BREAKING: Landlords now covered by cladding fund – but NOT portfolio operators

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Landlords who own flats hit by the cladding scandal will be covered by the remediation fund, the government has announced.

However, portfolio landlords have been left out, with property experts suggesting that this omission will mean work will be held up and their flats could become unsellable.

Last month, it was suggested that landlords would not be included in the fund, but in an amendment to the Building Safety Bill, the government now plans to protect leaseholders who live in a property as their principal residence and accidental landlords – those who do not live in the property, but do not own any other residences, or who own only one other property. Overseas landlords who own one or two properties in the UK will also be covered.

A Department for Levelling Up, Housing and Communities spokesman tells LandlordZONE: “We committed to covering those who sub-let properties. These clauses announced go a bit further.”

However, many in the sector say that excluding many landlords will block building repairs and make flats unsellable. In cases where the developer or the freeholder cannot afford to cover the costs of non-cladding works, flat owners will have to cover the cost of works up to a cap of £10,000 (£15,000 in London).

Portfolio landlords

Portfolio landlords make up a significant proportion of a building’s leaseholders in some city centre blocks, which means there will be long delays for works to remedy fire safety defects because leaseholders will be dependent on landlords’ ability to pay huge bills. 

Experts have warned that even though owner-occupiers in buildings with a large share of landlords would be protected from the costs, their flats would therefore remain un-mortgageable, unsellable and devalued until all works were complete.

It could also stop property investors from being able to sell. Under the new legislation, a buyer purchasing a flat from an owner-occupier would also be protected from the cladding costs and the non-cladding cap.

But a buyer purchasing a property from a portfolio landlord would take on a lease that had no cladding cap protections attached to it, even if the buyer was purchasing as an owner-occupier, according to Giles Peaker of Anthony Gold solicitors.

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Tenancy Deposit Scheme fiasco – unilaterally terminated protection?

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I use the Tenancy Deposit Scheme insurance-based scheme. In my opinion, I would sooner pay a small premium to hold the deposit than have to jump through hoops trying to get payments for damages through the custodial scheme.

If as a fait accompli you make a deduction from a deposit that you hold

View Full Article: Tenancy Deposit Scheme fiasco – unilaterally terminated protection?

Three Methods of Financing a Buy to Let Business Incorporation

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There are three main methods of financing a Buy to Let business incorporation. However, one of them is fraught with risks and high costs and it unlikely to be the method you might think of as being risky at first either.

View Full Article: Three Methods of Financing a Buy to Let Business Incorporation

New study finds UK needs 230,000 new rentals per year

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International consultancy, Capital Economics, has arrived at the figure of 227,000 new homes to be built per year, needed to feed the expected future demand and to stabilise the UK rental market.

The National Residential Landlords Association (NRLA) commissioned the respected economics consultancy Capital Economics to carry out the research.

This research by the firm found that if the future growth projections pan out, and owner occupation and social housing demand continues at their present rates of growth, then the private rented sector (PRS) supply of housing needs to increase by 227,000 homes per year.

This would be in-line with government’s own targets, which anticipates growth of nearly 2 million new households over the next decade.

Multiple sources of new supply

Providing the level of new housing advocated by the research consultancy, it suggests, would come through a combination of new-build; converting commercial property for residential use; moving housing stock from short-term to long-term residential lettings; and re-engaging vacant housing into the rental market.

“Even with increased provision of affordable housing and higher rates of owner occupation, both of which are important, our research shows that significant additional investment is needed by landlords in the private rented sector,” says Andrew Evans of Capital Economics.

Capital Economics suggested that the private rented sector is currently heading in the wrong direction with this. Without the necessary changes to the way landlords’ profits are taxed, along with changes to the current regulatory system, the private rented sector housing stock would shrink by around 50% or a half million properties over the next 10 years, thinks the firm.

Andrew Evans, managing economist for Capital Economics, has said:

“The private rented sector, which is predominantly supported by private individual investors, has a key role to play in addressing housing need in the UK.

“However, the stock of homes for private rent has fallen in recent years, driven partly by a series of policy changes.

“Without further changes, that supply could fall by over half a million more over the next decade.

“Even with increased provision of affordable housing and higher rates of owner occupation, both of which are important, our research shows that significant additional investment is needed by landlords in the private rented sector,” he says.

