OPINION: The EPC ratings system is “not fit for purpose”

admin    Uncategorized     agents

Every since I started to market one of my commercial buildings around 10 years ago now, I began to doubt the efficacy of the EPC rating system.

The guy that came along to do the inspection told me himself he had just completed a 6 week course, or whatever it was, to train to be a building inspector. He explained to me how the computer system would calculate the dreaded EPC rating once he went away and entered all his data.

I say dreaded because I knew the building would probably produce a low rating, solid walls, 3 combination boilers that I had installed 15 years ago and no double glazing, though there was roof / ceiling insulation.

Low rating

Sure enough the rating was low, I can’t remember now what it was but probably a D or even an E. But it was the EPC system’s recommendations that shook me. It was suggest I fit solar panels on the roof! Not a mention of uprating the boilers to condensing ones, or insulating the walls, let along fitting double glazing? When I questioned him, he said, that’s what the computer says. It was truly bizarre!

I’m not condemning every EPC inspection. When they are carried out by a competent assessor, and I’ve had some done since by chartered surveyors that gave me much more confidence, but the fact remains that the algorithm built in to the EPC calculation produces misleading results.

A flawed system

The Government is looking to have as many homes and commercial buildings as possible to be EPC rated at band C or above by 2035. But what experts are telling us is that as property owners go green they are being punished by a ‘Flawed’ energy performance certificate system. It means that upgrades can actually lower a property’s rating.

In the worst case scenario, property owners and householders risk spending tens of thousands on energy efficiency upgrades that can actually make their properties less valuable, thanks to the Government’s “flawed” Energy Performance Certificate (EPC) system.

When owners come to sell in 10 or 15 years’ time they could find themselves trapped as banks would mark down values. Cheaper mortgages would be difficult to access, despite having spent money making their properties more energy efficient.

Inconsistencies in the EPC rating system

Inconsistencies in the existing EPC calculation mean that property owners currently can pay out thousands of pounds for work that, when they come to sell, they find actually lowered their EPC rating.

The energy sector has been scathing about the system. The EPC rates buildings from A to G but experts are saying the current system is “not fit for purpose” because the rating is based on the cost of energy used, not on the actual carbon emitted into the atmosphere. It results in a system that punishes people for installing heat pumps because they use more electricity and LPG gas because it’s more expensive than natural gas – it incentivises the use of mains gas over electricity or LPG.

Tom Spurrier, of the UK Green Building Council, a leading industry body, has said:

“We have currently got a metric that incentivises gas because it is cheaper.” If you install a heat pump, which is powered by electricity, your EPC rating may actually fall. Properties with Liquid Petroleum Gas (LPG) are also marked down because the gas is more expensive than mains gas.

Landlords affected first

If the Government wants all private homes to be EPC band C by 2035, private landlords are going to be affected first because of plans to introduce a band C requirement for new lets by 2025, and for existing lets by 2028.

Owner occupiers will also be hit and landlords will be required to have an average band C ranking for their portfolios by 2030, leading to homeowners in the worse-performing properties paying higher mortgage costs. There is a risk that private homes that cannot meet the target could become un-mortgageable.

Commercial landlords

In the case of commercial buildings, a Government consultation envisages a phased implementation with an interim milestone of an EPC rating of C by 2027, leading on to an EPC rating of B by 2030. The thinking behind having an interim milestone is to encourage landlords to take action before 2029-30, while providing some flexibility to allow landlords to plan and implement improvements into their tenancy cycles.

Each milestone would follow two year ‘compliance windows’: 1 April 2025 – 31 March 2027 for an EPC rating of C and 1 April 2028 – 31 March 2030 for an EPC rating of B. At the beginning of each window, landlords will have to present a valid EPC.

By the end of each window, landlords would have to show that they have achieved the relevant threshold or have registered an exemption. Any exemptions would need to be refreshed at the start of each compliance window. The intention is that, even where an exemption is registered, landlords should demonstrate that the building has achieved the highest EPC rating that is possible to deliver cost-effectively.

