Town declares housing crisis blaming ‘skyrocketing’ rents partly on landlord exodus

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A town council in the SW has declared a ‘housing crisis’ blaming affluent new arrival renters but also ‘landlords pulling out of the market’ for rapidly-rising rents.

The initiative is in the fashionable town of Frome and is being led by councillor Polly Lamb (main picture, inset), who is a former lettings agent in the area.

She wants to highlight the problems caused by ‘skyrocketing’ rents which exclude many low-income local, some of whom have resorted to living in converted vans or sofa surfing.

“Frome has become very popular and has a high profile in the national media,” she says in her report submitted to the cabinet meeting.

“Regulations to control the PRS and keep tenants safe are unpopular and many landlords cite this as reasons to pull out, making rental properties even more scarce.

“Many landlords are selling their properties if they deem it too expensive to meet the energy performance standard in time for 2025/2028.”

Covid move

“This has encouraged more people to move here, particularly in the Covid period as remote working became more possible.”

She made the comments during a council meeting (main picture, inset) pointing out that Frome has a higher-than-average house prices and lower-than-average salaries, which “means increasing number of people locally rely on the private rented sector for accommodation”.

But as her report highlights, a lack of affordable housing and a council waiting list topping 600 means they are competing with home-working professionals who yearn for the town’s bucolic allure.

Greater powers

Frome is the third council in the UK to declare a housing crisis along with South Hams in Devon and Leicester, although it’s also calling for greater powers to regulated second home; more social and council housing to be built, more powers to regulate planning and better use of existing homes locally.

“Rents have skyrocketed and that is pushing out local people who have been here all their lives,” she told the council meeting, adding that the ‘crisis’ status would mean housing provision would now be at the heart of all the council’s decision making.

Read the report in full.

View Full Article: Town declares housing crisis blaming ‘skyrocketing’ rents partly on landlord exodus

2-year 70% LTV Buy to Let rates reduced 0.45% by Paragon

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Paragon Bank has reduced its core two-year fixed rate buy-to-let mortgages starting at 4.85% for a maximum 70% Loan to Value (LTV) dependent on EPC rating

Rates on the two-year fixes are priced at 4.85% for single self-contained properties with EPC ratings of A-C and 4.90% where the EPC is rated D or E.

View Full Article: 2-year 70% LTV Buy to Let rates reduced 0.45% by Paragon

EXCLUSIVE: New licencing schemes to rise by 31% in 2023 says data firm

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The number of selective and HMO additional licensing schemes launched this year has already equalled last year’s total as councils come under pressure to tackle private rental housing standards.

Thirty-two schemes have been launched so far – matching 2022 – according to geospatial technology company Kamma, which predicts that we could see another 10 before the end of the year, or 31% higher than 2022.

While the number of schemes launched in 2020 (20) and 2021 (19) fell as councils diverted resources towards dealing with the Covid pandemic and ensuing lockdowns, this created a backlog in 2022 when councils rushed to green light plans.

Activity

However, Kamma’s COO Chris Morgan (pictured) says it doesn’t believe a backlog is still the reason for a growth in scheme activity.

“The state of the economy, the cost-of-living crisis, and the changing demographics of the PRS towards older more affluent renters has put pressure on government to tackle, or at least be seen to be tackling, rental housing standards,” he tells LandlordZONE.

“There is a fundamental attitude shift that we expect to carry forward this higher level of new schemes being launched each year. It really is total finger in the air trying to predict council behaviour, but if I had to pick a range, I’d probably say between six and ten more schemes this year,” adds Morgan.

Although prevalent in London, schemes are launching all over the UK. In the last few months, Manchester has rolled out five new selective licensing schemes, Birmingham introduced selective licensing in 25 of its wards, and Southwark became one of the UK’s largest schemes, launching in 19 of its 23 wards.

Meanwhile, Medway and West Northamptonshire are considering similar schemes.

