Partnership seals multi-million pound acquisition deal

admin    Uncategorized     agents

Real estate investment manager Europa Capital and joint venture partner Addington Capital have sold their Lancelot portfolio of 29 residential properties to Mountview Estates Plc for £10.6 million.

The properties comprise 17 houses and 12 flats (see photo) mainly in London and the South East, all leased on regulated, assured and life tenancies, providing a gross rent of £261,243 a year.

Project Merlin

The properties were acquired by the joint venture in October 2018 as part of the Project Merlin acquisition – a portfolio of mostly old housing stock in Greater London made up of 202 units (43 houses and 153 flats) for £55 million. Since then, Addington Capital has been asset managing the properties with its sister property management and leasing company, AddLiving, providing property management.

Matthew Allen, principal at Addington Capital, says since acquisition it has been looking for opportunities to re-package the properties and add value. He adds: “As a standalone regulated portfolio, Lancelot presented a relatively rare opportunity to acquire these kind of reversionary interests in bulk. The last of these statutory tenancies were created in 1989 and so there’s a dwindling supply. We ran a competitive process and Mountview, as a specialist buyer, is very familiar with the kind of stock and was a reliable counterparty.” 

Operating Partner

Addington Capital was set up in 2010 as an independent asset management and investment business and operates in the office, retail and residential sectors as an operating partner, working closely with its partners to create value through active asset management.

View Full Article: Partnership seals multi-million pound acquisition deal

Landlord ignored order to share horror house with tenants

admin    Uncategorized     agents

A rogue landlord who rented out a ‘death trap’ HMO has been fined £3,660 after he failed to make vital safety improvements.

Paul Ettienne lived with five tenants in a dangerous two-bedroom property in Headstone Drive, London, which had previously been banned from use by Harrow Council. Inspectors discovered that the HMO was unlicensed, had poor electrics, overloaded extension leads and a large window unit secured with tape.

Illegally installed

The disrepair was so bad that one plug in the loft was serving a network of daisy-chained extension leads powering electric fires, TVs, music system, and lamps to the eves in the loft which had been sectioned off as small bedrooms. In order to get to the rooms, tenants would have had to use an illegally installed staircase with no fire protection. The loft itself had had load bearing removed and was not safe for habitation. 

A large window unit on the first floor was held with tape and installed the wrong way around with the handle on the outside.  

Previous prosecution

Ettienne had previously been prosecuted in 2019 for breaching an Emergency Prohibition Order and was found to be still flouting the law despite having been handed a large fine. He had made no attempt to comply with the order and pleaded guilty at Willesden Magistrates Court, blaming his inaction on the pandemic and a loss of income.  

Councillor Anjana Patel, cabinet member for environment and community safety, says: “Not only did Etienne ignore the conditions of the protection order, but he thought he was above the law and could get away with housing tenants in his death trap property. Thanks to the work of our officers the law caught up with him and he has a price to pay.”

View Full Article: Landlord ignored order to share horror house with tenants

Former housing minister and evictions ban architect Chris Pincher resigns

admin    Uncategorized     agents

Chris Pincher, a former housing minister and architect of Covid’s painful eviction ban laws for landlords, has resigned from his latest government job at the Conservative whip’s office.

The 52-year-old, who until today had been working as the party’s Deputy Chief Whip since leaving his housing job in February this year after two years at the Department of Levelling Up, Housing and Communities.

The Sun reports that Pincher resigned last night after several MPs reported him for drunken behaviour at London’s Carlton Club during which he is alleged to have groped two junior members of staff.

Reports indicate he was barely unable to stand up after drinking “far too much”, his resignation letter released today reveals.

Evictions bans

Pincher was one of the Government’s key housing ministers during the Covid months and fought off criticism of his department’s handling of Covid eviction restrictions announcements, which were often made suddenly and on several occasions late on a Friday afternoon.

His elevation to the whip’s office in February raised eyebrows as he had held a position there previously but resigned in 2017 after being accused of making an unwanted pass at former Olympic rower turned wannabe MP, Alex Story, several years earlier.

An internal investigation cleared him of any misconduct, and Pincher exonerated himself last year after organising an effort to save the PM from a back-bench revolt.

In his resignation letter Pincher says: “Last night I drank far too much.

“I think the right thing to do in the circumstances is for me to resign as deputy chief whip. I owe it to you and the people I’ve caused upset to, to do this.”

He said that Boris Johnson would continue to have his “full support from the back benches”, adding: “It has been the honour of my life to have served in Her Majesty’s Government.”

