NRLA chief rebuts claims that he ‘misled’ MPs about PRS shortages

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A Commons committee has confirmed that NRLA chief Ben Beadle did not mislead MPs when giving evidence about the diminishing supply of private rented housing.

An article in The Guardian had accused Beadle of making up stories about the state of the sector in a bid to persuade the government to scrap restrictions on mortgage tax relief. It said the landlord body was warning of landlords selling up due to punitive taxation and that Beadle had told the select committee into the PRS last September, “We are already seeing landlords and, critically, homes leave the sector…The exodus is well under way.”

It reported that he told an industry webinar last week: “Actually the truth is that while some landlords are leaving the sector, this sector is actually still increasing. That’s not terribly helpful to our argument to be honest with you. But in the context of cost of living and rising costs we have to tell that story and link the two.”

Red handed

Conservative MP Natalie Elphicke claimed the clip showed Beadle and the NRLA being “caught red-handed making up stories about a ‘shortage’ of rental stock so landlords can jack up rents and to scare politicians who should know better”.

According to the English Housing Survey, the number of private rented households rose in England by 177,000 from 2021 to 2022 – figures published since Beadle’s committee appearance, he insists. “It was to this that I was referring on the webinar. However, my comments did not provide the full context. The latest English Housing Survey data remains an outlier when compared to all empirical evidence and other key industry data.”

Following a meeting yesterday, the committee agreed that he had not misled them.

Beadle (main picture) adds: “Everything I told MPs was completely accurate based on the published data available at the time. The NRLA will continue campaigning for a sector that is fair to both responsible landlords and tenants.”

View Full Article: NRLA chief rebuts claims that he ‘misled’ MPs about PRS shortages

A year in review for agents: The PRS annual report 2022

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The Property Redress Scheme annual report 2022 has just been released and reflects on the past year in the property rental sector and we look at some of the major things on the horizon that property agents need to be prepared for in 2023.

The report covers a summary of what happened in the private rented sector in 2022 and how this has impacted the complaints raised, resolutions and memberships of the Property Redress Scheme. The PRS annual report 2022 also includes the results of the largest sentiment survey of the year, carried out across sector. Read the report here.

Key highlights from the report

• Membership numbers rose by six per cent
• Early resolutions awarded increased by 48% in 2022 to £353,053
• Over 2,000 complaints raised in 2022, an increase of 6.8 per cent
• Complaints were completed in less than 40 days in 2022, compared to 50 days in 2021

 “The Property Redress Scheme has grown for the eighth year in a row, increasing our membership by six per cent from 2021. As of 2022, we are now the largest redress scheme in the UK. This is a reflection on the recognition and reputation of the scheme and shows we are established and respected in the sector. Read the full report to find out more.”

Sean Hooker, Head of Redress at the Property Redress Scheme

Key highlights from the survey of over 3,000 agents and landlords

• 76% of agents feel the private rented sector is fit for purpose and 72% of landlords feel the same. Their main reasons for this are it provides a regular income, and the current regulation protects landlords
•  Both agents and landlords feel the biggest challenges facing the private rented sector are legislation (agents 25%, landlords 39%), rent payments (agents 24%, landlords 21%) and property maintenance (agents 17%, landlords 14%)
• Despite legislation being a big challenge, 83% of landlords are confident their compliant with current regulations
• 50% of agents feel very or quite supported by the Government and 24% feel neither supported or unsupported whereas 43% of landlords feel not very or not supported at all and 16% feel neither supported or unsupported
• Almost half (48%) of all landlords feel the current legislation hinders them due to too many complex regulations
• Almost an equal number of landlords are against (31%) as they are for (30%) tenants with pets in their property
• 80% of landlords envisage themselves still being a landlord in three years’ time

About the Property Redress Scheme

The Property Redress Scheme is now the largest letting agent redress scheme in the UK with over 17,200 members.

