Continued imbalance of supply and demand is a concern

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Propertymark’s latest Housing Market Report has indicated that a record 32% of properties sold for more than the original asking price. This smashes the previous record back in May 2014 of 19%.

Propertymark Chief Policy Advisor, Mark Hayward

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Right to see payslips if tenant in arrears?

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An elderly family member has rented a property to a council tenant for 20 years plus. My relative hasn’t managed it well and is owed £8,000 in missed rent payments. As my relative is ‘slightly’ at fault (in my view)

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Peers savage government’s ‘too timid’ Leasehold Reform Bill

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The government’s Leasehold Reform Bill making its way through parliament was heavily criticised during its second reading in the Lords yesterday by peers unhappy about its weaknesses and unintended consequences, one describing it as ‘lipstick on a pig’.

The bill is designed principally to abolish escalating ground rents and the huge costs that they can create for leaseholders, so much so that a market for long-term residential leasehold investors has sprung up, such are the profits involved.

But the legislation, which will usher in the most significant changes to property tenure in 800 years, will only apply to new leaseholds once it becomes law, which is not expected until 2023, government minister Lord Greenhalgh (pictured) confirmed.

Baroness Pinnock highlighted how this would create a two-tier property market for leaseholder.

“The failure of the bill to deal with past abuses of ground rent and service charges will leave existing leaseholders in a worst position because it will create a housing market when new-builds with zero ground rent will be far more attractive than those with spiralling ground-rents,” she said.

“Who in their right mind is going to purchase a property with those extortionate additional costs?”.

Also, many peers tackled the government for being too timid in its reforms, which will enable the leasehold system to continue albeit reformed.

Others, including Lord Stummel, said its measures should be implemented now and not in 2023.

Many speakers said it was time to abolish leasehold entirely, arguing that freeholders and managing agents would always cook up new ways to get around the restrictions.

“Buildings should be run for the benefit of those living in them and not the freeholder,” said Baroness Andrew (pitured).

Former chancellor Lord Hammond (pictured, below) also picked up on a key problem with the bill – that its definition of ‘rent’ was too vague and would impact the wider market.

He pointed out that the definition of rent will prevent properties being rented out on medium-term or long-term leases including, most crucially, the build-to-rent developers and investors who often lease their properties to management companies.

Watch the debate in full.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Peers savage government’s ‘too timid’ Leasehold Reform Bill | LandlordZONE.

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New global guidance for Land Measurement

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New guidance on the measurement of land for development projects such as new housing and commercial development have been published by the Royal Institution of Chartered Surveyors 25 May 2021, which defines common measurements used across the built environment and associated metrics such as density.

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The number of homeowners taking in lodgers triples over 10 years

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Research into the value of the tax relief claimed using the Rent a Room scheme shows huge take-up.

Since 2009, the total value of relief declared as a result of the government’s Rent-a-Room Scheme has increased by 187%, according to the latest available MHCLG data.

Launched by the Conservatives in 1992 the ”Rent a Room” scheme was intended to encourage people to utilise their otherwise unused spare rooms and provide much needed accommodation for workers and students, encouraging mobility of employment and education.

The original tax-free earnings allowance for lodger-earnings was £4250, increased to £7,500 in the 2016/17 tax year, and this amount is still the current allowance. The earnings must be declared to HMRC but there is no tax payable for annual earnings below the allowance.

Analysis of the data by property management service provider, Houst, has revealed the record amount of £140,500,000 was declared over the 2018/19 period, up from £48,800,000 in 2008/09.

The data demonstrates a considerable rise in the number of homeowners taking in lodgers over the last ten years, and those figures do not take into account anyone taking in lodgers and not declaring this to HMRC.

The increasing number of Rent-a-Room declarations to HMRC indicates that more people are recognising the benefits of earning extra income from taking in a lodger – as a live-in landlord, you are allowed up to two ‘non-family’ lodgers before your property can be classed as a HMO, with all the additional regulations that implies.  

Covid push

Houst speculates that this trend is likely to have intensified dramatically since the onset of the Coronavirus pandemic, the period of time for which MHCLG data is currently unavailable.

