Freeholder, Leaseholder – can you be both?

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Hello, After setting up a property development company, my first project was a large extended terraced house. The property was in poor condition and I was fortunate enough to buy it cash. I was granted permission to convert it into two flats which I intended to keep and rent out.

View Full Article: Freeholder, Leaseholder – can you be both?

Rents still rising at below the rate of inflation

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Tenants in the UK have seen their private rents rise by 4.7% in the year to February – which is still below the annual rate of inflation.

The figures from the Office for National Statistics (ONS) show that rents rose by 0.3% from January and the annual percentage change is the largest recorded by the organisation since it began keeping records in January 2016.

View Full Article: Rents still rising at below the rate of inflation

OPINION: Are landlords really leaving the private rented sector?

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It has been reported this week that housing minister Rachel Maclean (main picture) told a meeting in Westminster that fellow Conservative MPs and the ‘property sector’ (i.e. the NRLA and other trade associations) are wrong to claim that landlords are leaving the sector.

This followed a Guardian article two weeks before that accused NRLA chief executive Ben Beadle of ‘peddling’ the line that the current Government squeeze on private landlords had led to more leaving the sector than usual.

The reason this debate has hotted up is that the NRLA and others are fighting a rear-guard action to persuade Ministers to go easier on private landlords, while campaign groups like Shelter, Generation Rent and the London Renters Union are seeking to help tenants mitigate the higher cost of living by limiting rent rises.

So where do we go from here? At a recent property industry event former Chancellor George Osborne made the point that governing a country is about managing competing interests in a balanced way.

What makes this difficult in the private rented sector is that the narrative adopted by the ‘tenants’ champions’ is extreme.

Profiteering

In a piece within the Open Democracy website, a London Renters Union spokesperson used language like “landlords tightening their grip on our housing system”, “profiteering” and “millions of renters are trapped in a poor-quality, insecure and extortionate private renting sector”.

Such points of view do not push the debate forward, but rather keep everyone behind their barricades living within their own echo chambers, rather than getting together to have a more grown-up debate about housing supply and funding in the UK.

Explosive

But the other accelerator in this sometimes explosive debate is a lack of hard facts, something everyone exploits.

There are said to be some 2.3 million landlords in the UK but no one is 100% sure how many are leaving the sector because there is no solid official record. The NRLA and others must rely on anecdotal reports from their members and internet polls, both of which are indicative, not fact.

By the way one thing is for sure though – rental supply is tightening, data from the main property portals shows, and a recent ITV investigation uncovered.

But similarly organisations like Shelter do not know exactly how many properties are sub-standard or poorly managed, or how many rogue landlords really exist.

Again, they can use anecdotal stories from their phone helplines and conduct polls to have stab but they are not the whole picture.

All this will soon all change. If the looming Renters Reform Bill includes the promised national register of PRS properties and their landlords, including details of their landlord or agent’s property and tenancy management track record, we’ll have a much clearer picture.

Once and for all we’ll all be able to see the real fluctuations in PRS supply, the number of landlords and how many properties are badly run.

Nigel Lewis is Editor of LandlordZONE.

View Full Article: OPINION: Are landlords really leaving the private rented sector?

BREAKING: Government squeeze on landlords has cost Treasury £1.5 billion

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Tax changes in the private rented sector have lost the Treasury £1.5 billion in revenue, according to new research commissioned by the NRLA.

Capital Economics found that restrictions in mortgage interest relief had contributed to 1.2 million fewer properties being available in the sector, just when renters across the country faced a shortage of homes.

According to Zoopla, compared to the five-year average, demand for rented housing is up 46% but supply is down 38%.

Capital Economics found that between 2010 and 2016, PRS stock increased by 3.7% a year, while between 2017 and 2021 – when the mortgage interest changes came in – it grew by just 0.4% a year.

The analysis reveals how, if private rented housing stock had continued to grow at a rate of 3.7%, there would have been 6.8 million properties in 2021 – about 1.2 million more than were actually available to rent.