Our role is to provide an impartial service that considers consumer complaints about a variety of property related issues. The PRS have an expert team that:

• investigate fairly and listen to both sides, once the member has had the opportunity to resolve the complaint directly
• explain things clearly and let people know where they stand, initially trying to negotiate an early resolution
• give people our decision as quickly as possible, where early resolution was unsuccessful
• always meet people’s communication and accessibility needs

Join the PRS today

All agents can join the Property Redress Scheme, it is a simple and straightforward process. Simply complete the application form here and pay the appropriate annual subscription fee.

View Full Article: A year in review for agents: The PRS annual report 2022

TOM’s Ultimate Guide for landlords whose tenants can’t pay the rent

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More than half of landlords reported having lost rental income due to the pandemic and, as the cost of living crisis continues to bite, many more are worried about their tenant falling behind with the rent.

It’s vital that landlords know how to deal with rent arrears before they escalate. In this article, Tom Entwistle, a residential and commercial landlord since the 1970s and founder of LandlordZONE draws on his experience to offer tips for landlords whose tenants can’t pay the rent.

For more advice, read Total Landlord’s article, what to do if your tenant can’t pay the rent and falls into arrears, including videos from Mike Morgan of the Property Redress Scheme’s Tenancy Mediation Service, and evictions expert Paul Shamplina, founder of Landlord Action.

Tenants in arrears

A key skill for any successful landlord is having the ability to manage rent payments effectively. Maintaining your cash-flow – especially if you have a mortgage or mortgages to pay – is a vital part of your property management skill set, much needed to avoid you perhaps losing a property that you’ve worked hard to acquire.

Having missed or constantly receiving late rent payments from a tenant is an alarming prospect and very frustrating for any landlord. Rent arrears lead to a good deal of stress and sometimes sleepless nights for landlords.

But it’s something you need to learn to deal with in a professional and detached way if you are to maintain a good relationship with your paying customers – your tenants.

Getting angry solves nothing and can lead to more trouble. You need to work through a logical process to deal with the situation, one which treats your tenants with respect and is as helpful as possible in what is often a very difficult situation for your tenants.

Planning ahead

Everything you do in a landlord-tenant relationship should be planned and precise, planning for the worst case but hoping for the best. In my experience dealing with the average residential tenant means that 95 percent of them (19 out of 20) will pay their rent on time and look after your property as any good home should be looked after.

It’s the small percentage of tenants that cause you all the trouble, so better to do your best to avoid them in the first place. Do thorough vetting and selection, carry out a robust referencing process, take precautions like asking for a guarantor and taking out rent guarantee insurance.

These precautions, I would suggest, will be even more important when Section 21 is abolished under pending new legislation changes.

Standing orders – best thing since sliced bread!

I always insist on rent payments by standing order. I’ve found it is the best system ever to manage rent payments for residential as well as commercial tenants, for the small-scale landlord.

You know instantly when a rent payment has failed to arrive because standing orders are only cancelled for two reasons: there is not enough money in the tenant’s account or the tenant instructed the bank to stop it.

I’ve never accepted payments by cheque because it’s so hit and miss and stressful: the cheque’s late, is it the post? Has the tenant not sent one? How long should I wait to ask? When you do ask, invariably “it’s in the post” or “I’ve changed banks and I’m waiting for a new cheque book”, in fact every excuse under the sun. This game can go on for a long time.

So, with standing orders all you need to do is keep an eye on your bank balance online. You know exactly when the rent is due each month and if it does not appear you need to take immediate action.

Don’t be tempted to delay taking action or your tenant will think you are too relaxed about it. Start with a friendly phone call, email or just call round to ask your tenant why the non-payment?

Whatever the reason or excuse, always follow this up in writing and state the circumstances as a contemporaneous note in your tenancy’ diary. It might seem harsh but this could be the first step in the eviction process so documentary evidence is so important. Most evictions are due to rent arrears.

I have a “rent arrears letter” that I send out with a statement of rent payments already received and when the arrears started. I will re-send this on a regular basis until the arrears are cleared.

The letter contains information about how the tenant can seek financial help and advice, how we can talk about their problems and try to resolve them in the short term, and finally the severe consequences of falling behind with their rent.