Rents moving ever higher

A severe shortage of rental housing is pushing rents ever upwards as demand continues to rise. People are struggling to find suitable accommodation at a reasonable price now, and with growing numbers of renters projected to continue, the situation will only get worse unless more supply is forthcoming.

UK rents are now on average over £60 per month higher than they were before the coronavirus pandemic first started in 2020, research by property portal Zoopla has found. The average UK residential rent, according to the property portal, was £969 at the end of 2021 and growing.

Without some urgent action Capital Economics concludes, an increasing number of people looking for affordable rental housing will really struggle to find it.

NRLA chief executive Ben Beadle says that their report “…highlights in stark detail the supply crisis now engulfing the sector.”

“For all the efforts to support home ownership, the private rented sector has a vitally important role to play in helping the Government to achieve its housing objectives.

“Without urgent action, the increasing number of people looking for affordable housing will be the ones to struggle as they face less choice and higher rents as supply dries up,” Mr Beal says.

A government spokesperson from the Department for Levelling Up, Housing and Communities has said:

“We support the private rented sector and recognise the crucial role Build to Rent homes have in boosting housing supply and increasing quality and choice for renters across the country.

“This Government is building more genuinely affordable homes to help people on to the housing ladder. Since 2010, we have delivered more than 574,000 affordable homes and we are investing £11.5 billion in affordable housing.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – New study finds UK needs 230,000 new rentals per year | LandlordZONE.

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Gove to force building industry to pay cladding bill BUT will landlords get help?

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Levelling Up Secretary Michael Gove has doubled down on his promise to make the building industry pay for cladding remediation after some bosses said his original proposals were “unrealistic” and “inequitable”.

Under Gove’s latest plans, the government could block planning permission and building control sign-off on developments for non-compliant companies.

Amendments to the Building Safety Bill – which will also make firms pay to fix historical problems instead of leaseholders – now need to be approved by Parliament.

Cost contribution orders will be placed on manufacturers who have been successfully prosecuted under construction products regulations, requiring them to pay their fair share on buildings needing remediation.

Dangerous cladding

New clauses will also enshrine in law the government’s commitment that no leaseholder living in their own home, or sub-letting in a building over 11m, should pay for the removal of dangerous cladding.

Under the plans, developers that still own a building over 11m that they built or refurbished – or freeholders linked to an original developer – will be required to pay in full to fix historic building safety issues.

Building owners who are not linked to the developer but can afford to pay in full will also be required to do so.

Where building owners do not have the resources to pay, leaseholders will be protected by a cap set at £10,000 for homes outside London and £15,000 for homes in the capital.

The Department for Levelling Up, Housing and Communities is still to clarify whether landlord leaseholders will be included in its cladding costs relief initiative. 

A National Residential Landlords Association (NRLA) spokesman tells LandlordZONE: “The NRLA does not feel the amendments tabled by the government to the Bill properly address the problem that buy-to-let landlords who are leaseholders are being treated so much more differently to others.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Gove to force building industry to pay cladding bill BUT will landlords get help? | LandlordZONE.

View Full Article: Gove to force building industry to pay cladding bill BUT will landlords get help?

Landlord wins compensation after challenging agency’s ‘unfair’ lettings contract

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A landlord who complained after being told she could not exit a property management contract with a leading lettings agency until the tenant left has won her case.

The Property Ombudsman (TPO) has awarded Karen Markham £408 in compensations after she sought redress over her run-in with the Wokingham, Berkshire branch of Romans.

Her saga began three years ago when she bought a buy-to-let property via the agency, subsequently asking it to find a tenant and manage it as well.

Markham subsequently found out that her contract with Romans stipulated that, if she wanted to serve the agency notice, this could only be done after the incumbent tenant left.

TPO has ruled that the terms of business and communications did not clearly outline the circumstances under which the instruction could be terminated.

The ombudsman said it was “not satisfied that this liability for continuous fees, without the ability to serve notice, was specifically drawn to the Markham’s attention.

Agency criticised

“The fees in the contract are not expressed in clearly labelled sections. I have also not found that the contemporaneous system notes are sufficient to conclude that the indefinite nature of the rent collection service was explained sufficiently.”

The Ombudsman also criticised aspects of Romans’ communication with Markham.

