‘Why must PRS landlords do electrical checks when social homes are ‘exempt’

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The government has been slammed for its double standards by compelling private landlords to carry out electrical safety checks in high-rise blocks every five years, while social landlords don’t face the same obligations.

Lord Foster of Bath attacked the current inequality during a debate on the Building Safety Bill, which is set to receive Royal Assent soon.

He told the House of Lords the disparity was strange because the government wanted equality between social and private landlords.

He told peers: “The social housing charter states unequivocally, ‘Safety measures in the social sector should be in line with the legal protections afforded to private sector tenants.

“Responses to the social housing Green Paper showed overwhelming support for consistency in safety measures across social and private rented housing’.”

Five-year checks

Lord Bath introduced an amendment proposing mandatory five-year checks, which he said social housing landlords supported.

He added: “Some 87% of leaseholders support the introduction of mandatory electrical safety checks. The same survey found that 91% of leaseholders were more concerned for their safety and that of their tenants as a result of what they saw in the tragic fire at Grenfell.”

Read more about landlords' electrical safety check obligations.

However, Home Office Minister Lord Greenhalgh (pictured) said the amendment would add an additional objective for the building safety regulator around property protection.

He added: “I am concerned that adding additional objectives for it at this early stage in its life could distract it and hinder its success. Instead, we should include this issue in the first statutory review of how well the regulator is working.”

The government has vowed that no leaseholder living in medium or high-rise buildings will have to pay a penny for the removal of cladding, but it has repeated that only buy-to-let landlords with one other property should be included in statutory protections for leaseholders.

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Company linked to high profile investor put into liquidation owing £1.5m

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A high-profile property investor hailed as a rent-to-rent success story has put his company StayBC Ltd into liquidation, owing creditors nearly £1.5 million.

Newport-based Ben Brand charted his rapid rise on social media, describing his introduction to the property sector after attending a training course in 2019 where he learnt how to set up his own serviced accommodation company, admitting that prior to that, he had had no property or business experience.

StayBC Ltd promised to source property investment opportunities for clients to increase their wealth.

Last April, he had 160 serviced accommodation units, employed 60 staff and was managing three hotels.

By August, he talked about making £500,000 a month in sales, operating across South Wales and South West England and employing more than 140 staff.

He revealed that his deal sourcing business was generating £50,000 in monthly sales, specialising in finding rent-to-rent and purchase opportunities for investors.

Name change

Earlier this month, he set up Oaktree Investing Ltd, after changing its name from StayBC Sourcing Ltd. He has also been promoting another company – Stay Developed.

Companies House information shows that £450,000 is owed by StayBC to his own sourcing company StayBC Sourcing while more than £1 million is owed to a group that includes HMRC plus 130 investors and small businesses.

Brand also recently set up an investment club to attract those wanting to grow and build a serviced accommodation company.

It promises: “Our mission is to help people create lives of wealth, happiness and freedom by teaching them how to create and scale their own Serviced Accommodation businesses. Here, we will train, coach and mentor you on your journey.”

Due to his high profile, Brand was regularly featured on podcasts, speaking about his business model. This week, he was still posting on his Facebook page, ‘Benthebrand’, about new opportunities for investors in apartment blocks.

LandlordZONE has attempted to contact Brand for a comment.

Pic credit: YouTube.

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OFFICIAL: 53% of renters’ finances so weak they can’t pay £850 ‘unexpected bill’

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More than half (53%) of renters could not afford an unexpected, but necessary, expense of £850 compared with 1 in 10 (13%) adults who own their property outright, new research published today finds.

The Office of National Statistics (ONS) studied the impact of the increased cost of living during the last five months and found that those renting their homes, adults on the lowest incomes or those with no formal qualifications were most likely to be unable to afford this unexpected expense.

Parents of dependent children, divorcees or those separated, disabled people, and those living outside London, the South East and South West were also likely to be more affected.

The ONS data uses the affordability of an unexpected expense as a measure of financial vulnerability and helps identify households that may not be able to absorb a cost of living increase.

Rent arrears

The findings are likely to worry landlords, many of whom have been affected by rent arrears during the pandemic, while last week’s Budget offered little consolation for struggling renters who are now also being hit by spiralling energy bills.

The National Residential Landlords Association says although average rents across the country have been increasing by less than inflation, the squeeze is compounded for renters reliant on Universal Credit.

Policy director Chris Norris (pictured) adds that more than half now have a gap between what they receive in housing benefits and what they have to pay in rent.

“Ministers should be doing more to support the most vulnerable tenants by unfreezing housing benefit rates so that they may better reflect the cost of quality homes,” he tells LandlordZONE.