It is made it clear that landlords can bypass the two stages and go straight to B if it is more cost-effective and minimises disruption for tenants when doing refurbishments and improvements.

Room for improvement

There are some rather bizarre outcomes to the present EPC system that need to be tackled if the above targets are to hold any credence with property owners and energy specialists.

David Simms, a small-scale developer and landlord in London told The Daily Telegraph that when he redeveloped a block of flats in Clapham, he paid out £10,000 to install energy-efficiency improvements, including insulating the building.

“The EPC rating went from a B to a borderline D because we put in electrical heating. It was like being kicked in the face,” he said.

The solution, according to the EPC assessor, was to revert the heating system back to overnight storage heaters. This was despite the fact that this would increase the total energy usage.

On another redevelopment cited by Mr Simms, he installed double glazing, energy-efficient lighting and an electric boiler. Again, the EPC rating fell from D to E and he says, “The assessor told me if it had been a gas heating system it would have gone to a B.”

These sorts of anomalies in the EPC rating system go directly against the Government’s aim of reducing, then eventually banning, the use of natural gas boilers and encouraging heat pumps, for which they are offering £5,000 grants.

Jess Ralston, of the Energy and Climate Intelligence Unit, a non-profit organisation, told The daily Telegraph:

“EPCs are so focused on cost, they forget the environmental impact. If you install a heat pump, you will be punished.”

When the EPC system was designed back in 2007, said Mr Ralston, electric generation was very different to now. Ten years ago, electricity use produced more than twice as much carbon as natural gas, but now it is half that of gas.

Mr Spurrier says that:

“In terms of overall net zero, we need to switch as much as we can to electricity, But because the EPC system has not changed, it incentivises property owners to do the opposite. Pressing ahead with EPC targets without reform will be extremely problematic. We don’t want to embark on a policy using a tool that is not fit for purpose.”

David Adams, of the Energy Efficiency Infrastructure Group, an industry body, says:

“The EPC system is completely inadequate to tell you how good a dwelling is and how much improvement it needs. People now may have completed on a house and be completely unaware of the liabilities they are taking on.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – OPINION: The EPC ratings system is “not fit for purpose” | LandlordZONE.

View Full Article: OPINION: The EPC ratings system is “not fit for purpose”

Ministry of Justice Consultation to enhance legal support for those facing eviction or repossession

admin    Uncategorized     agents

The Ministry of Justice 8 week consultation sets out a new approach to the delivery of legal aid for housing possession proceedings. The proposed changes will improve access to legal aid for anyone at risk of losing their home and provide holistic advice to individuals most in need.

The post Ministry of Justice Consultation to enhance legal support for those facing eviction or repossession appeared first on Property118.

View Full Article: Ministry of Justice Consultation to enhance legal support for those facing eviction or repossession

Rent increase hostage to windows?

admin    Uncategorized     agents

Hi, My tenants have not had a rent increase for the last 3 years and I need to do this now. Unfortunately, they are refusing the rent increase and tenancy renewal unless I fix the windows.

The windows have some mist collecting between the two panes of double glazing.

The post Rent increase hostage to windows? appeared first on Property118.

View Full Article: Rent increase hostage to windows?

Demand for rental properties at ‘highest level ever’, landlords tell survey

admin    Uncategorized     agents

Landlords say demand for rental properties is at a historical all-time high, a poll by the NRLA has discovered.

The survey of private landlords across England and Wales, conducted in partnership with the research consultancy BVA/BDRC, found that 57 per cent confirmed that demand for homes to rent had increased in the third quarter of 2021 – up from 39 per cent in the second quarter of the year.

At the beginning of the first Covid lockdown in the second quarter of 2020 just 14 per cent of landlords reported tenant demand having increased.

In a sign of recovery in the market, landlords operating in London have seen a significant increase in demand compared to the levels reported throughout the pandemic as workers returned to the capital.

Workers return

68 per cent of landlords operating in outer London reported demand having increased, up from 25 per cent in the third quarter of 2020. In central London, 54 per cent reported increased demand, up from 16 per cent at the same time last year.

