Plans revealed to speed up possessions for landlords – FOUR years after consultation

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The government has finally promised to set out how it will improve the possession process for private landlords in the courts – almost four years after it first asked for their views on how to make efficiencies.

Its consultation quizzed tenants and landlords on whether a separate Housing Court was needed and Justice Minister Kit Malthouse has now announced that a policy response to the call for evidence would come later in the spring.

He says the Department for Levelling Up, Housing and Communities has committed to work with the Ministry of Justice to make the process quicker and easier.

Its report published at the time – November 2018 – revealed how some landlords reported that it took too long to get to possession order stage using a Section 21 notice as there was often an underlying reason for wanting possession, such as rent arrears.

Read the consultation document.

The main delays in the process related to enforcement; from the possession order being granted, it took a further 10 weeks to gain possession.

The research also found some backlogs and bottlenecks in court administrative procedures due to pressure on court resources caused by lack of staff, closure of courts, a high workload and outdated IT.

However, much has happened in the past few years, with Covid-related court delays pushing the possession process into many months rather than weeks and the government promising to get rid of Section 21s in its upcoming Renters Reform Bill.

In a Parliamentary written response, Malthouse also said the Home Office had no plans to introduce a policy relating to police data sharing relating to eviction of tenants through the courts – however, there is already a well-established national database of rogue landlords.

But as LandlordZONE has reported in the past, very few landlords ever make it onto the dataset. Latest government data released in August last year showed just 43 are listed.

LandlordZONE has asked the Ministry of Justice for an update on when the initiative will start.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Plans revealed to speed up possessions for landlords – FOUR years after consultation | LandlordZONE.

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EXCLUSIVE: Portsmouth landlords battle council ‘ineffective’ HMO licensing

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Portsmouth’s landlords have urged their council not to go ahead with plans for an additional licensing scheme covering more of the city’s HMOs.

Its current scheme covers 1,400 larger HMOs but it plans to extend this to about 2,000 three- and four-bed houses in a bid to improve standards and rid the sector of rogue landlords. A consultation launches on 23^rd May.

Portsmouth’s first additional licensing scheme ran from 2013 to 2018 but was not renewed after doubts about its effectiveness.

Last year, LandlordZONE reported that despite heralding its current licensing scheme’s success, it had fined just seven landlords and agents in 2020.

Portsmouth and District Private Landlord Association believes additional licensing would not help resolve problems around HMOs.

Chairman Martin Silman (pictured) tells LandlordZONE that it will have no effect on noise, parking and anti-social behaviour because smaller HMOs generally don’t create these problems.

Instead, with additional licensing focused on squeezing out the smaller rooms and raising standards across the sector, prices will be pushed up, while landlords will ask whether it’s worth continuing to have smaller HMOs.

“The number of small, nice homes for three or four nurses or dockyard contract workers will decrease and the number of mega-HMOs will rise in response to the high demand and high prices that this will create,” says Silman.

Knock-on

“This has a knock-on inflationary impact on both local rents and local house prices which increases the pressure further for more affordable rents and affordable homes.”

Some councillors have also voiced support for city-wide selective licensing of the whole PRS and while Silman believes the evidence does not support this, he fears this could be the next step.

The council has estimated it will need to employ the equivalent of 18 extra full-time employees to help manage the new additional scheme, which would be funded by new fees of between £829 and £883 for a five-year licence.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – EXCLUSIVE: Portsmouth landlords battle council ‘ineffective’ HMO licensing | LandlordZONE.

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Rent control campaigners hit by HUGE setback as Spain ends ‘disastrous’ experiment

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Rent controls have been scrapped in the Catalan region of Spain after they failed to make housing more affordable.

The caps were imposed in a bid to rein in soaring housing costs, but instead the law made property investment in Barcelona less attractive as yields dropped due to lower rental incomes while house prices continued to rise.

Its government has now declared the rental law as unconstitutional.

The news is pertinent as many parts of the UK are currently pushing for similar constraints on the private rental sector; Bristol is bidding to become the first city to introduce rent controls, while London mayor Sadiq Khan continues to campaign for similar powers, Jersey’s Reform Party has proposed measures and the Scottish government is also consulting on proposals.

Spain’s property hotspot, Barcelona had attracted many second-home buyers and investors during the last few decades, according to Mohammad Butt (pictured), Barcelona office director at Lucas Fox estate agent.

He says: “This is great news for Barcelona, as the end of rent capping will allow investors to fully capitalise on purchasing in an international city which offers an attractive and safe return on their investment.”