More than 8 in 10 (83%) adults reported an increase in their cost of living in March compared with around 6 in 10 (62%) last November, according to the ONS, mainly due to the rising cost of food shopping (90%), gas or electricity bills (79%) and the price of fuel (71%).

Read the ONS research in full.

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Government grants for corporate landlords to insall EV charge points

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The government scheme for EV chargepoint grants gives financial support to buy and install electric vehicle (EV) chargepoints at residential or commercial properties in the UK: Click here for the full details.

The grant amount is per chargepoint socket installed and provides up to 75% of the cost towards the purchase and installation of a chargepoint socket

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Three easy-to-miss legal updates every landlord should know about!

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With 168 rules and regulations to follow when letting a property, it can be a nightmare for landlords to stay up to date with legislation.

Here’s three upcoming changes worth knowing:

Right to Rent

If you’ve been letting to the same tenant for a long time or are new to buy-to-let, you might not realise the Government requires you to check whether your tenant is legally allowed to live in the country. Even if they have a British passport, you still need to carry out the checks. If you don’t, you could be fined thousands.

The good news is that you can carry out these checks remotely until 30th September. You can speak to the tenant via a video call and accept scans or photos of documents rather than having to see the originals.

There is also an updated code of practice that landlords must abide by, and it’s important to note that you cannot discriminate against prospective tenants who might be less easy to make checks on. Find more information here.

Landlord Licensing

There’s a lot of talk at the moment about the ‘Renters’ Reform Bill’, which has been on the cards for a few years now. It’s expected this year and is likely to scrap Section 21, as well as introduce other changes.

One of the proposals that’s often overlooked is the requirement for landlords in England to have some form of regulation. This already exists in the rest of the UK – landlords have to register themselves and their properties, and anyone managing a property in Wales must also be licensed. So it’s highly likely that, as a landlord in England, you’re going to have to be either registered, licensed and/or belong to a redress scheme in the not-too-distant future.

Then there’s the extremely complicated local authority licensing schemes in England. Mandatory nationwide licensing only applies to ‘large’ HMOs in England and Wales – properties with five or more people, forming more than one household. However, each council also has the power to introduce their own additional and selective licensing schemes, which can apply to any rented property.

To add to the confusion, selective licensing schemes only run for five years, after which they can be renewed, scrapped or replaced with a different scheme. Some councils are great at making sure landlords are aware of changes and new schemes, but some do the absolute minimum, meaning changes can easily be missed.

It’s essential for landlords – especially if you don’t live in the same council area as the properties you let – to stay on top of local licensing schemes. If you don’t have the right licence for your property or if you breach any of the licence conditions, the council could fine you up to £30,000. Your tenants, or where tenants are in receipt of benefit, the Council can, apply to the First Tier Tribunal for a Rent Repayment Order which could require you to repay up to 12 months’ worth of rent.

Smoke and Carbon Monoxide Alarms

In November 2021, the Government announced that there will be some changes to alarms coming soon. The proposed changes are quite cost effective and could protect you and your tenant, so we think it’s well worth implementing them now if you can:

1. CO2 alarms will be required in rooms with a combustion appliance (apart from gas cookers) in all tenures via building regulations – so for your home as well as the properties you let.
2. Landlords will need to repair or replace alarms if they’re reported as faulty. The cost of doing this is so low and they give such great peace of mind to protect tenants, it’s worth checking regularly that the smoke alarms are working properly.

How are you keeping up?

At Leaders we have expert agents who manage lettings compliance for our landlords. If you let through an agent, check how they stay legally compliant and if you self-manage, make sure you have a reliable way to keep up to date with ongoing changes.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Three easy-to-miss legal updates every landlord should know about! | LandlordZONE.

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TONIGHT: Struggling to find property deals?

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Live online TONIGHT (Thursday 31st May) at 8pm! Brand new training all about how you can find better property deals in your area.

If you are struggling to find great deals, or don’t know what to look for

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Failing Social Housing providers to be named and shamed

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The government will “name and shame” failing social housing providers as part of major reforms to give residents a stronger voice and drive up standards. This means social landlords providing sub-standard housing and services would be publicly called out on the government’s website and across social media channels.

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NEW: Job advert for national landlord register manager reveals scheme will happen

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The Department for Levelling Up, Housing and Communities (pictured) is advertising for someone to investigate setting up a national landlord register.

Despite not having confirmed officially that there will be a such a register, the job advert is for a full-time policy advisor.

It follows a commitment in the government’s Levelling Up White Paper earlier this year to explore the introduction of a landlord register, after first promising to bring forward reforms to drive improvements in standards in rented accommodation in 2021.

