Soaring energy costs prompt dangerous meter tampering requests

admin    Uncategorized     agents

A shocking survey reveals that 43% of electricians and gas engineers have been asked by clients – including tenants – to illegally tamper with their electricity or gas meters to reduce their energy bills.

The findings from Direct Line business insurance highlight that as energy prices continue to rise

View Full Article: Soaring energy costs prompt dangerous meter tampering requests

Concerns over loan defaults as office and retail tenants fail to renew leases

admin    Uncategorized     agents

Persistent home working is affecting office occupancy rates and is leading commercial tenants to fail to renew their office leases.

Ghost city streets have emerged post pandemic as occupancy rates hit a new low. In the UK it has been reported that these office space rates could now be as low as 36 per cent in some locations compared with an average level of above 80 per cent pre pandemic.

The Ifo Institute for Economic Research, a Munich-based research institution, one of Germany’s largest economic think-tanks, reports that on any given day, 12.3 per cent of workplaces remain unused because staff working from home.

In the US some lenders expect to take losses on real estate loans following warnings that the commercial property asset class is the sector to experience a crisis after the recent turmoil in the US regional banking industry.

Quantitative Easing

Since the start of the global financial crisis in 2008, central banks around the world continued to roll out quantitative easing (QE) measures which has resulted in dramatic expansions of their balance sheets.

The Covid pandemic further accelerated this trend as an essential monetary policy tool. The pandemic emergency purchases programmes aimed at softening the economic shocks led to government purchases of unlimited amounts of treasury and mortgage-backed securities.

Interest rates were cut to near zero pushing up asset prices to unprecedented levels, but as bank and central government unwind QE, raise taxes and attempt to contain high inflation levels by raising interest rates, all this is increasingly putting pressure on commercial borrowers and lenders.

Leases not renewed?

The problem for commercial property landlords is that vacancy rates are increasing as leases expire and fail to be renewed. There are many businesses operating with a considerable amount of spare capacity, office and retail space. Many commercial landlords and will either not be renewing their leases or will renew taking less space.

The persistent trend for office workers to work from home means that many businesses with spare office space will not be renewing their leases because their employees continue to work from home. Studies show that the trend has only partly been reversed since the pandemic, and experts are predicting that working from home will remain a feature of future office life.

A similar issue is facing many commercial retail stores in UK high streets. Many shops are facing dramatic declines in values brought on by a lack of tenant demand which is brought about by the rising trend for online shopping.

All this is making banks nervous. Landlords may be looking to restructure loans as their income streams dry up, when tenants fail to renew, and new tenants are hard to come by. In the worst case for bank lenders, landlords will simply fold leaving the lenders shouldering large losses.

In the US the commercial property market has already reached a point where some banks have been offering to sell off commercial property their loans at a big discount, even when their landlord borrowers are currently keeping up with their repayments – the banks are anticipating problems ahead and want to reduce their exposure to commercial property debt.

CoStar, a commercial property research company, thinks that a commercial real estate loan issue is looming, warning that commercial real estate could be the next crisis point in the US following the recent regional banking crisis there.

Oversupply

An oversupply of commercial buildings in some locations will inevitably lead to certain amount of re-purposing. Converted commercial buildings to residential and other uses is a trend that’s been ongoing for some time, and there are tax and planning incentives to do this.

It needs considerable new investment to implement conversions to be successful, and even when the buildings continue in office or retail use, they may need a considerable amount of refurbishment to meet the new energy efficiency standards, particularly with older buildings.

Some down town areas are struggling because of a lack of footfall, a lack of people traffic when workers are working from. This makes it all the more important that some buildings in these locations are converted to residential use to increase this all important foot traffic.

View Full Article: Concerns over loan defaults as office and retail tenants fail to renew leases

BREAKING: Welsh Government is ‘looking at rent control options’

admin    Uncategorized     agents

The Welsh Government has launched a consultation on ‘fair rents and adequate housing’ within which housing minister Julie James (main picture) reveals she is considering rent controls.

The consultation asks for the views of those within the private rented sector on a wide range of subjects linked to affordability, supply and demand and what constitutes ‘fair rent’.

But it is the section on rent controls that will alarm many landlords, who had thought the Welsh government had rejected rent controls following a debate in the Senedd during October 2022.

Now, James says: “I am committed to using all the levers we have to ensure we maintain a viable private rented sector here in Wales, offering high quality and choice of accommodation, where landlords have confidence to invest in making improvements and tenants have greater certainty that longer term costs of moving into or staying in a rental property will be affordable,” says James.

