The Property Ombudsman scheme excludes six agents

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In its latest report, The Property Ombudsman (TPO) reveals that it has excluded six agents from its scheme in the last quarter of 2022 for failing to pay a compensatory award.

All six agents were referred to the scheme’s independent Compliance Committee which ruled that they should be excluded.

View Full Article: The Property Ombudsman scheme excludes six agents

CLAIM: ‘Banning new HMOs makes student housing market worse’

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Students are finding it even harder to find accommodation following a four-year freeze on new HMOs in a leading university city, according to one councillor.

The Scottish seaside town of St Andrews stopped approving licences for new HMOs in 2019 in a bid to relieve pressure on the overcrowded housing market and to free up flats for those not studying at the university.

Liberal Democrat councillor Jane Ann Liston (main image) says she predicted the move would only spread the student population more thinly but that the situation is even worse than she feared, with many properties being divided into two-bedroom flats to avoid HMO rules.

“We have all heard of pairs of students under-occupying properties where the other bedrooms are locked, resulting in huge rent increases for each tenant and driving the poorest students out of St Andrews and into accommodation 13 miles away in Dundee,” she told The Courier.

The policy’s aim to free up potential student-occupied flats for low and middle-income households hasn’t happened, said Liston, while many landlords are choosing to go down the short-term lets road instead.

Oblivious to noise

“With most students wanting to be in the town centre, which includes many properties only suitable for fit young people oblivious to noise and unencumbered by children or cars, there is an opportunity to make best use of our limited housing stock by encouraging students to live there, leaving the further-out residential areas for families,” she added. “The current policy fails to do this.”

Students are campaigning to end the freeze after scores struggled to find accommodation at the start of last term. Councillors are set to discuss the policy in April following a consultation which has just ended.

Picture credit: Jane Ashton/Twitter

Read more about HMOs.

View Full Article: CLAIM: ‘Banning new HMOs makes student housing market worse’

Expenses to improve a EPC rating on BTL – capital or revenue?

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Hello, Hopefully, most prospective landlords would make checking the EPC one of their first tasks when looking at a property to buy. But say you inherit a property you want to use for a buy-to-let. The property is in a good state of repair

View Full Article: Expenses to improve a EPC rating on BTL – capital or revenue?

Labour promises ‘big review’ of private rented sector if it win election

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Shadow Housing Secretary Lisa Nandy has flagged up a big review of the private rental sector if Labour wins the next election.

Speaking at the party’s annual London conference over the weekend (pictured), she said the party had set out plans to tilt the balance of power back towards tenants through a powerful new Renters’ Charter and a new Decent Homes Standard.

The leader of Hammersmith and Fulham Council, Stephen Cowan (pictured), would lead the review into how any reforms would work, Nandy told delegates.

“Security in your home, the right to make your home your own and most of all the right to live in a home fit for human habitation is non-negotiable,” she added: “I’m delighted that Steve is going to drive forward this work so that we are ready to go on day one.”

Charter promise

Nandy has pledged to set up the charter within 100 days if Labour wins the next election, which is expected to include an end to automatic evictions for rent arrears and no-fault evictions, the right for renters to have pets, to make reasonable alterations to a property, and to introduce a four-month notice period for landlords.

She’s also laid into the government’s levelling up strategy, labelling it a “ludicrous Hunger Games-style contest where communities are pitted against one another, and ministers sit in Whitehall picking winners and losers”. Labour would scrap the policy, said Nandy.

“It takes an extraordinary arrogance to expect us to be grateful for a partial refund on the money they have stripped out of our communities, which has decimated vital local services like childcare, buses and social care.”

At a speech later this week, she’s expected to say that should Labour win, it would carry out its commitment to hand over powers to local communities in a wide range of policy areas, including housing.

View Full Article: Labour promises ‘big review’ of private rented sector if it win election

We are all facing the prospect of rising mortgage rates

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Just over a year ago, the Bank Base rate was 0.1%. Since then, there have been 9 consecutive increases with the rate now at 3.5%.

It is predicted that the rate will increase by a further 0.5% this coming Thursday

View Full Article: We are all facing the prospect of rising mortgage rates

Northern Rock excess mortgage interest claim?

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I have come across a Northern Rock excess mortgage interest claim being started by Harcus Parker. Although they have not yet had High Court permission to pursue the claim, if it proceeds they say it will be on a No Win No Fee basis.

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Buying tenanted property – can you ‘reset’ the tenancy to ensure it is valid?

admin    Uncategorized     agents

Hello, We are considering buying a block of 5 flats, all tenanted. Some have been on-boarded through an agent and others have not.

Our concern is that at least some are not valid tenancies in which prescribed information was not given or deposits protected in the correct way

View Full Article: Buying tenanted property – can you ‘reset’ the tenancy to ensure it is valid?

From Ltd back to my own name?

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Hello, I currently have one Buy to Let property which is in a limited company. I bought the property 5 years ago in an Ltd to get around the Section 23 legislation and so be able to claim mortgage interest as an expense.

View Full Article: From Ltd back to my own name?

Capital cost vs allowable expense?

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Hello, Would reinstatement (like for like) following an accident to a property be considered a capital cost or allowable expense vs income?

My instinct is to view it all as maintenance/repair because there was damage which needed attention to get it back to how it was prior to the accident.

View Full Article: Capital cost vs allowable expense?

Landlords to challenge Scottish rent control extension

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A coalition of landlords and letting agencies are to seek a legal challenge to the Scottish Government’s rent control and eviction ban legislation and its proposed extension from April. The Scottish Association of Landlords, Scottish Land and Estates, and Propertymark have together submitted a petition to the Scottish Court of Session requesting a judicial review.