If there’s a guarantor or rent guarantee insurance involved make sure you keep these parties in the loop, always send them copies of your letters and statements so they know in good time what they may be liable for, and they may then put some pressure on your tenants to comply.

Always communicate directly with your tenant if you can

Having had many instances of rent arrears or missed payments over the years I find that there’s often a genuine reason and one that can be sorted out with a quick discussion.

Perhaps there was a change of bank, a late wage payment or just a heavy spending month, and a cheque will make-up for the missed payment, but invariably a missed standing order is a sign of trouble, a struggle on the tenant’s part to pay.

I find that some tenants will cooperate to try and overcome their difficulties, but some – and I’m afraid to say a good number, will do their utmost to avoid you when they are struggling. They will fail to answer their phone, or respond to emails or answer the door.  They are either too embarrassed to face you or they want to mentally bury their money issues and hope they will go away.

If you find your tenant is willing to cooperate with you, and is willing to accept help when they are perhaps going through a temporary money problem, then you should try your best to accommodate them.

They may well otherwise be a good tenant, but in an energy crisis with high inflation and job insecurities they may need temporary help, like a rent holiday or a temporary reduction in rent, to be repaid over time.

Alternatively your tenant may be able to pay but has no intention of doing so. Or is continually paying late in dribs and drabs, which makes your life difficult keeping track of it all.

Not being able to communicate means that you are not able to offer help and therefore the situation will inevitably lead to you going for an eviction – no landlord can be expected to house tenants for free indefinitely.

Follow the correct procedure

For serious arrears the tenant needs to have missed at least two monthly rent payments. When a payment is missed I send (by post and email as well if you can) a rent arrears statement regularly showing the arrears as they build-up. This does three things: it keeps the tenant reminded of the arrears situation, it stops both parties losing track of the arrears position and it forms good evidence if you need to go to court.

How can mediation help with rent arrears?

Taking the legal route should be a last resort. If you can get some cooperation, mediation should be your first port of call if you’re having trouble reaching an agreement with your tenant yourself.

But at the same time, buy-to-let is a business and you can’t afford to allow someone to keep living in your property rent free.

When your tenant is in two to three months’ rent arrears, and it appears they either can’t afford or simply won’t make their rent payments, then you may have to make the difficult decision to serve an eviction notice.

Eviction should be a last resort but if you need to go down this route make sure your property is in good order and you have responded to any repairs requests.

You also need to be sure you have complied with the necessary prescribed actions such as having a current gas and electrical check certificate, carried out right-to-rent checks and all the appropriate notices have been served, especially when using Section 21.

The Section 21 notice is a two months’ notice normally served when rent arrears start, whereas a Section 8 notice is a two  weeks’ notice for rent arrears and the arrears should be for more than two months.

Section 21 is only available if the tenancy is a periodic one, where the fixed term has ended. If you are lucky the tenant may realise they  can’t afford to stay and leave voluntarily.

Arrears in commercial (business) tenancies

In my opinion rent arrears in a business tenancy are similar to a residential tenancy in that the first priority is to help your tenant through any short-term difficulty, but the handling of this calls for a more nuanced approach.

Again, as soon as the arrears start you should establish contact to find out what the difficulty is. A short-term cash flow issue can be accommodated perhaps with a temporary rent re-scheduling, a rent holiday or reduction, to be made up over time, and again you need to send regular statements to clock the position at the start and as the arrears build.

It may be possible to help a commercial tenant out of their difficulties by suggesting a sub-letting of part of the premises or an assignment of the lease to another tenant. The RICS Code for Leasing Business Premises offers guidance here.

Whereas a tenant in persistent arrears in a residential tenancy is better out of the property, from the landlord’s point of view, this is not necessarily the case with a commercial tenant.

When a commercial tenant is evicted a lot of the tenant’s costs fall back onto the landlord: full business rates in most situations become payable after three months, insurance premiums (which often double for a vacant unit) can no longer be charged to the tenant, security issues arise with vacant units, and the landlord has to take care of standing charges for all services: gas, electricity, telephone, internet. They all fall on the landlord, along with a good deal of administration time.

