Can we move into our HMO?

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My wife and I were wondering if we moved into our HMO, by not taking in a new group of students and paying the HMO mortgage off with the sale of our residential property and using what was the HMO as our new main residence?

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Don’t give away 50% of your profits

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A very popular strategy with many property investors is the concept of Joint Ventures, particularly when you have run out of your own money.

You find a great property deal and someone else (who maybe does not have the time

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EXCLUSIVE: Landlords fight ‘ridiculous’ plans to widen HMO licensing in Portsmouth

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Portsmouth Council has launched a consultation into licensing thousands more HMOs across the city.

Its current scheme already covers 1,200 larger HMOs but it plans to extend this to an estimated 4,800 three- and four-bed houses – figures that Portsmouth and District Private Landlord Association dispute.

Chairman Martin Silman (pictured) tells LandlordZONE: “The council only found 3,000 HMOs when they had additional and mandatory licensing between 2013 and 2018, and we know many have disappeared since then, so to suggest there are 2,000 more now than then is ridiculous.”

Smaller shared homes were included in mandatory licensing from 2013 to 2018 but only within certain parts of the city, while the new proposal covers the whole of Portsmouth.

The local landlord group believes the authority is using the exercise to increase the standards required for HMOs, and that this could backfire.

“Portsmouth already asks for most communal space per person in the country, now they are adding minimum kitchen widths and other strange requirements,” says Silman.

“The sad news is that this will drive a lot of small HMOs out of the market which will push up rents for all and create homelessness.”

He adds: “We will fight it vociferously but unless there is a major change of political views, it will happen anyway.”

No justification

But the council believes there is no justification for targeting specific areas of the city and its report explains: “We also believe that having different requirements in certain areas would cause confusion to landlords and tenants. It may also put undue pressure on neighbouring wards where rogue operators may be displaced.”

Last year, LandlordZONE reported that despite heralding its current licensing scheme’s success, it had fined just seven landlords and agents in 2020.

A final decision is expected to be made in the autumn, with the first five-year licences – costing £855 – potentially issued in spring 2023. The consultation is open for comments until 31st July at www.portsmouth.gov.uk/HMOLicensing.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – EXCLUSIVE: Landlords fight ‘ridiculous’ plans to widen HMO licensing in Portsmouth | LandlordZONE.

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Landlord 1 – Shelter Nil

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I had a very large and aggressive tenant who was in rent arrears. For the 11 years of his occupation, he was regularly behind with the top-up to his housing benefit and I would periodically have to ask for back payments.

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Property passports to help landlords prove their homes are compliant

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The NRLA are calling for new property passports to help landlords prove their homes are compliant and tenants identify decent and safe housing.

Under plans devised by the National Residential Landlords Association (NRLA), such passports would certify that a property met all legal standards.

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‘Landlords cannot rely on agents to tell them about licensing’ – judge

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A landlord who blamed his letting agent for mistakenly telling him his property wasn’t an HMO has been slapped with a £19,350 Rent Repayment Order.

Joshua Conway sought advice from high street agent Elli G Estates about his property in Shirehall Close, Barnet (pictured), where four former tenants shared three bedrooms, a kitchen and a bathroom between September 2018 and September 2019, a First Tier Property Tribunal heard.

When informed in July 2019 that it needed a licence, he applied for an exemption notice by telling Barnet Council he would soon be moving back in.

The tribunal judge said that a landlord’s reliance on an agent would rarely give rise to a defence of reasonable excuse.

During the hearing, it was discovered Conway had been named in an article in The Times as a director of Vale Investment (Management), where tenants had been trying unsuccessfully for months to get the property agency to repair a leaking roof.

Conway claimed he was not involved in property management, which the tribunal disputed.

It ruled that the professional landlord, who has one other rental property, should not have taken advice from the agent and that he had a better knowledge of property management than he was admitting to.

Giles Peaker, a partner at Anthony Gold, says it’s increasingly clear that attempts to rely on it being ‘someone else’s job’ to tell the landlord they have a licensable HMO, will fail.

He tells LandlordZONE: “For blaming the letting agents to have any real prospect of success as a reasonable excuse defence, I think it’s right that there would need to be a clear and explicit duty on the agent to inform the landlord of licensing requirements set out in the agent’s contract with the landlord. Even then, it may not work, as it is still the landlord’s responsibility.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – ‘Landlords cannot rely on agents to tell them about licensing’ – judge | LandlordZONE.

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MP’s Strike Back Against Buy To Let Landlords

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MP’s strike back against Buy To Let Landlords as they release a House Of Commons Commission Report about further regulation on the private rented sector.

Joining me to cover this story on Property Breaking News is Andrew Roberts.