Taking in lodgers received a dramatic boost in numbers during the economic crash and great recession of 2008 and has since continued with the popularity of letting out spare rooms with the advent of Airbnb type renters. Utilising spare rooms as a simple means using new technology to provide an additional income stream has now become a major industry in itself.

Tom Jones, Co-Founder and Chief Commercial Officer of Houst, says: “Thanks to the digital solutions of the last decade, homeowners are now able to fill their properties quickly and efficiently, whether that be a spare room or a second home, and generate a secure and regular source of income. Given the enormous economic uncertainty, people are increasingly viewing personal assets as a vehicle to drive up their incomes by turning their homes into money-making properties.

“The reality of the pandemic is that it has forced many to reconsider their living arrangements and look directly at how we occupy our homes and how exactly they could be used to stave off economic concerns. The pandemic has transformed how millions see and use their homes, leading many to reconsider its potential as a stable driver of income.”

Warning

Anyone considering renting out a room in their home should be aware that permissions may be necessary: from their landlord if they are a leaseholder, from a mortgage provider and from their insurer.

There could also be considerations for the impact this may have on council tax liability, and any benefits the lodger landlord is claiming.

In addition, the property must be safe, free from and hazards that could cause injury. Also, the landlord must be letting out his or her own residence and share facilities such as bathroom and kitchen with the lodger. The property must meet certain general letting requirements including annual gas checks and five yearlyelectrical system checks, and all the furniture must meet the general letting safety standards.

Finally, lodgers come under the Right-to-Rent regulations, where the landlord must check the immigration status of their lodgers. It goes without saying that the income from the lodger arrangement must be declared on the next available tax return.  

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – The number of homeowners taking in lodgers triples over 10 years | LandlordZONE.

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Leading lender says landlords must be given more time to complete EPC upgrades

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A major mortgage lender has backed calls for landlords to be given more time to upgrade properties to the new EPC minimum standard.

Richard Rowntree, MD of mortgages at Paragon Bank, says the proposal that all new tenancies must have an energy rating of at least C by 2025, and all tenancies by 2028, puts too much pressure on landlords, particularly following coronavirus, and could threaten already strained stock levels. 

Last November, The Lettings Industry Council (TLIC) wrote to the Ministry of Housing, Communities and Local Government, urging a more staggered approach to improving energy standards in the private rented sector than those put forward by the Department for Business, Energy and Industrial Strategy (BEIS).

Says Rowntree: “Under TLIC’s proposals, all tenancies would have an EPC rating of C by 2030 – only two years later than the BEIS proposals – and improvements would be phased. This a sensible approach that recognises the need to improve the carbon footprint of the sector, whilst acknowledging the damage that inflexible proposals could cause.”

TLIC chair Theresa Wallace (pictured) tells LandlordZONE that she hasn’t had a response to its proposal but says: “I an email BEIS recently to ask what their next steps were following their consultation of this.

They responded to say that they will publish a government response in due course, which would set out more details on next steps.” She adds: “I have also asked BEIS to look into electric heating which apparently doesn’t score so well on EPCs yet it’s meant to be more energy efficient.”

Rowntree adds that landlords will need finance and innovative solutions to cope with the changes. “We have made a start in this area with the launch of our 80% LTV rates for properties with an EPC rating of A to C, encouraging landlords to invest in more energy efficient stock.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Leading lender says landlords must be given more time to complete EPC upgrades | LandlordZONE.

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Landlord loses appeal over £10k fine for HMO run via ‘sham tenancy’

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A rogue landlord who created a sham tenancy agreement to dodge HMO rules has been fined £10,000.

Tanvir Hussain had appealed the original fine from Islington Council but this has been thrown out by a First Tier Tribunal which ruled that he had named only four of the six tenants on the tenancy agreement to circumvent HMO regulatory provisions.

The house in Stroud Green Road, London, had been let under a 12-month assured shorthold agreement in 2015 to Mr Millen, Miss Johnston, Miss Harvey and Miss Morris.