View Full Article: EXCLUSIVE: New licencing schemes to rise by 31% in 2023 says data firm

Unmasking Fake Property Gurus and Deal Sourcers

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Having nearly got sucked in by fake gurus and property sourcers I decided to write and submit this article to Property118 to help others …

When navigating the world of property investment, it’s essential to distinguish between genuine experts and those looking to capitalize on your enthusiasm.

View Full Article: Unmasking Fake Property Gurus and Deal Sourcers

London sees more record breaking rent rises

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Average weekly rent in London rises again, according to new figures.

The latest figures from Foxtons lettings index reveal average weekly rent in July was £597 per week, slightly lower than the £599 recorded in June

View Full Article: London sees more record breaking rent rises

Rent a property for one year only?

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Hello everyone,could I please have some help from the Property118 forum? I would like to know the best way to rent a flat for one year only as my wife and I are planning to sell our home and we will want to move into it next year. 

View Full Article: Rent a property for one year only?

Landlords selling up see capital gains fall

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Landlords who have sold up this year have seen their capital gains take a hit – they are making £10,000 less than they did last year, research reveals.

According to real estate firm Hamptons, the average BTL landlord who sold a property this year made £95,000.

View Full Article: Landlords selling up see capital gains fall

‘Ministers must tackle tenants who abandon homes and cost landlords £1,000s’

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Property sector bosses have urged the government to give landlords stronger laws to take back possession of their property if it has been abandoned.

In a letter to Housing Secretary Michael Gove on behalf of the Housing Coalition, Propertymark suggests that he includes provisions for abandonment in the Renters (Reform) Bill to give landlords stronger protections.

An abandoned property costs income and raises insurance costs as well as additional challenges such as a responsibility to safeguard possessions left behind and preventing the property becoming a target for vandalism and anti-social behaviour.

As the legal tenancy is still in place, a tenant can return to the property at any time, meaning that the home cannot be re-let or occupied by anyone else.

Read a LandlordZONE Forum discussion on the subject

Under the Renting Homes (Wales) Act, if a landlord believes their property has been abandoned, they must try to contact the tenant for one month but can then end the tenancy if they have sufficient evidence.

Financial risks

Propertymark says this approach recognises that a landlord is very unlikely to try and take back possession of a property unless they are certain that it has been abandoned, because the legal and financial risks to them are too great.

It suggests the UK government could include similar provisions in the upcoming bill.

Alternatively, the government could bring into force the provisions on abandonment under Part 3 of the Housing and Planning Act 2016. These measures would allow private landlords to recover possession of abandoned residential properties more easily but have not yet been enacted.

“Unlocking these properties currently stuck in limbo would help maximise the number of homes available for rent, reduce the risks associated with unoccupied properties, and give greater income security to landlords, supporting them to increase standards and keep rents fair,” says Propertymark CEO Nathan Emerson (main picture).

View Full Article: ‘Ministers must tackle tenants who abandon homes and cost landlords £1,000s’

Developers’ greed resulted in them “cooking their own goose”

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For many years some housing developers in the UK were involved in a leasehold housing scam; they found a very lucrative second income stream, but this was all at the expense of innocent buyers.

Usually these were young inexperienced couples who were easy prey when it came to getting them to sign on the dotted line. These people thought they were buying a new home, they didn’t realise it still belonged to the developer.

Homeowners who bought into leasehold housing developments saw their ground rents and service charges rising far faster than they ever expected. Some were told they could purchase the freehold later at low cost, but when they tried they found the cost was out of reach, running to many thousands of pounds. Some then found themselves trapped and unable to sell their property because of the liabilities surrounding the high charges.

House the developers’ system worked

This is how it worked: The developer sells the house – usually enticing the buyers to use their own solicitors – with a leasehold title rather than freehold. Then the developer sells the freehold on to an investment company, which provides the investor with a long-term income and a large pay-out for the developers.

Leasehold ownership, where you buy and own the property but not the land it sits on, makes sense if it’s in a block of flats, where the individual flats are owned by many different people. But the arrangement does not make sense for stand alone houses.