He added that the European Central Bank had indicated a possible interest rate increase in order to regulate inflation.

“Now is the time to be requesting a mortgage whilst rates remain low,” says Butt.

“The return of foreign investors with the lifting of travel restrictions and quantitative easing programme within the EU has been the main driver for the Spanish recovery and real estate market.” 

Read more: The history of renting in the UK and rent controls.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Rent control campaigners hit by HUGE setback as Spain ends ‘disastrous’ experiment | LandlordZONE.

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TRENDS: Tomorrow’s landlords will be more invested in holiday lets, says new research

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The future of landlording is to have a more bucket-and-spade flavour than at the moment, new research among younger wannabe investors has discovered.

One if five UK adults have thought about buying a short-let holiday property in the UK to rent out, spurred on both by travel restrictions during the pandemic but also growing awareness of the ecological effects of plane travel, says Suffolk Building Society.

Those keenest to consider such an investment are younger people between 18 and 34 years old, half of whom either live in London or the West Midlands.

Holiday lets

The building society says this increased interest in holiday-let properties is mirrored within its own lending team, with both the volume of, and total value of, completions for new holiday let purchases doubling between 2020 and 2021.

It also says that this new cohort is evenly split between those inspired by Covid to get into holiday lets, and those who had always planned to.

Devon and Cornwall are the locations that most wannabee holiday-let landlords were considering, followed by the Lake District, Peak District and Yorkshire Dales.

“It’s easy to understand why the idea of owning a holiday let is so attractive,” says Charlotte Grimshaw, (pictured) who heads up Suffolk Building Society’s mortgage broker division.

“As people were limited to holidaying in the UK, often within an area they know and love, their eyes were opened to the opportunity of increasing their income, as well as enjoying a property for personal use too

“However, intermediaries should also advise their clients to take the time to understand the market, and check out the competition before falling in love with a property that isn’t viable in terms of lettings.” 

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – TRENDS: Tomorrow’s landlords will be more invested in holiday lets, says new research | LandlordZONE.

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Changing Places toilets

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Thousands of severely disabled people who need specialised facilities when they are out and about will benefit from over 500 new Changing Places toilets in England.

The Chancellor confirmed in his Spring Statement over £23.5 million has been allocated to 191 councils across England to install life-enhancing Changing Places toilets in public places and tourist attractions

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How can landlords afford to upgrade their properties to EPC band C by 2025?

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Like almost all industries the housing market is increasing its efforts to tackle climate change.

Households account for 40% of the UK’s carbon footprint and the government has forced landlords to move more quickly than others, and from 2025, all properties in the private rental sector will need to have an EPC of C or higher to be let to new tenants.

Also, lenders are increasingly offering ‘green finance’ for sustainable properties, encouraging landlords to increase sustainability.

For example, banks have said that borrowers will only need a 10% deposit on loans of up to £25,000 for a ‘green advance’, while others are offering a green cashback scheme worth £500 for eco-upgrades until March 2022.

So, with the chancellor reducing VAT on energy-saving features in the Spring Statement it is certain that ‘green’ investments are going to become a lot more prominent.

Read more about the Spring statement.

Eco privilege

That said, the cost of renovations could price out many landlords, leading to ‘eco-privilege’ in the market.

Thus, with fines of up to £30,000 for non-compliance, many landlords will need to pay thousands to renovate their properties to achieve an EPC rating of C or higher.

For affluent landlords who can afford to renovate outright, this will not be a huge issue and could be a benefit as they will be able to access favourable mortgage rates and other ‘green’ finance options.

But landlords who cannot afford to make the changes will be left with less affordable loans and an already problematic affordability crisis could become a lot worse.

Problems bridged

The bridging sector can assist landlords in accessing favourable ‘green’ finance options and limit the effects of ‘eco-privilege’.

Such loans can bridge the gap between the beginning of a sustainability refurbishment project and the acquisition of a ‘green’ finance solution.

Whether they are used to purchase a property at auction then renovate it before a landlord finds a long-term financial solution, or because a landlord simply needs to free up capital to pay for the renovations, bridging loans can empower a wider range of landlords to access ‘green’ finance for their long-term financial needs.

Fairness of the market can be protected, and the industry will become more sustainable overall.

In the build-up to the introduction of the new EPC regulations, it is vital that landlords plan a timeframe for their renovations and carefully consider their financial options.

Lenders with experience and expertise should assist landlords in doing this, and those who can successfully navigate the next few years can expect to capitalise on the benefits of ‘green’ finance options.