Richard O’Neill, MD of Lettings at Romans, told Wokingham Today that: “We have worked closely with trading standards to review our documentation and have actioned their suggestions to improve clarity and avoid similar issues in the future.

“A review of this kind is strictly confidential between Romans and the complainant. Therefore, we will not be publishing the results publicly, however we have now changed our terms and conditions and we do not enforce old policies.”

Guide: How to choose a letting agency.

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Tough new measures to enforce remove of unsafe cladding

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Tough new measures that will force industry to pay to remove cladding and protect leaseholders from exorbitant costs have been unveiled by Secretary of State for Levelling Up Michael Gove.

For those in industry not doing the right thing

View Full Article: Tough new measures to enforce remove of unsafe cladding

LATEST: Bristol to seek rent control powers to limit ‘unaffordable’ PRS

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Bristol’s mayor Marvin Rees has pledged to fulfil his manifesto promise of making the city the first to pilot rent controls.

He has teamed up with the Bristol Fair Renting Campaign – supported by Shelter – and community union ACORN to host an online renting summit on 2nd March to get renters’ views on rent controls as well as the council’s enforcement powers.

“I made a manifesto commitment to campaign for the power to introduce rent controls to make Bristol an affordable living city, and we are calling on the government to give us the power to regulate rents,” says Rees.

“Piloting rent control in Bristol will allow us to take a step towards tackling our local renting crisis and will help us develop learnings that can inform wider positive change for the rest of the city.”

Bristol’s housing chief Tom Renhard (pictured) was previously a leading member of campaigning group ACORN when it forced the council to toughen up demands on developers to build affordable homes, and roll out landlord licensing schemes.

He says Bristol rents are ‘out of control’ and believes the renting system is not fair, stable or safe.

“Unaffordable private rents are deepening inequality, as people on lower incomes are at growing risk of homelessness and many are being forced out of the city,” adds Renhard.

“It’s time for a reset in the relationship and for the national government to give us the powers we need locally to properly regulate privately rented housing.”

In Bristol, where demand vastly exceeds supply, the average price of a rented property is now at least £1,000 a month in most parts of the city, it is reported.

However, the National Residential Landlords Association insists rent controls don’t work and points to a lack of new social housing and flat real wage growth across cities in Europe and the USA where the presence of rent controls has done nothing to address affordability.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Bristol to seek rent control powers to limit ‘unaffordable’ PRS | LandlordZONE.

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High Court Ruling on adding extra Floors

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Thinking of adding extra floors onto your property? Airspace Development may now be a little harder as a result of last week’s High Court Ruling curtailing development opportunities.

Last year, new Permitted Development rights were introduced to great fanfare as the biggest shake-up to the planning system.

View Full Article: High Court Ruling on adding extra Floors

NEW: Landlords to follow new discrimination Code for Right to Rent checks

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Landlords have been given new advice on how to complete Right to Rent checks without discriminating against tenants.

The Home Office initiative is, to a greater extent, a response to the political and legal pressure from a Court of Appeal win by the Joint Council for the Welfare of Immigrants, which proved successfully that the scheme had led to discrimination.

The new code of practice, which is still going through a consultative process after being promised last year, applies to residential tenancy agreements starting on 6th April as well as where a repeat check on an existing tenant needs to be carried out after this time, to retain a statutory excuse.

It outlines how landlords should not make assumptions about a person’s right to rent, or their immigration status based on their colour, nationality, ethnic or national origins, accent or length of time they have been resident in the UK.

They must not simply check the status of those who they think appear or are likely to be migrants, treat those with a time-limited right to rent more or less favourably, treat those who have access to the Home Office online checking service or who provide a manual document listed as an acceptable document more or less favourably.

Direct discrimination

As well as direct discrimination, the code highlights indirect discrimination, which could include insisting that a prospective tenant has been resident in the UK for more than five years, which would mean migrants are less likely to be able to meet the requirement.

Landlords must also not discriminate against someone based upon the type of right to rent check which is required.

For example, a British or Irish citizen can decide that they do not want to use an IDSP for digital identity document verification and use a physical document instead.

For those prospective tenants who cannot evidence their right to rent, the code adds that landlords must try to keep the offer of accommodation open to give them the opportunity to produce documents to demonstrate this.

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