have increased into double figures over the same period. All this at a time when inflation is at its highest level for a generation, dramatically increasing the cost of living for renters and pushing up mortgage costs for landlords.

Rent squeeze

This “rent squeeze”, as the Times puts it, is the result of recent interest rate hikes by the bank of England and thereby higher mortgage costs, which landlords will do their best to pass on to tenants when their profits dwindle to zero or even into losses.

Interest rates are not the only cause of this rent squeeze: the dysfunction in the buy-to-let rental market started when George Osborne, the then outgoing Chancellor of Exchequer, introduced a fiscal policy in 2015, in conjunction with the Bank of England, aimed at cooling the buy-to-let market, which had seen phenomenal growth.

Financial crisis fears

This rapid growth of buy-to-let not only worried the Bank, fearing over-extended borrowers causing another 2008 style property and financial crash, it also resulted in a public perception of a growing cohort of multi-millionaire buy-to-let landlords becoming rich at the tenant’s expense. They were said to be buying up houses, preventing first time buyers entering the market. The media kicked up a storm and the Government gave in to this media pressure.

The Government relented with a 3 per cent stamp duty surcharge on second homes and buy-to-lets. It removed the 10 per cent depreciation allowance, and phased-in a reduction of mortgage interest relief over 4 years, to be replaced with a tax credit, increasing the exposure of rental income to taxation. All this achieved its aim – it did cool the buy-to let market.

Buy the old aphorism, “be careful what you wish for”, or the “law of unintended consequences” very much applies here: yes it may have punished those millionaire landlords, stopped them in their tracks. It may have cooled lending, especially when coupled with much stricter lending criteria, but the consequences – as warned incessantly by landlords – is an even greater punishment inflicted on tenants, many of them struggling working families and young people.

The current shortage of rental property is down to, in my view, these policies and the Government’s failure to encourage and assist the building of sufficient new housing in a country with net migration running into the hundreds of thousands.

Net migration

In 2022, according to ONS figures, net migration added over 600,000 more people to the UK population, that’s more people arriving long-term than leaving, and it’s equivalent to two towns the size of Newcastle. This represents an increase of just short of 120,000 more that the 2021 figure (488,000) and nearly double that of pre-pandemic levels, with the then net migration figure much lower at 333,000. The 2023 figure is likely to continue to be just as high again as in 2022.

A shift in strategy

One consequence of the Government’s squeeze on buy-to-let landlords has been the shift from long-term to short-term Airbnb style letting. The tech platform and others like it has transformed the way landlords can market and manage lettings on a short-term basis which, and under current tax rules, this is more profitable and attracts far less regulatory control.

However, continuing the “law of unintended consequences” theme, it has led to some locations, mainly seaside towns and large city centres, where fully one quarter of rentals are listed on Airbnb as short-tem lets, depleating the supply of long-term rentals for locals folks and transient workers.

The result is a back-lash now against short-term lets. Councils – and in particular the governments in Scotland and Wales – are now questioning why landlords should be given tax advantages by simply switching from conventional lets, which are classed as investments for tax purposes, to short-tern Airbnb holiday style lets, which are classed as businesses with more favourable tax treatment.

Build to rent to the rescue?

So the Conservatives, whose stated aim is to encourage more home ownership, have got themselves into a right royal muddle with property. Their idea that build-to-rent (BTR) by large institutions with professional management would come to the rescue of the declining buy-to-let provision, mostly provided by small-scale landlords, is unlikely to be sufficient to solve the problem. Institutional investors, certainly in the short-term, can build only a fraction of the housing required. In any event they only supply a particular segment of the rental market. To make sure these are profitable they go for premium housing aimed at young professionals and stable families.

According to the latest data from Savills, the last quarter of 2022 data shows the UK’s Build to Rent (BTR) stock now stands at nearly 80,000 completed homes, with a further 50,500 under construction. There’s a future pipeline of around 113,000 new homes, including those in the pre-application stage, which brings the total BTR stock at around a quarter million homes, still a drop in the ocean when compared to the just under 5 million privately rented dwellings in England alone.

Also, it would seem BTR is currently afflicted by the same problems as the rent of the house building market. In the current severe slow-down, where annualised building starts fell by around a quarter during the year to Q4, 2022, some house builders are struggling to survive.

In the US and in Europe, institutional landlords are much more common than in the UK. Here, the private rented sector has traditionally been pro­vided by small scale individual investor landlords. These are the people Osborne went after. Instead of encouraging a controlled expansion, he removed the attraction of buy-to-let, namely a safe investment with a steady yield and good capital growth. He dashed a 20-year growth record that had successfully taken up the slack when council housing was on a rapid decline.

Private money was being attracted to housing provision, but the Government, instead of encouraging the trend, wanted to reverse it, partly on the basis that with some tax incentives, institutional investors would create a more professional renting market, similar to those in Europe and the USA. But instead the market began to shrink, as these anti-landlord measures were introduced from 2017 onwards.

The UK’s rental stock as a consequences has failed to grow and keep pace with demand. The situation is now being exacerbated by first time buyers’ inability to get on the housing ladder because of the high interest rates now prevailing. Some people will be renting well into middle age the way things are at the moment.

The shortage of rentals and the hike in landlords’ mortgage costs are pushing up rents levels inexorably, adding to the pain of new and existing tenants. According to estate agent Hamptons, a typical buy-to-let investor, refinancing an interest-only 2.2 per cent two-year fixed mortgage at the present market rate of 6.9 per cent would need to raise the rent 45 per cent to cover the extra cost.

On top of this landlords are looking at the serious extra investment some of them will need to make to bring their properties up to the standard required to achieve an energy perform­ance certificate (EPC) grade “C” or above by 2028.

Rent controls

The left and the housing charities got their way: they wished to bash the “evil” buy-to-let landlords but what they got was a steeper housing crisis seriously affecting tenants. Scotland’s tenancy law reforms went a lot further that those in England with predictable results. First they tried to freeze rent levels and had to soften the policy to local area rent caps.

None of it has worked out well: tenants complain bitterly that land­lords are hiking rents aggressively when they take on new tenants, and landlords complain that the severe restrictions under Scottish renting laws are not worth the candle and threaten to sell or not to invest in any more properties. In England rent controls proposals constantly call for by London mayor Sadiq Khan have been rejected by both the Government and Labour.

In imbalanced market

Sky high rents indicate a market that lacks supply and competition. When prices are high in any market it sends out a signal to suppliers to enter, but when there is regulatory risk, when profits are so restricted that money can make a better and easier return elsewhere, landlords won’t invest.

In my view the Government needs to think seriously about providing a better incentive for landlords to invest in rental property, to ease their path so that private money can flow into the housing stock and relief the pressure on rents and the pain for tenants.

Re-thinking buy-to-let taxes

The only way to do that is to change the way rental income is taxed, and possibly remove the stamp duty surcharge. Demonising landlords has been a politically popular strategy, suiting the left leaning think tanks, housing charities and the popular media, but the results have been catastrophic for tenants.

The perfect storm of higher inflation, interest rates and mortgage repayments has resulted in a severe slowdown in house building, a shortage of housing of all kinds, and sky high rents. The Conservatives need to think deeply about this situation and do something about it quickly.

As the Sunday Times says:

“Being able to rent a home at a reasona­ble price, and have a realistic prospect of owning one, gives people a stake in soci­ety. The housing crisis poses immediate problems for the government, but it is ulti­mately a cross-party issue. Ignoring it is not an option if Britain is to have any kind of successful future.”

View Full Article: COMMENT: Government has got itself in a muddle over the rental market