This new role will focus on looking at possible penalties and enforcement and leading on the data protection elements of a register.

Penalties

The job description explains: “You will lead and drive policy development and delivery related to specific workstreams on our work exploring a national landlord register – penalties/enforcement and data protection. This will involve significant, detailed policy work at all stages of the policy cycle, potentially including delivering legislation.”

The newly appointed advisor will lead and support stakeholder engagement, both internally and externally, representing the department’s views and position through the policy development process.

They will also work alongside departmental staff and a range of other government departments to, “understand the broader context of PRS and housing policy and ensure alignment with wider government policy”.

The job will be based in either London or Wolverhampton with a salary of between £36,337 and £39,598. Candidates have until 11^th April to apply.

“This is positive news that the government is planning for a national landlord register and that Ministers are taking it seriously, as the millions of English landlords who will need to join the scheme have been waiting to hear what the requirements will be for some time,” says Sean Hooker (pictured), Head of Redress at the PRS.

“We will of course work with the new recruits to help them implement a workable system. It makes logical sense that if you have mandatory redress, you have your register.

“In the meantime, we are running the pilot for the NRLA along with TDS.

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Challenge for the PRS is how to adapt to accommodate more mature tenants

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Homes headed by a person over the age of 45 will account for at least half of all privately renting households by 2035, analysis conducted on behalf of Paragon Bank has found.

A report by the Social Market Foundation (SMF)

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How can investors build a buy-to-let portfolio?

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For a long time, investing in buy-to-let was seen as a sure-fire way to make money. But, over the last five years or so, regulatory and taxation changes have dented its appeal.

However, with inflation hitting a new 30-year high in January, mortgage rates still at historic lows and rental yields increasing, many investors are considering buy-to-let once again. Here are some past lessons that could help shape an investment strategy for the future.

Timing the house price cycle

Britain has seen unprecedented house price growth over the past 25 years. An investor who timed the house price cycle perfectly and always invested in the fastest growing regions would have seen double the average returns of someone investing in the slowest growing regions.

Between 1996 and today, a buy-to-let investment in the North East would have made the biggest returns, with high rental yields compensating for lower house price growth compared to southern areas. London, the region that’s seen the strongest capital growth, came third.

Crucially, we are not expected to witness the same magnitude of house price inflation over the next 25 years as we have seen over the past 25. Nevertheless, northern areas are forecast to see higher price growth until 2024, when a new housing cycle begins. From then, price growth across the South, especially London, is set to start outpacing the North once again.

Taking a long-term view is key, says Catherine Westerling, Head of Lettings at Hamptons. “Property has always performed strongly as an asset class on a minimum 10-year view, but a 20- to 25-year strategy is likely to be far more rewarding.”

Manage costs

The price an investor pays for a property makes the single biggest difference to returns. As Westerling explains. “It’s the old adage: you make your money when you buy, not when you sell.”

Recent tax changes have pushed up costs for individual landlords, particularly if they are higher-rate taxpayers, so many have put their properties into a limited company structure. There are now a record 270,000 buy-to-let companies in operation, with around two-thirds of these set up since 2016, when it was announced that mortgage interest would soon no longer be tax-deductible for landlords holding investment property in their personal name.

Leverage is crucial

The gains investors can make from house price growth are amplified significantly if they borrow as much money as they can to fund a purchase. When prices rise 10%, an investor with a £50,000 deposit and 75% loan to value mortgage will see a return of 40% on their initial investment, before the costs of servicing the loan.

In addition, reinvesting rental income back into a portfolio increases returns significantly. Nationally, the average portfolio built-up over the last 25 years on the back of rising house prices and reinvested rental income would be 55% smaller if rental income was withdrawn each month rather than reinvested.

Balance is best

The most successful landlords have a balance of geographies so they can benefit from the current high yields in northern areas as well as the longer-term capital growth from southern locations, Westerling explains.

She adds that landlords also seek to hold a mix of property and tenure types and include properties that can have value added by a refurbishment or extension. “At the end of a refurbishment an investor has increased the property’s rental value and capital value, while also improving a mortgaged property’s loan to value”.

For further analysis and expert advice, access Hamptons’ new Buy-to-Let report and sign-up to the webinar on 31st March here.

DISCLAIMER

@ Hamptons 2022 purpose of general information and Hamptons accept no responsibility for any loss or damage that results from the use of content contained therein, including any errors or negligence from third party information providers. It is your sole responsibility to independently check and verify the facts contained within this report. All opinions and forecasts within this report do not in any way represent investment or other advice. Reproduction of this report in whole or in part is not allowed without the prior written consent of Hamptons.

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