The annual income and corporation tax revenue from these extra rented properties would have boosted Treasury revenue by £1.5 billion, it says.

Full review

The NRLA is calling on the government to conduct a full review of the impact of recent tax rises on the sector, including the impact of Mortgage Interest Relief changes.

It believes ministers must also consider the rationale for the change, given that the Institute for Fiscal Studies has previously argued it was wrong to suggest landlords have been taxed more favourably than homeowners.

Chief executive Ben Beadle (pictured) says its research shows that the government has shot itself in the foot.

“When you consider that the government’s rationale for the changes has been refuted by the Institute for Fiscal Studies, it is clear that the Chancellor needs to review this misguided tax hike,” he adds.

View Full Article: BREAKING: Government squeeze on landlords has cost Treasury £1.5 billion

FACT: Government squeeze on landlords has cost Treasury £1.5 billion

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Tax changes in the private rented sector have lost the Treasury £1.5 billion in revenue, according to new research commissioned by the NRLA.

Capital Economics found that restrictions in mortgage interest relief had contributed to 1.2 million fewer properties being available in the sector, just when renters across the country faced a shortage of homes.

According to Zoopla, compared to the five-year average, demand for rented housing is up 46% but supply is down 38%.

Capital Economics found that between 2010 and 2016, PRS stock increased by 3.7% a year, while between 2017 and 2021 – when the mortgage interest changes came in – it grew by just 0.4% a year.

The analysis reveals how, if private rented housing stock had continued to grow at a rate of 3.7%, there would have been 6.8 million properties in 2021 – about 1.2 million more than were actually available to rent.

The annual income and corporation tax revenue from these extra rented properties would have boosted Treasury revenue by £1.5 billion, it says.

Full review

The NRLA is calling on the government to conduct a full review of the impact of recent tax rises on the sector, including the impact of Mortgage Interest Relief changes.

It believes ministers must also consider the rationale for the change, given that the Institute for Fiscal Studies has previously argued it was wrong to suggest landlords have been taxed more favourably than homeowners.

Chief executive Ben Beadle (pictured) says its research shows that the government has shot itself in the foot.

“When you consider that the government’s rationale for the changes has been refuted by the Institute for Fiscal Studies, it is clear that the Chancellor needs to review this misguided tax hike,” he adds.

View Full Article: FACT: Government squeeze on landlords has cost Treasury £1.5 billion

Landlord cries foul over £50,000 cladding bill after ‘not qualifying for help’

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A landlord whose properties are caught up in the cladding scandal faces a bill of up to £50,000 unless the government changes the rules about who it will subsidise.

Neera Soni rents out a number of leasehold properties and says she and at least a quarter of those owners at one development in Birmingham don’t qualify for help.

Under section 119 of the Building Safety Act 2022, anything in the fire officer’s report comes under the Building Safety Fund and covers all leaseholders, but any other problems aren’t covered. In this case, the developer would usually pay for repairs.

Qualification

However, it gets more complicated, as landlords who own more than three properties and don’t live in the one being remediated don’t qualify for help; then, the freeholder and head leaseholder can charge them the full share of the remediation costs through the service charge.

And if a property owner’s building is worth less than £2 million, they can charge these unqualifying leaseholders up to £50,000, while leaseholders who qualify only pay up to £10,000.

Cladding

Soni, a member of action group BrumLag, owns two other properties affected by cladding and has already stumped up some money for repairs and is dreading the final bill.

“It doesn’t cost the government or taxpayers anything to help leaseholders – they need to get rid of this non-qualifying rule,” says Soni.

“Our service charge has gone up from £6,000 due to issues with water ingress and an insurance hike, to £18,000 – that’s before the mortgage,” she tells LandlordZONE.

The courts are set to rule on the exact meaning of section 119 of the Act, but that is expected to take at least a year, she explains. 