Rent control options

The consultation explores four potential rent control measures including a ceiling or freeze; limiting annual rent rises to pre-agreed percentages and only allowing rent rises when a tenant moves out and the property is advertised afresh.

Welsh landlords could also face rent restrictions based on limits to yield using a formula, and a ‘costs plus’ model.

But all this is up for debate and the NRLA is urging landlords with properties in Wales to get involved in the consultation, which follows an earlier Green Paper.

Ben Beadle (pictured), Chief Executive of the National Residential Landlords Association, says: “Let’s be clear, rent controls would serve only to decimate the sector further and would be a disaster for tenants, when so many are already struggling to find a place to rent.

“The Minister herself diagnosed the issues when she rightly rejected calls for a rent freeze before Christmas.

“The same reasons apply now. We all want to see more homes available to rent but adopting the tried and failed ideology of rent controls is not the way to do it.

“The best way is to introduce pro-growth measures to increase housing supply that will reduce costs for renters.

“Now is the time for landlords to get involved and for the Welsh Government listen carefully to the views of those providing much needed homes.”

To submit your views, visit the consultation website.

View Full Article: BREAKING: Welsh Government is ‘looking at rent control options’

Airbnb to give rental income data to HMRC, short lets landlords warned

admin    Uncategorized     agents

Airbnb is to share data with the taxman on its hosts’ earnings going as far back as the 2017-18 financial year, a new warning on its website reveals.

The information will help HMRC identify those making money from letting their properties without declaring it, who then face criminal prosecution and tough penalties of up to 30% of the tax owed.

The Treasury has previously said that more than half of people using ‘sharing sites’ did not think they had to pay tax on this income.

However, anyone renting properties on Airbnb can only make up to £1,000 a year before tax, which is protected by the ‘trading allowance’ while any profits above this threshold must be declared.

Taxpayers who have not disclosed their income are being encouraged to do so via HMRC’s longstanding Let Property Campaign, which would reduce the penalty.

Tax investigation

Richard Morley, a partner at accountancy firm HW Fisher, told The Telegraph that if HMRC obtains evidence that tax has been unpaid in a previous year, the tax authority can open an investigation to obtain information going back up to 20 years under so-called ‘discovery laws’.

An HMRC spokesman says: “This is routine activity – each year we send out thousands of reminder letters on various areas of tax. We believe our customers want to pay the right amount of tax and by working with online rental platforms, as well as issuing these reminders, we’re taking steps to help make it as easy as possible for people to get their tax right.”

Holiday home owners will be forced to obtain planning permission to let their properties under government plans expected to come into force later this year. The government is also holding a further consultation on a new registration scheme for short-term lets.

Read the LandlordZONE Forum discussion on the subject.

Read the Airbnb warning in full.

View Full Article: Airbnb to give rental income data to HMRC, short lets landlords warned

BLOG: Ministers MUST reconsider periodic tenancy plans for students

admin    Uncategorized     agents

Last year saw worrying housing shortages in a number of university cities in the UK. In Leeds we were turning away larger than usual numbers of students at the back end of the summer as there were simply no rooms available.

Even before the proposed changes under the Renters Reform Bill, accommodation portal StuRents predicted that there would be a national shortfall of 450,000 student bedspaces by 2025.

Currently, most students sign a fixed 12-month contract for a full academic year and move in over the summer.

Students like the security of a fixed agreement, as do landlords; it’s hard to re-fill a large student house half-way through the year with professionals or families.

In addition, Article 4 planning restrictions in many cities could prevent a landlord re-letting to students in the future if voids are backfilled with families or couples, as this could be seen as a change of use class.

Students secure accommodation well in advance of the next academic year as both tenants and landlords have a pre-determined end date when properties will become available again.

By prohibiting fixed tenancies, student tenants would only need to give a month’s notice and could vacate at any point during the year.

This indefinite leave to remain means there is no guarantee that the property will become vacant for the following year, making it impossible for landlords (and prospective new tenants) to enter into a new tenancy agreement for the next academic year.

Massive demand

Leeds has about 37,000 students living in the city and there’s a massive demand for housing as the universities, especially the University of Leeds, continue to grow.

In Leeds, shared student HMOs still provide the bulk of supply, despite Article 4 regulations curbing further expansion. This essentially means that bar the planning department having a complete change of heart, there’s no likelihood of student HMO housing numbers increasing.

The current drafting of the Bill gives an exemption for Purpose Built Accommodation (PBSA) but not for the typical student house-shares.