The lease term and non-payment

The tenant is tied into a lease for its duration, and is responsible for all the costs regardless of paying the rent. There are often advantages, given that commercial units can take some time to re-let, especially in difficult economic times, to try to help the tenant through the difficulties and it is better to have the tenant in the premises even if they don’t pay rent.

With a commercial tenant who won’t cooperate and won’t pay there are two possible courses of action before resorting to forfeiture – the procedure for evicting a commercial tenant.

One is to take the tenant to the county court (small claims) for the debt of rent arrears, and two is to appoint bailiffs who will visit distress for rent (Distress for Rent Act 1737) on goods if the rent is not forthcoming.

Bailiffs must also follow more recent legislation known as Commercial rent arrears recovery (CRAR). Often one or other of these two courses of action are enough to shock the tenant into keeping up the rent payments in future. 

A key point about dealing with rent arrears is that you need to let your tenant know that you take the matter extremely seriously. You do this by taking action as soon as a payment is missed.

Don’t ignore it and hope the problem will go away, or you will allow arrears to build up into enormous losses, as some landlords do.

 [CF3]https://www.youtube.com/watch?v=7DN4kxlnHic

View Full Article: TOM’s Ultimate Guide for landlords whose tenants can’t pay the rent

RICS says rents will rise as landlords leave the PRS

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Despite rising rents and continued demand from tenants, there will be more landlords leaving the private rented sector, a new survey reveals.

The latest RICS survey found that tenant demand has increased by 32% from January.

However

View Full Article: RICS says rents will rise as landlords leave the PRS

Legal clarity on flat to flat water leaks?

admin    Uncategorized     agents

Hello, There was a leak from one flat down to several other flats caused by a damaged waste pipe from the sink. The flats are 20 years old.

Once discovered, the damaged pipe was repaired straight away. There has been no malicious or negligence by the leaseholder from where the leak came from.

View Full Article: Legal clarity on flat to flat water leaks?

Landlord insurance for flats?

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Hi, I own a few flats that are in blocks, they are all unfurnished (so I have no contents) and the buildings insurance is provided for the block via the managing agents/service charge.

There doesn’t appear to be any products out there that will provide ‘landlord cover’

View Full Article: Landlord insurance for flats?

Major council launches mould and damp crackdown in PRS including fines

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Hackney Council has launched a major enforcement drive against private landlords who ignore complaints about serious damp and mould, signalling an unofficial application of ‘Awaab’s Law‘ for landlords.

It has agreed a 25% increase in funding (£400,000) a year for the authority’s private sector enforcement team, focusing on expanding its capacity and ensuring private landlords meet their duty to tackle damp and mould and provide a good, safe home to tenants.

Rogue landlords will face hefty fines and legal action if they don’t comply.

Since 1st December, the council has responded to more than 70 reports of damp and mould in privately rented homes, which each report acted on within five days and enforcement notices were served where the landlords failed to take steps to resolve the issue.

Awaab Ishak

This announcement is the latest step in Hackney’s response to the case of Awaab Ishak, a two-year-old who died following prolonged exposure to mould in his family home in Rochdale.

It follows new council plans to tackle damp and mould in its own housing stock, including a five-day turnaround to address all reported damp and mould issues and a new next working day repair service to respond to reports of leaks.

The investment is also the latest boost for the council’s #BetterRenting campaign which is working for a better system for the more than 30,000 private renters in Hackney by supporting tenants, challenging government and tackling rogue landlords.

The borough already hands out the third largest fines to landlords in the capital, according to geospatial technology company Kamma, with an average of £11,250.

Read more: the ultimate guide to inspecting your property.

View Full Article: Major council launches mould and damp crackdown in PRS including fines

Property firm boss banned for 12 years after falsely claiming £45,000 Covid loan

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A property investor who falsely claimed a £45,000 Bounce Back Loan before dissolving his firm has been banned by the Insolvency Service.

Simon Gorgin, 63, from Kings Langley, was sole director of P3 Estates Ltd until it was dissolved in December 2021.