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‘Covid is not an excuse to dodge licensing’ judge tells landlord facing £10,000 RRO

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Landlords can’t use Covid lockdowns as an excuse for not licensing a property, a First Tier Property Tribunal has ruled.

Paul Fashade argued that his HMO in Devonshire Road, Lewisham (main image) had previously had a licence for six people which expired in July 2020 and that he and his property manager had tried unsuccessfully to renew it during the pandemic.

He told the tribunal they had emailed Lewisham Council and tried to renew it online – but couldn’t provide any evidence of emails or phone calls. He finally got a licence in February 2022, after the three tenants who brought the case against him had left.

One tenant received a Rent Repayment Order of £2,880 and two shared a joint order of £8,350 for living at the unlicensed six-bedroom HMO between December 2020 and December 2021.

The three reported that they had not been given copies of the gas certificate or EPC with their tenancy agreements and one said his deposit had not been protected until half-way through his tenancy.

They had assumed the HMO was licenced and only discovered its status by making a search of the local authority register.

37 repairs

A report following a council inspection in September 2021 revealed that the house was not in pristine condition and that Fashade had been asked to carry out 37 repairs and improvements to the property as a condition of the granting of a new licence.

He tried to claim that damage had been caused by the tenants, however the tribunal ruled that the cause was more likely due to wear and tear.

It added: “The tribunal does have regard to the respondent’s conduct and that of his manager for whom he is responsible, including making unfounded allegations about the applicants’ conduct, failing promptly to repair faults at the property and disrespectful behaviour towards the applicants.”

Read the tribunal decision in full.

Read more recent news about rent repayment orders.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – ‘Covid is not an excuse to dodge licensing’ judge tells landlord facing £10,000 RRO | LandlordZONE.

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Office market weathering the storm better than expected

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With rental growth in prime London offices set to outpace the rest of the country, the doom mongers predicting permanent working from home (WFH) and office flight have so far, it seems, been on the wrong tack.

Quarter 1, 2022 has seen rent returns rise as UK commercial property recovery generally has been gaining pace, also in warehousing and logistics as well as retail parks. The government’s drive to prime the regions in its levelling campaign, supporting communities’ recovery across the UK, it is hoped, will further boost commercial property.

In it latest RICS Commercial Property Survey, agents are reporting a considerable increase in the number of new tenants looking to rent UK commercial property, “with the uplift particularly prevalent in prime London office space.”

Says RICS:

“Respondents to the survey saw a notable increase in UK office demand in Q1 2022 with the net balance improving to +30% from a flat picture at the end of 2021.”

This shows a significant change in sentiment, which was also beginning to appear in the retail sector, with occupier demand approaching net neutral (-1% net balance). That’s the first time the measure has been anywhere near neutral since early 2017.

Taking in commercial property as a whole, it’s the first time since 2015 that a net balance of +32% of respondents in the RICS survey reported an increase in occupier demand at all levels and across sectors (retail, office and industrial uses).

RICS property agents reported that investor enquiries also saw a substantial increase in early 2022, with the strongest figure since Q3 2015, and a net balance of +32%. RICS says that for the first time since 2017 investment enquiries are now net positive across the three traditional market sectors: office, industrial and retail.

The impact of working from home (WFH)

There’s been much discussion in the media about the impact of home working on city centres, transport, retail and offices. The COVID pandemic disrupted labour markets dramatically during 2020 and 2021, when millions of people were furloughed or losing jobs.

There was a rapid adjustment to homeworking by many thousands as offices were closed to all but a few staff. Many other workers in the vital services were deemed essential and continued to work: in hospitals and grocery stores, on refuse collections and in warehouses, as well as the police and to some extent, the courts.

The post-pandemic economy will undoubtedly change, in many cases for the better, with more flexible working, more omni-channel retailing and home delivery, with much enhanced productivity and innovation through the proficient use of technology.

The question on everyone’s mind in commercial property is, “what affect with this have on rental demand, will occupiers require less space and therefore economise by downsizing?”

Toby Courtald CEO of Great Portland Estates (GPE), one of London’s biggest landlords has conceded that offices will never be quite the same, never as busy as they were before the pandemic, though he is adamant that those who have been predicting “the death of the office” have got it wrong.

GPE owns a multi-billion pound mainly office estate in London and has also swung back into profit this year announcing an end-of-year profit of £167 million at the end of March. The estate’s portfolio valuation increased by £2.65bn or £6.1%, across the year. During the year the property RIET agreed new leasing deals of £38.5 million, a figure that went well beyond the company’s expectations.

The nettle that most office landlords appear to have grasped is they will need to adapt their office space to the post-pandemic requirements, along with the changes needed to meet the new environmental standards, most notably insulation, energy efficiency and air quality. These changes will involve substantial new investment.