There is nothing wrong with PBSA – some of the accommodation is excellent – but it’s expensive and dilutes the student life-experience of proper communal living if it accommodates students for the full duration of a university education.

The number of PBSA bedspaces are growing, but not by enough to match demand. Many of the new blocks are also targeted at international students, and while we’ve seen student HMO rents in Leeds increase by around 15% in the last 12 months, PBSA rents in Leeds are on average still £100 a week more expensive than HMOs. For many students there’s a real affordability issue.

Real issues

With supply and demand very delicately poised, Leeds is a city where – should student landlords exit if fixed tenancies are abolished – there are likely to be real issues for students in finding houses. There just isn’t the capacity to pick up the slack if landlords leave.

University applications are down by around 2% for 2023 (compared to the post-Covid spike), but that is unlikely to provide enough breathing space.

The student landlords in Leeds we have spoken to are certainly twitchy, but I think most are waiting to see if amendments are made before they decide what to do.

In Scotland, Section 21 has already been scrapped and large numbers of landlords have left the student market. In cities like Edinburgh, students are couch-surfing, commuting from other cities, or simply cancelling courses.

Alongside landlord and university groups (including the University of Leeds) we have been lobbying for all student tenancies to be exempt, not just PBSA. It’s not too late to avert a crisis, and there are noises coming out of Westminster that this is at least being considered. Fingers crossed that common sense prevails.

• Sugarhouse Properties has partnered with Leeds RAG – the Leeds University Union’s official fundraising society, to sponsor and participate in this year’s RAG week culminating in a charity abseil down the side of the university’s historic Michael Sadler Building. To donate or learn more about Leeds RAG and the charities it supports, go to https://engage.luu.org.uk/groups/VBD/leeds-rag

Richard Napier (main picture) is director of Sugarhouse Properties, a student and professional independent letting agency in Leeds.

View Full Article: BLOG: Ministers MUST reconsider periodic tenancy plans for students

NEW: Property educators urged to join reform group’s first national summit

admin    Uncategorized     agents

Property educators are being urged to collaborate, learn, and shape the future of property education at The Property Investors Bureau Property Educators Summit.

The invitation-only industry event aims to improve standards, foster collaboration, and add value to their business by providing a neutral environment to engage in discussions, share insights, and explore innovative approaches to property education.

Attendees can join three industry workshops that cover key topics relevant to the property education sector: Discover the Power of Strategic Collaborations: Unlock Your Business Potential, presented by Hanif Khan, angel investor and strategy and partnership specialist; Discover the Keys to Legally Protecting Yourself and Your Valued Customers! presented by David Smith (pictured), partner in JMW Solicitors; and The Future of the Property Investment Industry: Exploring the Metaverse and AI, presented by Daniel Colaianni, CEO of AIXR.

Attendees can also take part in a Property Educators Town Hall event, facilitated by Cyril Thomas, Property Investors Bureau chairman.

This event will provide a platform for property educators to connect with industry leaders, engage in stimulating discussions, and build a supportive community.

“The Property Educators Summit 2023 is a pivotal event that brings together the brightest minds in property education,” says Thomas (pictured).

“We believe that by fostering collaboration and encouraging innovative thinking, we can shape the future of property education and elevate industry standards to new heights.”

Tickets for the summit – at the luxury Biltmore Hotel in London on 14th July – cost £299 +VAT for Property Education Accreditation Scheme (PEAS) members and £499 +VAT for non-members. Non-members must apply for their PEAS accreditation and will then receive a 25% discount on their ticket price. Apply for PEAS accreditation here.

For tickets call 01206 700 123, email info@pibuk.org or visit https://pibuk.org/property-educators-summit

LandlordZONE backs the PEAS initiative and is a member of its ‘social council’. PEAS was set up to help reform and reshape the property educators sector, and help investors looking for training to find ‘the good guys’.

View Full Article: NEW: Property educators urged to join reform group’s first national summit

Renting to a prospective purchaser?

admin    Uncategorized     agents

Hi all, I am in the process of selling my mother’s house, which is empty and have had a prospective buyer since March.

However, there have been some problems regarding the sale and this has caused the transaction to take much longer than usual and may still take another 3 to 4 months for completion.

View Full Article: Renting to a prospective purchaser?

Illegal evictions increasing ‘dramatically’ says leading tenancy group

admin    Uncategorized     agents

Illegal evictions and harassment by rogue landlords are increasing as tenants struggle to pay their rent and some landlords resort to criminal means to remove tenants as the court system falters and some landlords seek to exploit soaring rents, according to Safer Renting.