Elsewhere, landlords operating in the South West reported the strongest demand with 79 per cent saying that demand had increased in the third quarter of the year.

This was followed by 74 per cent in the South East (excluding London), 73 per cent in Wales and 71 per cent in the West Midlands.

Despite the booming demand, the same proportion of landlords plan to reduce the number of properties they rent out as plan to increase them at 19 per cent.

Ben Beadle, Chief Executive of the NRLA, says: “As demand picks up following lockdown measures, we need a stimulus to support responsible landlords to provide the homes to rent we vitally need.

“Without this, it will ultimately be tenants that suffer as a result of less choice, higher rents and the resulting difficulties they will encounter when looking to become homeowners.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Demand for rental properties at ‘highest level ever’, landlords tell survey | LandlordZONE.

View Full Article: Demand for rental properties at ‘highest level ever’, landlords tell survey

Minister rejects calls to clamp down on landlords who evict tenants illegally

admin    Uncategorized     agents

The government has rejected a bid to strengthen the way illegal evictions are dealt with and to give tenants more protection.

During a debate in the House of Lords, shadow spokesperson for communities and local government, Baroness Blake of Leeds, urged them to insert a clause into the Offences under the Protection from Eviction Act which would force the police to provide councils investigating an offence with the information they needed.

She said there was a failure to enforce the law against criminal landlords, due partly to local authority budget cuts which meant there were too few tenancy relations officers.

“Where the police do not recognise the criminality of these tactics on the part of landlords, it leads to underreporting of incidents and to those reported being routinely classed not as a criminal offence but as civil matters or breaches of the peace,” she told peers.

Baroness Jones of Moulescoomb warned that the problem of illegal evictions would only get worse during the winter following the end of Covid restrictions as many frustrated landlords would want to kick people out of their homes, with some knowingly or unknowingly trying to evict them without following the correct procedures.

She said: “Many police wrongly conclude that this is a civil matter and not a criminal one. We know this could not be further from the truth.”

Distressing activity

However, Home Department Minister Baroness Williams of Trafford said that while the distressing activity had no place in society, local authorities and the police already had mechanisms in place to work collaboratively to tackle criminal landlords. She added: “If there is an issue, the solution here is not more legislation.

The existing powers we have are sufficient but I accept that it is incumbent on the police and local authorities to work collaboratively to tackle crime in their areas, including on illegal eviction investigations.”

The amendment was withdrawn.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Minister rejects calls to clamp down on landlords who evict tenants illegally | LandlordZONE.

View Full Article: Minister rejects calls to clamp down on landlords who evict tenants illegally

BLOG: It’s time private landlords took a wider role in providing social housing

admin    Uncategorized     agents

This winter will be a perfect storm for homelessness in the UK, as rising rents, energy and food prices, combined with the end of several government support initiatives, including the universal credit uplift and the furlough scheme.

For households already in arrears from Covid-19, and Citizens Advice believe that half a million more renters have gone into arrears since the first lockdown in 2020, the next few months and years could be when the true impact of the pandemic is finally felt.

Even before Covid, however, the UK was already facing a significant homelessness problem.

The government, in collaboration with local council and not-for-profit organisations, rallied during the pandemic to provide temporary emergency relief for frontline homelessness.

The Big Issue believes it is significantly cheaper to prevent homelessness proactively than to let it spiral, yet while the weight of responsibility still largely falls on the public sector to do so, it is the UK private sector that is now largely responsible for social housing.

In fact, privately-run housing associations have provided the majority of social homes since they outstripped local councils for the first time in 2008.

And private landlords, while benefitting from Right to Buy policies which saw socially rented properties move into private hands, have also increased their share over the years, largely due to the ongoing undersupply and underfunding of social rental housing.

Doubled in size

Since the high of 2003, homeownership in the UK has fallen from 71% to 64%, and the private rental market has doubled in size in that time, with this type of housing being particularly common in cities, for lower-income households and young adults.

It is why there must be more collaboration between the public and the private sector if we are going to tackle the upcoming homelessness crisis, whether that be homelessness via domestic violence, rough sleeping, substance misuse or no-fault evictions.