Author bio: Paresh Raja (main pic) is the founder and CEO of Market Financial Solutions (MFS), a London-based specialist lender that provides bridging loans and buy-to-let mortgages.

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Law of unintended consequences emanating from Holyrood

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Some of the more onerous restrictions which were imposed on landlords in Scotland in the first dark days of the pandemic are about to be rescinded at the end of the month, and it might be assumed that this would be a good thing for the private rental sector.

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The No1. property investor skill you need

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If you want to become a more successful property investor, you need to get really good at finding great deals in your investing area.  This is the most important skill you need to learn.

Most people search online

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Rental reality… Belvoir advises on how the market is performing across the country

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The Belvoir Rental Index has been producing unique, valuable data for landlords and investors for the past 12 years and is a fantastic free resource for anyone who is interested in the PRS. Recent rises in advertised rents have been significant, and the Rental Index revealed that in Q4 2021 rents increased by 10.5%, year on year, versus Q4 2020. However, when compared to the average rent in Q4 2019 the increase is a little lower at 9.5%. This suggests that over a two-year period, rents increased by just over 4.5% per annum for 2019 and 2020, so the rent rises over a two-year period are a little higher than inflation over this period. 

Looking forward, most of Belvoir’s franchisees are anticipating a rise in house and flat rent inflation, although some expect rents for flats to be static in the first part of Q1 2022. Room rents are anticipated to either remain the same, or due to the pressure of tenants now desiring their own space because of the pandemic, there could even be an oversupply, and this could result in some falls. 

With Covid restrictions finally lifting more tenants in general may be looking to move on, and this could allow additional stock to come onto the market, enabling more people to move into the homes they desire.

Regional trends

Belvoir’s Rental Index is also able to look at advertised rents in specific regions, and this provides incredibly useful information for landlords who want to know the true picture of what is happening in their area. In Q4 monthly rents varied from £599 in the North East, £680 in the North West, £719 in Yorkshire, through to £1158 in the South East and £1545 in London.

As well as the Rental Index, Belvoir also conducts a quarterly survey of offices across the network, which can add further detail to what is happening in specific territories.

Three quarters of all offices across the Belvoir network reported a rise in rents for flats in Q4, with almost a quarter reporting static rents. Belvoir Brighton was the only office to report a decline in rents for flats and houses. When it came to houses, not a single office reported a decline in rents. When asked to predict how flat rents were likely to perform in Q1, there was a 50:50 split of Belvoir offices predicting an increase or static rents, with just Belvoir Brighton predicting a decrease.

Property shortages

Q4 revealed a continued shortage in all properties, especially two, three and four bedroomed houses. Natalie Boardman of Belvoir Tunbridge Wells says: “Stocks are low, as more landlords are exiting the market, which puts upwards pressure on rents.”

Tenant occupancy

Tenants continue to occupy properties for extended periods. Belvoir offices reported:

25.8% of tenants remain for 13-18 months

Just under 39% remain for 19-24 months

32% of tenants rent for over 24 months

There were no tenancies for less than a year.

Tenant arrears

Belvoir offices reported that rental arrears remain low:

Just under 10% of offices reported zero rent arrears – an increase versus Q3 21

Almost 65% of offices reported less than three renters in arrears – an increase versus the first three quarters of 2021, all of 2020 and most of 2019

Just under 19.5% of offices reported 4-10 tenants in rent arrears – a decrease compared to the first three quarters of 2021, all of 2020 and most of 2019

6.5% of offices reported 11 or more tenants in arrears – the lowest level since Q4 2019.

Eviction numbers also remained low, with 61% of offices reporting zero evictions and almost 23% reporting a single eviction in Q4. Offices that did carry out evictions reported that these were mostly due to landlords selling their property, or the result of anti-social behaviour.

Property sales

Belvoir offices seeing up to three landlords selling properties increased to 61% in Q4. The number of offices with zero landlord sales fell to around 3%.

Voids

In Q4 one-week voids fell to almost 23% in Q4, compared to almost 40% in Q3.

To read the Belvoir Q4 2021 rental index in full, visit https://www.belvoir.co.uk/rental-index/

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Rental reality… Belvoir advises on how the market is performing across the country | LandlordZONE.

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Moratorium on commercial landlord rent arrears remedies ends

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The new law now in place is there to help resolve certain remaining commercial rent debts says Paul Scully MP for the Department for Business, Energy & Industrial Strategy, and the Department for Levelling Up, Housing and Communities.