The freehold was owned by Hussain’s brother, Jangeer Hussain, and managed at the time by Liberty Estate Agents.

During an Islington Council inspection in 2019, it found there were six occupiers and discovered breaches including blocked escape routes, poorly maintained fire alarm and no notices displayed for escape routes.

Unlawfully

Hussain told them that except for Mr Millen and (possibly) Miss Curd who lived with him as a single household, the other occupants of the property were there unlawfully.

He admitted he operated a “light touch” in relation to his duties as the landlord – despite operating a commercial business from the ground floor premises. He said that except for receiving the rent from Liberty, he did not visit or inspect the property.

The tenants said the tenancy had originally been granted to six people and that there were five bedrooms.

They said Liberty had insisted that only four tenants were named on the agreement and it advised them that there was no limit on the number of people who could live there. The Tribunal agreed that Liberty was acting on Hussain’s authority, aimed at circumventing HMO rules.

It reduced the original £14,999 fine because seven of the eight breaches were resolved.

Read the tribunal decision in full.

Read more about HMOs.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Landlord loses appeal over £10k fine for HMO run via ‘sham tenancy’ | LandlordZONE.

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Sheriff Rides in to Tackle Transfer Times of Orders for Possession

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As Sheriffs, we are continuing to monitor transfer times of Orders for Possession from the County Court to the High Court for landlords, and other claimants who want a faster and more effective transfer system.  So, we will be sharing our research with the Property 118 community

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Compensation of 60 years regulated tenant?

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I have inherited a property with a regulated tenant of over 60 years standing. I am aware that to gain an EICR the property will require a complete rewire. The property is immaculately maintained and decorated by the tenant.

How do I stand regarding making good the damage this will cause and the cost of uplifting carpets

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LATEST: Investors battle PRS developer over plan to change Loan Note terms

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Several investors in PRS residential developer The High Street Group who are part of a larger group owed an estimated £43 million are resisting an attempt by the company to suspend an early redemption clause within their Loan Note agreements.

The Newcastle-based firm is holding a special resolution meeting at its HQ on 1^st June at which, it is expected, a decision will be made to remove the clause, which enables investors to be repaid within 30 days upon request.

A spokesperson for The High Street Group tells LandlordZONE: “The vote will continue on the planned timetable and we encourage all eligible parties to take part.

“Our investor proposal is a pragmatic, viable and responsible course of action to support the company’s successful corralling of resources to continue its investment programme.”

But some of the 2,000 investors who hold Loan Notes with The High Street Group – which is one of the largest PRS developers in the UK – say the company should instead be placed into administration and ultimately liquidation so that its assets, which include 15 sites worth some £100m, can be sold to pay off its creditors.

Patience is running thin among the group, LandlordZONE has been told, who are unhappy that if the vote goes through, they will have to wait until 2025 to find out if they will get their money back.

Difficult period

It’s been a difficult 12 months for The High Street Group. One of its subsidiaries has been wound up following a battle with a creditor, other companies within the group have struggled to post their accounts on time and auditor PwC recently resigned after revealing it was unable to access company information.

But the Loan Note holders, who say they fear the company could be making moves to protect its assets in case of a potential move to administration or liquidation, are divided on what to do. Some believe it should be given the extra time while others say ‘enough is enough’ and want their money back.

100% of investment

A spokesperson from The High Street Group, which developed the Hadrian’s Tower in Newcastle (main pic) adds: “Investors will receive 100% of their investment plus the agreed interest, but without the ability for early redemption.

“This measure is not unusual, in fact during the pandemic the FCA gave permission for investment firms to pause redemptions to maintain the viability of the sector.”

The company says its proposal have been met with strong levels of support with 50% of investors already agreeing to the new terms.

“New funding has been agreed for all our projects, which are now remobilising. The investor proposal is the final element of our fight back from the pandemic to take advantage of a newly emerging buoyant market,” the spokesperson adds.

Read more about the PRS developer sector.

Pic credit: The High Street Group.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Investors battle PRS developer over plan to change Loan Note terms | LandlordZONE.

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