Developers were allowed to sell their homes on a leasehold basis, which means they could then charge high and escalating ground rents. This is an annual charge leaseholders must pay the freeholder, plus they can charge extortionate fees if the leaseholder needs to get permission from the freeholder for alternations to the property.

What is leasehold and freehold?

Land titles in England hark back to the feudal times of William the Conqueror, 1066. The term freehold is mentioned in the Doomsday Book and means the permanent, unencumbered and absolute tenure of land or property with freedom to dispose or alter it at will – it’s about as near as possible to full ownership as it gets in England because ultimately all the land is owned by the Crown.

Land gave people power in the Middle Ages and powerful families wanted a mechanism to retain ownership of their land while away from it, and maximising their earnings from it. Leasehold gave them that mechanism, allowing others to occupy their land, for a specific or extended period of time, but they could get their land back at some point and earn an income from it in the meantime.

Long-leaseholds are useful, and in some respects necessary, in a multi-occupied buildings. Someone must coordinate maintenance work, including safety matters and repairs to the structure / common parts, because left to individual flat owners it simply would not get done. The building would fall into ruin and destroy value for all the leaseholders.

Leasehold house sales banned

Thankfully for buyers, from 30 June 2022 The Leasehold Reform (Ground Rent) Act 2022 banned ground rent charges on new residential leases in England and Wales. The government has said it has been working to abolish ground rents for a number of years as part of a suite of reforms to the leasehold system. It says that ground rents “provide no clear service and can be set to escalate regularly, with a significant financial burden for leaseholders”.

But to the consternation of leaseholders, the Government’s stated plans to abolish leasehold home ownership altogether have been watered down by the Secretary of State for Levelling Up, Housing and Communities, Michael Gove, after he previously pledged to get rid of the ‘feudal’ system.

Some leaseholders still feel cheated because, as some argue, it is now a “two-tier system” because although those who buy leaseholds now have been helped, existing leaseholders are still stuck with the problem of mortgage lenders being really risk-averse.

Michael Gove said earlier this year: “I don’t believe leasehold is fair in any way. It is an outdated feudal system that needs to go. We need to move to a better system and to liberate people from it,” but it seems he has since backed down on such a drastic reform of the system.

However, some changes are expected to be introduced over the coming months. One is to help leaseholders choose their own property managers, to cap existing ground rents and prevent building owners charging leaseholders for the legal costs involved in legal disputes.

It was probably inevitable that once the Government went into the complications and vested interests involved in removing leaseholds, the idea of abolishing them had to be binned – Commonhold is one alternative but despite being available to leaseholders for many years, it’s never taken off.

So, how do the new rules will work?

Buyers of houses or flats on long leases, after 30 June 2023, don’t need to pay ground rent. If the freeholder demands ground rent, it can only be charged at “one peppercorn”, effectively a zero amount.

These new leasehold rules apply to retirement housing as well from 1 April 2023, though exceptions are made for some community-led housing and business leases. Existing leaseholders who voluntarily decide to extend their leases will also have their ground rent set to zero.

Continuing campaign

The change in the law was brought about with the help of a pressure group headed by northern leaseholder Katie Kendrick, whose battle began when her young family bought a new £214,000 house in Ellesmere Port, Cheshire through the Help to Buy scheme.

Trouble began when she found it would cost her nearly £3,000 for permission from the freeholder, an investment company, to do a kitchen extension. This prompted her to band together with two other leaseholders to start the campaign which has resulted, after a 9 year struggle, in getting the change in the law.

However, she’s not done yet, she intends to continue her campaign to get leaseholds totally abolished, and to help publicise this a play, entitled “Fleecehold”, tells the personal stories of how three women (Kendrick and two leasholder friends) took on the powers behind a system that dates back to 1066 and William the Conqueror.

Kendrick started the National Leasehold Campaign (NLC) which now has 27,000 members and they intend to stage banner campaigns outside of new developers warning buyers about leaseholds.

As the law stands today it still allows freeholders and developers to levy charges on the people who bought nearly 5 million homes. They are leaseholders with a right to live in their homes long-term, for example 99 to 150 years, but control lies with the freeholder.