In May 2020, he stated on the loan application that the firm’s turnover in 2019 had been £180,000.

However, investigators discovered that P3 Estate Ltd had never traded, and had not been trading at the time of the loan application and so wasn’t entitled to receive any money.

They also found that three days after the loan arrived in the company’s account, Gorgin further breached the rules of the scheme by transferring the full £45,000 to his own bank account.

Strike off

Gorgin, who has other business interests in the creative sector, also failed to notify the bank from which he had borrowed the money that he had applied to strike off the company in April 2021.

By July of the same year P3 Estates still owed the full amount of the loan, prompting an investigation by the Insolvency Service.

He has now been banned for 12 years, which prevents him from directly or indirectly becoming involved in the promotion, formation or management of a company, without the permission of the court. A compensation order is being recommended to recover the money.

Abused

Peter Smith, deputy head of dissolved company investigations, says Gorgin abused the scheme and took taxpayers’ money at a time when many businesses were in genuine need.

“His lengthy ban should stand as a warning that we will take action against directors who abuse government support schemes,” he adds.

View Full Article: Property firm boss banned for 12 years after falsely claiming £45,000 Covid loan

Buy-for-Uni: How to be a student student landlord

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It’s that time of year when students will be looking to sort out accommodation for the upcoming year, so what better time to learn more about our Buy-for-Uni proposition?

A Buy-for-Uni mortgage allows students to purchase a property local to their university

View Full Article: Buy-for-Uni: How to be a student student landlord

Retro-fitting buildings for energy efficiency – is it worth it?

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Refurbishing, or in the jargon – retrofitting – older commercial and residential buildings, according to the Government, is desirable and necessary, given that energy efficiency standards that will need to be met under the Government’s legal commitment to net zero by 2050.

But is this kind of refurbishment economically viable in today’s straightened times; UK businesses are operating in a low grow, high tax economy that’s likely to be years in recovery? Residential landlords are under pressure with rising mortgage rates and other costs, a punishing tax regime and ever increasing regulation.

Many small-scale buy-to-let investors are weighing the economics of doing this right now. Many single lets are of the older property stock types, terrace properties with solid walls which present expensive up-grade costs, not to mention the hassle involved if it’s under a long-term tenancy.

The environmental cost

With energy consumption and costs increasing across the globe, older commercial and residential buildings are said to be responsible for consuming a large portion of the nation’s energy – they account for up to 20 per cent of carbon emissions in the UK and represent a higher than necessary amount of energy consumption.

Cutting pollution and saving energy is the need of the hour, but just how cost effective is investing in an environmentally sound refurbishment (retrofitting) project to the average commercial or residential large building owner?

Commercial buildings

Commercial building owners often struggle to see the evidence that these outlays will generate their desired returns, but that perception is beginning to change says property international property agents JLL.

Traditionally, owners see improvements in the efficiency of a building on a years-return basis – if the return period is short enough they will do it. The problem is that a simple cash return break-even analysis, looking only at operating costs, acts as a barrier to investment judged simply over the short-term.

Retrofitting investments must be viewed in a different context says JLL: they may not be self-funding on a purely operational cash flow basis, but other long-term benefits will ensue – the old rules for evaluating these projects must change, that’s the argument being put forward by several recent studies as well.

The return on sustainability investments is often undervalued, says JLL. Building owners need to look beyond operating costs to assess the impact on a building’s overall value, taking a longer term view.

JLL gives the example of a building worth £120 million in today’s market and needs a £18 million (15 per cent) upgrade.

That sort of investment may never be fully recovered on an operating-cost break-even basis, but tenant demand for low-carbon buildings is accelerating apace: there’s a big risk that a building’s value will fall dramatically if it fails to meet future tenants’ needs and the Government’s low-carbon targets.

Building will become unlettable

It means that older buildings throughout the globe that cannot meet low-carbon targets could become unsaleable and unlettable. Whereas low-carbon rental space in the right locations will likely earn substantial premiums when they benefit from efficient and tasteful retrofit conversions.