On 24 March 2022 the Commercial Rent Bill received Royal Assent, brought into effect to provide a legally binding arbitration process aimed at resolving certain outstanding commercial rent debts relating to the Covid pandemic.

Since March 2020, significant restraints have been placed on commercial landlords’ ability to recover arrears of rents from their tenants. However, landlords in England and Wales did retain some limited scope to recover rent and other sums due to them under commercial leases, despite the statutory and other restrictions, however. The laws in Scotland and Northern Ireland regarding arrears recovery were different.

Depending on the specific circumstances commercial landlords found themselves in, possible remedies open to them included, for example, recovering sums owed by tenants of commercial property from former tenants, guarantors, subtenants, or by claims in the county courts or High Court.

Code of Practice

On 9 November 2021, the government published an updated code of practice for landlords and tenants of commercial property. The code was voluntary, but was based on measures that are now given statutory force under the Commercial Rent (Coronavirus) Bill (the Bill), which was introduced to parliament on the same day.

The Bill also contained provisions to ring-fence arrears of rents for periods where the tenant had to remain closed, and to introduce a binding arbitration scheme of last resort for commercial landlords and tenants in England and Wales who were unable to come to agreement on those arrears.

The code replaced a previous code of practice issued in June 2020. The code was based on the principle that landlords and tenants should be negotiating how they can share the cost of pandemic-related commercial rent arrears where it is not possible for tenants to pay in full.

The code expected tenants able to meet their obligations to pay in full. However, for those unable to do so they were are expected to negotiate with their landlord “in the expectation” that the landlord waives some or all of the debt if they were able to.

The general moratorium ends

With the passing of the new law, now in place, it aims to resolve certain remaining commercial rent debts disputes accrued because of the pandemic, Business Minister Paul Scully has announced Thursday 24 March.

The ‘Commercial Rent (Coronavirus) Act 2022’ received Royal Assent on that day which means that a legally binding arbitration process will be available for eligible commercial landlords and tenants who have not already reached an agreement.

This will aim to resolve disputes about those pandemic-related rent debts and will help the market return to normal as quickly as possible.

The law applies to specific commercial rent debts for those businesses, including pubs, gyms and restaurants which were mandated to close, in full or in part, from March 2020 until the date restrictions ended for their sector. Debts accrued at other times will not be covered by the legislation.

Business Minister Paul Scully said:

“This new law will give commercial tenants and landlords the ability to draw a line under the uncertainty caused by the pandemic so they can plan ahead and return to normality.

“Landlords and tenants should keep working together to reach their own agreements where possible using our Code of Practice to help them, and we’ve made arbitration available as a last resort.

“Tenants who can repay their rent debts in full, should do so, and when they cannot, landlords should try to share the burden, so we can all move on.

“The government encourages commercial landlords and tenants to negotiate their own agreement where possible, so that an arrangement to resolve debt is mutually agreed, instead of resorting to the arbitration process.”

Continuing protection

Last Thursday 24 March was the last day of the general moratorium on commercial evictions and restrictions on Commercial Rent Arrears Recovery (CRAR) in England and Wales, but eligible firms remain protected for the next 6 months during which arbitration can be applied for or until the conclusion of an arbitration.

The moratorium has provided firms with necessary breathing space to negotiate how to address the cost of commercial rent debts caused by the pandemic, before the new law came into place.

Across the regions

The Code of Practice applies across the UK. The ‘Commercial Rent (Coronavirus) Act’ applies to England and Wales. Scotland has adopted an alternative approach to commercial evictions since the start of the pandemic, due to different property legislation and market conditions and there are differences for Northern Ireland.

More information

For those tenancies not covered by the new legislation, and were landlords and tenants have failed to reach agreement, either party can apply for arbitration unilaterally, as a backstop after negotiations have failed.

However, the parties are free to continue to negotiate outside of the legal arbitration process. The Code encourages the parties to use forms of alternative dispute resolution, such as mediation, if they wish to pursue this.

The window to apply for arbitration will be six months from 24 March and arbitrators may award a reduction of protected rent debt and/or time to pay, with a maximum period to repay of 24 months.

The legal arbitration process is to be delivered by arbitrators that have gone through an approval process to demonstrate their suitability to administer the scheme. The government will publish a list of approved arbitration bodies in due course, and where a dispute is eligible, landlords or tenants will be able to apply directly to any approved arbitration body to appoint an arbitrator.

Further guidance will follow from the departments for landlords and tenants as well as to arbitrators on how the process will work for all parties: Department for Business, Energy & Industrial Strategy and the Department for Levelling Up, Housing and Communities

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