Buyer beware

Buyers of leaseholds should educate themselves about the ins and outs and pitfalls, because it’s not just young couples who buy leaseholds, many landlords fall into this category when they purchase flats.

It’s important that prospective buyers and leaseholders thoroughly review lease agreements, make sure they understand the terms and associated costs, and seek legal and financial advice before committing to a leasehold property purchase.

View Full Article: Developers’ greed resulted in them “cooking their own goose”

Are Policy Makers Pushing Landlords Under The Proverbial Bus To Win More Votes?

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It’s hard not to come to the conclusion after reading the most popular articles, discussions and comments in multiple landlord news portals that landlords are being blamed, disregarded and punished from all sides; being squeezed out of the market, blamed for all wrongs and paying costs that are simply unfair.

Join the thousands of landlords fighting back with our help on their side

From the short-sighted ‘market cooling’ policies that have backfired causing a shortfall of rented accommodation and higher interest rates as thousands of landlords exit the market;  to local authorities advising tenants to ignore court judgements and to stay put until bailiffs are appointed with complete disregard for the imposed stress and financial cost to landlords;  to the introduction of the new Housing Loss Prevention Advice Service which many experts fear could result in tenants using free legal representation as a risk-free stalling process which could cost landlords thousands more in court costs and legal fees;  it seems that scapegoating landlords and expecting them to pay the cost for failed policies is faster, easier and more of a vote winner than making any serious attempt to understand and fix the real problems renters face.

Unfortunately, with a general election looming and anguish from the ‘Renters’ Wall’ growing in electoral sway, it is unlikely that the problems are going to get better any time soon and landlords will continue to be the brunt of blame and policy.

Matthew Lynn, columnist for the Daily Telegraph said recently, “The war on landlords has already backfired badly, sending rents spiralling out of control. And now it is driving inflation higher too. The worst part of it all is that there is no sign whatsoever that the Government realises it is to blame.”

So with public opinion, government policy and free support stacked against landlords, what can they do to balance the needs of the tenant with the cost to the landlord?

Help For Landlords

Many landlord associations are calling for a more balanced response from the government, taking the interests of the tenant and landlord into account, and for housing associations to support their calls to make sure policies designed to protect tenants do not routinely have an adverse effect for the majority of landlords.

However, with interest rates still rising, fixed term mortgages ending, and the recently launched free help for tenants wanting to challenge landlords seeking possession; the best option for many landlords is to sell up as soon as possible (before S21s are abolished and the more ‘challengeable’ S8s are the only option available to seek enforced possession).

As experienced by vast numbers of landlords commenting on articles and asking for help, one option to sell a buy-to-let property is either wait for tenants to vacate or use an S21 to give 2 months’ notice to tenants to quit but realistically landlords should be prepared for tenants to ignore the notice and any subsequent court instruction to leave while LHAs advise tenants not to move until a bailiff notice has been served. Also, once a tenant has been served notice, they often choose to stop paying rent for as long as the process takes with many commentators sharing experiences of losing £10K+ in court costs, lost rent, repair bills and legal fees just to get the property back.

Another option for landlords with good tenants is to sell with their tenants in situ by advertising the property as suitable for investors. Many high street agents are happy to promote properties in this way but most will not get help landlords to ensure all certificates are in place and/or help a tenant to be rehomed if they are willing.   

The Landlord Sales Agency is different – it was set up by landlords for landlords with the USP of using their vast experience as landlords to help other landlords find a better way to sell without the expense, delay and unpleasantness of litigation. We are the support landlords need in their corner to help balance the needs of the tenant with the cost to the landlord.

We also help landlords sell multiple properties together and our average sale time is less than 28 days. We have been warning landlords about the problems they are currently facing since George Osborne introduced the early policies in 2015 and we have accumulated a database of thousands of buy-to-let investors looking for tenanted properties.

Find out what we can do for you today and start planning what you want 2024 to hold for you.

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View Full Article: Are Policy Makers Pushing Landlords Under The Proverbial Bus To Win More Votes?