View Full Article: Former housing minister and evictions ban architect Chris Pincher resigns

Service charges and repairs – Allowable expenses?

admin    Uncategorized     agents

My daughter is living, rent-free, in my last remaining BTL, a leasehold flat. Decided that with all the additional legislation coming to get out of the PRS.

In 2021-22 I did not rent out the 2nd bedroom due to worries re Covid and having eventually managed to remove my daughter’s flatmate from hell.

View Full Article: Service charges and repairs – Allowable expenses?

Commercial landlords are disproportionately disadvantaged by CVA rules?

admin    Uncategorized     agents

The Company Voluntary Arrangement (CVA) has come under increasing criticism by commercial landlords and their representatives as putting them at a disadvantage compared with other creditors, so much so that the Insolvency Service commissioned research into its effects.

A CVA is a legal arrangement where agreement among an insolvent or potentially insolvent company’s creditors allows it to defer its debt obligations, to be repaid over a period of time. Where 75% of the creditors, by value, agree to support the company in this regard, the arrangement is designed to save what may otherwise be a viable commercial operation, or a part thereof, of a struggling company.

Once agreement among the creditors is reached, the unsecured creditors are bound by the arrangement, allowing the company to continue trading with its directors still in control. A licensed insolvency practitioner is appointed to monitor the company under the CVA for a period of up to 5 years.

The CVA has proved to be a useful tool to tied an otherwise viable company through a difficult period in its history, with the intention that it will be able to “trade out” of their its current financial difficulties once the directors can get things back under control.

Much criticism comes from the practice of selectively slimming down, particularly in the retail sector, of companies, by closing less profitable outlets and thereby avoiding their long-term lease obligations.

Landlords’ concerns about CVAs

The CVA was introduced into English law by the Insolvency Act 1986. Although it has had its successes, more recently the commercial property sector, particularly through the Covid pandemic, has been raising its concerns about its fairness, particularly in relation to the retail and leisure sectors.

Landlords argue that their debts, particularly rental debts, and how changes can be affecting long-term leases, and the basis on which rents are calculated, are compromised and unfairly affected, in comparison to other creditors.

Criticism of the CVA has been such that the Insolvency Service has been prompted to commission research to gather evidence and report, to help establish the facts and shed more light on this issue.

Commercial landlords have long argued that commonly a scenario develops that will substantially reduce a tenants’ rent payments and crucially, alter lease terms when the CVA action is voted on and approved by all the creditors, most of whom are not financially affected to the extent the landlords are.

The study

The Insolvency Service whittled down a list of 747 of the large companies in the retail, accommodation and food and beverage industries to participate in the research resulting in 59 in the research sample.

The Insolvency Service says it went about the research asking three key questions:

Q1 – How do outcomes for landlords in large business CVAs from either the Retail trade, Accommodation or Food and beverage service activity compare to other creditors?

Q2 – Are landlords equitably treated, compared to other creditors, in large business CVAs from either the Retail trade, Accommodation or Food and beverage service activity?

Q3 – If such a finding is made, [landlords compromised] to identify what specific levers in the framework are causing the issue and how.

It all boils down to one central question of: “Are landlords treated fairly compared to the other creditors in the case of the large business CVAs in the sample?”

The Insolvency Service reached the conclusion that “broadly” yes, landlords are indeed treated fairly by the CVA process. However, there’s a lot more detail here and an argument can be made that it’s not as simple as that, and the sample is relatively small.

One interpretation by Lexology, the international legal update service, was that “commercial landlords are almost twice as likely to have their rights compromised in a CVA than any other class of creditor. In the sample set of CVAs that the researchers considered, property owners were compromised in 93% of cases. The next most compromised class was inter-company creditors at 51%.”

The true level of compromise through the CVA process for property landlords could be much higher than the results of the research and the Insolvency Service report is suggesting. The researchers say themselves that the report “does not tell the full story”.

This is because according to Lexology, it, “focuses solely on the compromise of future rents and not on other losses suffered by property owners, such as conversions to turnover rents and the compromise of rent arrears, service charge and dilapidations.”

The report’s conclusions

The report does conclude that “the overall rate of compromise in relation to landlords is likely to be understated” and that’s because the evidence tends to be skewed by the inclusion of unimpaired “Category A Landlords”.

The overall average compromise for property owners was stated at 43%, considerably less than the 93%, but says the report, “this is an average across all landlords, including those whose debts were not compromised”. The average across compromised “Category B, C and D Landlords” was reported at 64%.