Emergency legislation coming out of Covid was meant to last until the end of March this year, but the Green Party MSP and tenants’ rights minister Patrick Harvie has confirmed that he is planning to extend this for another six months. Landlords will have rent increases restricted to a three per cent maximum.

The Nicola Sturgeon’s Scottish Government has recently revealed these plans to extend the six-month eviction ban with rent controls. Landlords are furious about what was intended as a temporary measure, may, as some predicted, be a backdoor means of imposing permanent rent controls on Scottish landlords.

A six-month ban on rent increases and evictions came into force under the Sturgeon Government last October but landlords are determined to use the legal system to challenge any such continuation of this, in court.

Severe shortage of rental homes

Landlords and their representative have issued the Government with a severe warning that these sorts of interventions in the rental market are exacerbating an already severe shortage of homes for tenants in the country.

Propertymark, the professional body representing letting agents throughout the UK, the Scottish Association of Landlords and Scottish Lands and Estates, have now submitted a petition to the Scottish courts requesting a judicial review of the “temporary” legislation.

The landlord and agent representatives have dubbed the legislation “disproportionate and unfair” and warn that it is leading to an acceleration of a trend where landlords are selling up, exiting the industry, leaving tenants not only paying higher rents, but also unable to find suitable accommodation.

They argue, with some basic economic justification, it would seem, that if supply is reduced and demand is rising, rents can only go one way. And that’s leading to the squeezing out and pricing out of many desperate potential tenants.

The Scottish Government’s plans to extend the eviction ban and continue rent controls until September will relax slightly the currently imposed total rent freeze, placing a cap on the system of a maximum of a 3 per cent increases in rents.

Greens MSP Patrick Harvie, also the minister for zero carbon buildings, as well as promoting tenants’ rights, argues that these protections will benefit tenants although he admits that costs are increasing rapidly for landlords.

A safety net is to be provided such that in certain circumstances, for example when mortgage payments and/or service charges have risen dramatically, landlords will be in a position to apply to the Government for higher rent rises, up to a maximum of 6 per cent.

No restriction for social landlords

No restrictions are to be placed on the social rented sector in Scotland, apart from a voluntary agreement from councils and housing association landlords to restrict increases to below the level of inflation, currently running above 10 per cent. The Convention of Scottish Local Authorities is to commit to average rent rises of no more than £5 a week.

Propertymark has warned that a 3 per cent rent rise cap in the private rented sector would materially discourage landlord investors from staying in the industry given the level of inflation and with mortgage interest rates rising at the fastest rates in decades.

Propertymark director Nathan Emerson has said of these new extending measures:

“The legislation is being made without any clear evidence as to its need.

“Private landlords provide homes on a huge scale for people, and they must be able to cover the costs of outgoings on the property. Repairs and maintenance costs are not solely applicable for social landlords and it’s essential for landlords to be able to keep properties to a high standard in the interest of their tenants.”

The petition presented to the courts in Scotland warns that the legislation will mean that those well-off individuals, tenants renting in the private rented sector, will be given a degree of protection that is not available to social tenants who may be in strained financial circumstances.

Landlords leaving in droves

A recent survey put forward by Propertymark of its Scottish agent members shows that around 90 per cent of their landlord clients who are looking to leave the buy-to-let sector have decided on this mainly due to the current rent freeze and eviction ban. Propertymark also found a big increase in the number of landlords serving notice on their tenants to enable them to sell their properties with vacant possession.

According to property agents Hamptons International, rents in Scotland have risen at the fastest rate of any UK region. Let property rents in Scotland rose by 11 per cent in the year to December whereas nationally this figure averaged 7.7 per cent over the same period, the agent says.

John Blackwood, chief executive of the Scottish Association of Landlords, has commented on this issue:

“Landlords selling up loss making property is further reducing housing supply, despite ever increasing demand. The result is the cost of finding a new home is actually increasing for renters.

“Landlords have had enough. We must stand united to protect our property rights by challenging this unfair legislation in court,” he added.

A spokesman for the Scottish Government told The Daily Telegraph:

“We recognise the role of the private rented sector in providing homes for let and acknowledge that some costs have been rising for landlords as well as tenants. The emergency legislation passed by Parliament requires us to keep measures under regular review.

“We are not aware of a legal action being served on the Scottish ministers challenging the Cost of Living (Tenant Protection) (Scotland) Act 2022.”

Rent control controversies

Rising rents across the UK have reignited the a political discussion as whether it is effective policy to enact rent control provisions. Some politicians, such as Sadiq Khan the Mayor of London, have argued strongly that these controls are the answer to tenants’ problems, particularly in the big cities.

When introduced the rules and regulations surrounding of rent control measures vary considerably from place to place, most consisting of caps on price increases within the duration of a tenancy, and sometimes beyond the duration of a tenancy, coupled with restrictions on eviction.

Research

Much research has been conducted over many years into how rent control affects tenants and housing markets. The results invariably conclude that while rent controls of varying degrees may help tenants in the immediate term, in the short run, in the long run these measures distort market pricing and equilibrium, leading to adverse effects.

These effects include long run decreases in renting affordability, landlords leaving the sector, a fuelling of the decline of whole neighbourhoods, and a decline in the quality of housing – landlords no longer able or unwilling to afford proper up-keep and repairs.

Rent controls can also lead to a serious “miss-match” over time between tenants and rental properties. That’s because once a tenant has secured a rent-controlled home it may choose to stay put, never moving on in the future for fear of losing the low rent. This leads to a drag on an economy due to low labour mobility and leads to longer commutes for productive labour.

A study by the London School of Economics (LSE) and a report by the House of Commons Library set out a convincing case against rent controls, see here

View Full Article: Landlords to challenge Scottish rent control extension