In British Land’s case, office investor demand, according to RICS, rose from a net balance of +5% at the end of 2021 to +23% in Q1 2022, and the net balance of respondents predicting a rise in capital values for the prime office sector is the most positive since Q4 2019 (+37% net balance).

With the increase in occupier demand for new office space, rents are expected to rise with a net balance of +19% of survey respondents expecting a rise, compared to +7% in the last quarter of 2021.

Rents for prime office space in central London are anticipated to outpace most other UK regions, while the South East is the only region in which secondary office space is predicted to see growth.

The latest research published by RICS in March has shown that high-quality and well-managed commercial real estate – such as prime office space – is integral to levelling up UK towns and cities*, and one of the asks of the research is that UK Government support commercial real estate, and promote investment in it, to secure levelling up across the UK.

Tarrant Parsons, RICS Economist, says:

“The latest survey feedback points to demand from both occupiers and investors gaining momentum over the quarter, with the office sector in particular now showing signs of recovery.

“This has led to an upgrading in expectations for capital value and rental growth across prime offices, while the prolonged downward trend in portions of the retail sector also now appears to be easing.

“That said, given the current headwinds facing the UK economy in form of sharply rising energy prices, higher interest rates and general cost of living pressures, there is understandably a lot of caution regarding the potential impact this could have on market conditions going forward.”

Jonathan Hale, Head of Government Affairs at RICS, adds:

“UK commercial property is clearly still attractive to investors and UK Government should work across the country to engage with the sector to build on this positive outlook.

“The recent RICS commercial real estate impact report emphasised the key role that the commercial property sector currently plays in the UK and its future role in driving forward economic recovery across the UK.

“As town centres, high streets and offices start to recover following the pandemic, a thriving commercial real estate industry will be crucial to support the government’s levelling up and net zero ambitions in the months ahead.”

Warning: of course, all of this was in the last period: in these times of rapid economic changes things can turn around quickly. With a raging war in Ukraine, inflation approaching double figures and a threatened recession the picture may be less optimistic in 12 months’ time?

Full RICS survey report here.

*This data follows the publication of the RICS Commercial Real Estate impact report, which found that high-quality and well-managed commercial real estate is integral to levelling up UK towns and cities and contributing to better spaces and amenities for local communities. The sector’s contribution – across retail, office and industrial uses – makes up 3.3% of the total UK GVA, employs 3.5% of the total workforce and generates 2.5% of the UK tax revenues.

About RICS – Everything we do is designed to effect positive change in the built and natural environments. Through our respected global standards, leading professional progression and our trusted data and insight, we promote and enforce the highest professional standards in the development and management of land, real estate, construction and infrastructure.

Our work with others provides a foundation for confident markets, pioneers better places to live and work and is a force for positive social impact.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Office market weathering the storm better than expected | LandlordZONE.

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LATEST: New report reveals big jump in landlords facing rent arrears

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More than a third of landlords have experienced rent arrears during the past 12 months – a clear indication that the cost of living crisis is starting to hit home.

Paragon Bank’s latest Landlord Report shows that 36% had tenants in rent arrears which, although only based on a survey of 621 landlords, is a big jump from the most recent Household Resilience Study which found just 7% of private renters were in arrears during April-May 2021.

Damaging reports

Landlords have had to contend with a range of other issues too, with almost a quarter (24%) coping with property damaged by tenants, and as a result, 23% had to withhold all or part of a deposit.

Paragon also found that 13% suffered anti-social behaviour from tenants, 13% had sought vacant possession, 11% used legal services, 8% made an insurance claim, 4% experienced sub-letting and an unlucky 1% had squatters. Despite this, none of those 621 questioned had missed a mortgage repayment.

Good job

Landlords largely do a good job and most of their renters are happy, the report found, which found that 91% have a positive relationship with their tenants and 88% had been very or extremely flexible with tenant requests.

Research for a Social Market Foundation report, commissioned by Paragon, found that 81% of private renters are happy with their current property, and 85% are satisfied with their landlord.

Paragon Mortgages MD Richard Rowntree (pictured) says: “It’s interesting to see that considering how properties meet the needs of tenants is central to landlords’ investment strategy and more important than generating high yields or capital appreciation.

“This is perhaps at odds with the negative perception of landlords who are sometimes viewed as placing profits above people.”

Paragon also found that landlord demand for city-centre property was strong last year, with house purchase completions in urban postcodes increasing by 100% compared to the year before. Milton Keynes was the city with the highest buy-to-let completion growth (667%), followed by Manchester (300%) and Bristol (300%).

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: New report reveals big jump in landlords facing rent arrears | LandlordZONE.

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