This risk-versus-value spread is beginning to show in multiple markets around the globe, London being a prime example. JLL predicts there being as significant shortage of commercial spaces with the right low-carbon footprints by 2025. This, they say, is down to the number of companies with net zero commitments, compared with the retrofit pipeline.

The supply simply won’t meet the demand in the future. “Retrofitting will contribute to delivering on that growing demand and driving value from changes to valuation fundamentals including rents, voids and operating costs,” says JLL.

“We consistently see these results in practice. A tenfold increase in mechanical, electrical and plumbing engineering (MEP) related capital costs to decarbonize prime office space in London are often more than offset by improvements in rent, reduced void periods and lower exit yield discounts. The result is that implementing a zero-carbon strategy is accretive – especially where some significant works are already planned.

“As companies continue to take action on decarbonizing their businesses, building owners who wait for greater certainty or regulation will fall behind the demand curve and face valuation risks. The reality is sustainability-minded companies will vacate buildings if owners don’t invest in retrofitting them. And we’ll see more pressure from that every year.”

80% of office buildings which exist today will still be in-use in 2050, says JLL

What about vintage buildings?

According to a recent report commissioned by the National Trust, Historic England, the Crown Estate and property companies Peabody and Grosvenor, retrofitting the UK’s historic buildings would support 290,000 jobs and boost the UK economy by £35 billion, while at the same time meeting the Government’s energy efficiency targets by slashing Britain’s carbon emissions.

Improving the energy efficiency of these historic buildings – those built before 1919 – both commercial and residential, would reduce the carbon emissions from all of the UK’s buildings by 5% per year; it would make these older buildings, homes and workplaces warmer to work in and live in and much cheaper to run.

Heritage and property groups have outlined a plan to boost energy efficiency at historical sites to create jobs, cut emissions and meet net-zero targets. Retrofitting the UK’s historical buildings – from Georgian town houses to the mills and factories that kickstarted the Industrial Revolution – could, says the report, generate £35bn of economic output per year. It would also result in additional skills training, create thousands of extra jobs and skills, and it would help achieve the Government’s climate change targets.

Just under 25 per cent of all UK houses, around 6 million of them, are pre 1919, and around 30 per cent of the commercial property stock in the UK is also in this vintage category. That’s around 600,000 commercial buildings. Property is responsible for around 20 per cent of the nation’s greenhouse gas emissions, and these older buildings are a significant proportion of that.

A bigger challenge

Retrofitting vintage buildings represents a bigger challenge than the same process in more modern buildings, but ensuring their insulation, windows and heating systems are more energy efficient will lower emissions and prolong the building’s lifespan.

Doing this avoids the wasted carbon emissions when a building is demolished and re-built from scratch. It avoids the large amount of emissions emitted during the site clearance and making the building materials such as cement and steel production necessary for construction.

The housing association Peabody, the crown estate and Grosvenor, the Duke of Westminster’s property firm, are arguing that a national retrofitting campaign for older buildings would result in the extra £35bn of economic output annually benefiting many industries along the way.

An example cited is Peabody Avenue in Pimlico in London where two terraces of staircase-access flats built in 1876 was used as a pilot project, an experiment to understand how to sensitively retrofit a set of heritage buildings.

Another example is the Grade II-listed Canada House in Manchester retrofit now in progress. Built in 1909 and owned by Grosvenor, the programme is to improve the building’s environmental performance.

Historic England has a record of restoring listed buildings, for example the 18th-century Shrewsbury Flaxmill Maltings.

Traditional skills needed in these refurbishments, such as lime plastering, are taught at workshops at the Heritage Skills Centre in Oxfordshire.

The report estimates there will be 105,000 new workers needed in this work, including plumbers, electricians, carpenters and scaffolders over a period of three decades if net zero targets are to be met – 14,500 more electricians and 14,300 plumbers will be required.

The organisations involved in this project want the government to make the apprenticeship levy more flexible, allowing unspent funds to be channelled into training people in heritage retrofit.

View Full Article: Retro-fitting buildings for energy efficiency – is it worth it?