“The government encouraged us to buy buy-to-let properties, but we have very little equity in them and as they don’t qualify we can’t sell them even when the work has been done,” adds Soni. “It’s so unfair.”

Read more about the cladding scandal.

View Full Article: Landlord cries foul over £50,000 cladding bill after ‘not qualifying for help’

NEW: Devolution deal gives Manchester more rogue landlord powers

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A new devolution deal will give the 10 Greater Manchester councils powers to approve larger selective licensing schemes.

The pact, signed by Levelling Up Minister Dehenna Davison (pictured, below), Greater Manchester Mayor Andy Burnham (main pic) and the council leaders, will also see authorities develop and trial regulatory schemes to improve housing quality in the PRS.

They will be the first to help test the Private Rented Sector Property Portal while it will give Greater Manchester powers to strengthen its Good Landlord Charter and crack down on rogue landlords.

At the end of last year, the authority announced £1.5m from the Housing Investment Loans Fund would be used for 10 new trainee roles across the city-region to expand housing enforcement – part of a three-year package of measures that also includes on-the-job training for existing officers under the Good Landlord Scheme.

Under the deal, Greater Manchester Combined Authority (GMCA) will get £3.9 million so it can lease 200 good quality private rented sector properties for homeless families, in a bid to eliminate the use of B&Bs other than in exceptional circumstances.

£150 million

It also includes devolving £150 million brownfield funding support to GMCA to deliver 7,000 homes in the next three years and devolution of funding to retrofit buildings, to bring down energy bills.

The deal marks a seismic shift in power, funding and responsibility from Whitehall to the region which will have more cash and power to invest in local communities’ priorities.

Andy Burnham says: “While we didn’t get everything we wanted from the deal, we will continue to engage with government on those areas in the future. For now, our focus will be on getting ready to take on the new powers and be held to account on the decisions we will be making on behalf of the people of Greater Manchester.”

View Full Article: NEW: Devolution deal gives Manchester more rogue landlord powers

UK house prices fall between December and January

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The average UK house price fell 1.1% between December and January, the latest Office for National Statistics (ONS) house price index reveals.

However, the average price was £289,819 – 6.3% higher than in January last year.

View Full Article: UK house prices fall between December and January

Unscrupulous landlord prosecuted for illegal eviction of young family

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A landlord in Derby has been convicted of an illegal eviction and ordered by a court to pay a £1,600 fine.

After initially agreeing a 12-month rental for an unfurnished house with a young family, landlord Grace Young of Pear Tree Street, Derby then attempted to illegally evict them just nine months into the tenancy.

She initially served the tenants a handwritten note asking them to vacate the property before then serving two eviction notices, one of which was invalid.

Her actions then came to the attention of the Derby City Council’s Housing Standards team, who prosecuted Young under the Protection from Eviction Act 1977.

Fine and costs

At Southern Derbyshire Magistrates Court, Young was fined £600 and ordered to pay costs of £950. In addition, she was ordered to pay a victim surcharge of £60.

The court heard that during the notice period, Young began to repeatedly stand outside the property and stare through windows and, while the tenants were away on holiday, entered the property and changed the locks without informing the tenants or providing them with new keys.

Councillor Matthew Eyre, Cabinet Member for Community Development, Place and Tourism said:  All landlords have a duty of care to their tenants and while the vast majority of private landlords in the city take their legal obligations seriously, there are a small minority who don’t. 

“This prosecution sends a strong message to that minority of unscrupulous landlords that the Council is not afraid to take legal action to safeguard tenants and their wellbeing.”

View Full Article: Unscrupulous landlord prosecuted for illegal eviction of young family

Revealed: The imbalance of the property market

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Rental stock accounts for just 5% of available homes in some areas of England, according to new research.

The findings from the Gradual Homeownership provider, Wayhome, revealed in areas like the Isle of Wight rental properties account for just 5% of the total market stock.

View Full Article: Revealed: The imbalance of the property market