Figures compiled by the charity from sources including Citizens Advice, Shelter, and local authorities show there were more than 8,000 instances of illegal eviction or harassment during 2022 – an increase on 7,800 cases in 2021 and 6,900 cases in 2020. It says figures are likely to go up again this year.

Safer Renting – a tenancy relations service operating in seven London boroughs – estimates that many more cases go unreported and believes that too often, the police side with the landlord or treat it as a civil dispute, while councils rarely take action because they have lost so many specialist tenancy-relations officers during austerity.

“More data needs to be collected so that there is evidence behind the arguments,” a spokesman tells LandlordZONE, “while the penalties for breaching the law are not high enough.”

DIY evictions

The spokesperson adds that the organisatoin supports the proposed landlord register but that in the meantime, while Section 21 remains and the court system is backed up with cases, it would expect to see an increase in landlords resorting to DIY evictions.

Safer Renting also points to the spate of criminal landlords increasingly turning to private security companies to get tenants to leave their homes without a court order.

“In the past, criminal landlords may have sent heavies to throw tenants out, but this is the first time in 33 years of working in the private rented sector that I’ve seen fake bailiffs kitted out with stab vests, radios and handcuffs,” co-founder Ben Reeve-Lewis (pictured) tells The Guardian. “Some of them even have vans with police-like livery on the side.”

Read more about evictions.

View Full Article: Illegal evictions increasing ‘dramatically’ says leading tenancy group

AGENT: London rental market to be ‘most competitive ever’ this summer

admin    Uncategorized     agents

Prospective tenants flooding into London this summer – along with the continued shrinkage in property numbers – is set to create one of the most competitive rental markets ever seen.

May bank holiday is when many 12-month and 18-month tenancies come to an end, explains Adam Jennings (main picture), regional lettings director for Chestertons’ southwest London area.

He says this time of year also heralds an increase in short-term summer rentals, when students finish exams and begin searching for somewhere to live, and companies start relocating staff to so that children can be ready for the new school term.

Far fewer

“With many landlords having sold their investments over the past few years, and many experienced tenants negotiating in order to extend their tenancies to three years or more, there will be far fewer properties available for all of these new tenants,” he says.

“This will create one of the most competitive markets that we’ve seen and is likely to nudge prices up further.”

Jennings expects there will be about 10% more properties coming onto the market in June, but this will be dwarfed by the number of tenants looking to move.

Uplift

Last year, Chestertons registered 23% more tenants in June compared to May and is expecting a similar uplift this year.

As a result, rents, which have been flattening out since last autumn, could rise by as much as 15-20% over the next few months, which means now is an ideal time for landlords to list their property, he adds.

Landlords with properties in central London saw the highest levels of tenant demand across England and Wales in the last quarter of 2022. Earlier this year, Foxtons reported that 2022 had 32% fewer listings in the capital than 2021 while demand remained high, finishing the year 14% higher.

Read more about rent rises.

View Full Article: AGENT: London rental market to be ‘most competitive ever’ this summer

LAW: Agent faces £10,000 bill after licencing fine appeal rejected

admin    Uncategorized     agents

A managing agent who failed to licence a property has had his appeal thrown out by a First Tier Property Tribunal.

Taren Lamba tried to convince the judge that he was not in control of the property in Kenwood Road, London (main picture) by insisting that all he did was take in the rents on behalf of his company Smart Move and then pass them onto the freeholder landlord, making an annual charge.

The tribunal heard that Enfield Council had fined him £10,000 after an inspection in December 2021 found the house was occupied by a tenant and family.

Enforcement officers discovered defective front and rear doors as well as no valid licence, despite a selective licence scheme having been introduced three months earlier.

At the hearing, Lamba also argued that the financial penalty was too high and that he hadn’t received several items of correspondence from the council.

Those items he received he had either referred to the freeholder or responded directly to them.

Enfield Council said its scheme was widely publicised to landlords, managing and letting agents within the borough before its introduction and that information was publicised on the authority’s website. 

Failure

The judge ruled that Lamba’s failure to submit any evidence of compliance with the licensing scheme clearly hindered his case and that it was clear he had control of the property because he received the rack rent. The tribunal added: “We consider that the amount set by the respondent in the sum of £10,000 to be a reasonable amount for an offence of this type, since the local authority scored the matrix with care and took into consideration the requirements of their explicit scheme.”

Read the decision in full.

Read more about property licencing. 

View Full Article: LAW: Agent faces £10,000 bill after licencing fine appeal rejected