For more detail see:

Company voluntary arrangement research report for the Insolvency Service and

UK company voluntary arrangements: 10 key takeaways for property owners from government research

View Full Article: Commercial landlords are disproportionately disadvantaged by CVA rules?

Rental reform limbo ends – but the debate has only just begun

admin    Uncategorized     agents

Fierce lobbying over parts of the Fairer Renting White Paper could see it watered down before it becomes law, predicts one property boss.

Its release after years of delay and fervent speculation was merely the first step, with uncertainty due to linger until the reforms actually make it into law, says Nick Lyons, CEO of inventory services provider No Letting Go.

Particular opposition

“The devil will be in the detail, which is lacking at the moment,” says Lyons. “For example, many landlords do not accept pets so there will be particular opposition to the idea of tenants finding it much easier to keep pets in their rental homes, unless they have some means to protect themselves against extra cleaning, excessive wear or damage at end of tenancy. There is every chance this could be watered down to appease frustrated landlords by the time it gets to Parliament.”

Complex journey

Lyons says much engagement has already been had on the issue of rental reform, but it’s likely that more consultation and feedback will be sought before the final version of the Bill is presented to Parliament. He believes it will continue to be a slow and complex journey particularly due to controversial reforms such as tenants being the ones to decide when a tenancy ends and what constitutes a valid reason for landlords to end a tenancy. “That is likely to still take some time as intense lobbying and opposition goes on behind the scenes,” says Lyons.

“I’d be surprised if rental reforms were introduced before the end of the year, so 2023 seems far more likely,” he adds. “There isn’t that chronic sense of limbo anymore – which is welcome – but equally there’s going to be a few more months of uncertainty yet to tolerate.”

View Full Article: Rental reform limbo ends – but the debate has only just begun

MORTGAGES – Interest Only or Capital Repayment?

admin    Uncategorized     agents

My personal view is that an interest only mortgage is far better than a capital repayment mortgage, here’s why …

Back in 1971 my parents borrowed three times their joint income to buy a house that cost them £3,000.

View Full Article: MORTGAGES – Interest Only or Capital Repayment?

Huge expansion of HMO licensing planned in Birmingham

admin    Uncategorized     agents

Birmingham is launching a consultation into an additional licensing scheme across the city that would include 12,000 properties in all 69 wards.

The council’s existing mandatory licensing scheme covers 4,000 larger properties with five or more occupants but it now hopes to improve standards in smaller HMOs. Landlords would need to pay a £755 licence fee under the scheme which, if approved, would launch on 1st April 2023.

Biggest scheme

In March, the council approved the UK’s biggest selective licensing scheme and is now waiting for Levelling Up Secretary Michael Gove to give it the go-ahead. Landlords across 25 wards including North Edgbaston, South Yardley and Sparkhill are set to need a licence in a scheme covering 40,000 properties.

Sajeela Naseer, the council’s head of licensing, says years of data-gathering shows a clear correlation between HMOs and antisocial behaviour, waste and some serious home hazards. She adds: “Licence conditions would include requiring landlords to work with the council to tackle anti-social behaviour arising from their properties, to have appropriate waste management arrangements in place and ensure that their properties are safe.”

Anti-social behaviour

Councillor Sharon Thompson, cabinet member for homes and homelessness, says it wants to hear from tenants living in HMOs and landlords who are responsible for them.

“Our research has shown that there are potentially 8,000 HMOs without a licence and that many are badly managed and give rise to a lot of anti-social behaviour,” says Thompson. “The licence would give the council extra powers to proactively identify HMOs and join up with other services such as the police to tackle the issues. This is why we believe that designating a city-wide additional licensing area is the right course of action.”

The consultation launches on 4th July and runs until 13th September.

View Full Article: Huge expansion of HMO licensing planned in Birmingham

Do landlords deserve to lose their Buy to Lets Mr Gove?

admin    Uncategorized     agents

The moment we’ve been anticipating has arrived; two weeks since Gove released his White Paper for a “faired private rented sector,” Landlords are taking stock of how best to deal with the upcoming changes they now need to make to their buy-to-let portfolios in a bid to meet the criteria of a “levelled up” housing standard for tenants.

View Full Article: Do landlords deserve to lose their Buy to Lets Mr Gove?

Monthly house price growth slows to 0.3% for June

admin    Uncategorized     agents

The latest Nationwide House price index for June is reporting a slowing inflationery market with month-on-month property prices up 0.3% in June – down from 0.9% in May.

However, Annual inflation is still in double digits at 10.7% with the average house price now standing at £271,613.

View Full Article: Monthly house price growth slows to 0.3% for June