For several reasons, housing supply in the UK is incredibly unresponsive to demand: construction faces an affordability issue, while demand for social housing always outstrips supply as prices are kept significantly below the market level. It is therefore up to us to focus on how existing stock can be better utilised.

The majority of social homes in the UK are now provided by private, non-profit organizations that offer low-cost housing for those in need of a home, but private landlords and investors can still play a larger role.

Guaranteed rent

If you’re a landlord, using your property for social housing means you still benefit from a guaranteed rental income at market value from housing providers, paid each and every month, even if the property is empty.

It also comes without all the normal stresses involved with renting a property, and a fully managed service that includes regular property inspections at no extra cost.

Providing low-cost transitional housing in this way can provide additional income to landlords with long-lease agreement of up to five years.

It also gives landlords the opportunity to become part of the solution, and to make a positive social impact with their properties.

Homelessness takes many forms and the people companies like Lotus Sanctuary often help are not often who you’d expect to be homeless.

Domestic abuse

For example, 61% of homeless females in the UK are victims of domestic abuse or violence and Parliament believes this problem, while typically difficult to measure, rose exponentially in lockdown with evidence that cases are escalating in seriousness and complexity, with Dame Vera Baird referring to it as the “epidemic within the pandemic.”

Safe accommodation is needed for these victims but is not always able to be provided by local council, especially if you consider this means being housed in the same area as your perpetrator.

This is just one example of where private landlords can step in, move quickly, and be able to assist people who need urgent accommodation. With more access to housing the private and public sectors can work together to the benefit of each other, as well as those who need it.

Gurpaal Judge is the founder and CEO of Lotus Sanctuary, a community-interest company on a mission to house and empower vulnerable people facing homelessness.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – BLOG: It’s time private landlords took a wider role in providing social housing | LandlordZONE.

View Full Article: BLOG: It’s time private landlords took a wider role in providing social housing

ANALYSIS: The build-to-rent movement is gathering pace…

admin    Uncategorized     agents

Build-to-rent is still small beer in relation to the rental property market as a whole; it makes a small dent into the Private Rented Sector (PRS), nonetheless it is “building” steadily and every unit built adds to the competition in some locations for small-scale landlords.

The changing nature of the housing market

Home ownership used to be the aspiration of virtually every young person. It was the basic housing model for Britons right up to the year 2000. Up to then 70% of homes were in owner occupation. This was a much higher proportion that in most other Western European nations.

In Britain, getting onto the housing ladder was every young couple’s expectation. It facilitated nicely a sensible financial life plan, it could ride the inflationary price waves, allowing couples to trade up regularly throughout their working lifespan, eventually using their property’s value as part of their pension.

But gradually this this dream scenario started to falter for many people. House prices started to climb out of the reach of the masses. The deposits needed to secure a mortgage rose out of the reach of the majority who aspired to own. So without the help of wealthy parents – the bank of Mum and Dad – they had limited options.

Help-to-buy

Even with the Government’s generous help-to-buy scheme, demand for new homes for sale declined quite dramatically, with the taxpayer payouts seeming to benefit the housebuilders more than the intended recipients, and it led to even higher house prices.

Forced to rent

Consequently, millions turned to renting from small scale landlords who in turn were financing their rentals with the ubiquitous buy-to-let mortgage. The change allowed thousands of middle class individuals to become private landlords, who in turn were riding the property price inflation waves and providing themselves with substantial pension pots.

Some of these private landlords built up substantial portfolios of rentals to the point were you could call them professional landlords. Now over over five million households are provided by these landlords in what is now a very substantial provision of housing – what is called the Private Rented Sector (PRS).

The steady growth of build-to-rent – the next wave is coming

In a move to what the Government sees as professionalising the private rented sector, mirroring those large scale managed units provided in the US, it is encouraged the growth of build-to-rent. This is being funded by financial institutions, large scale developers and property managers.

KKR, a giant American private equity group, is the latest financial institution to finance an ambitious scheme to build 4,000 build-to-rent flats. The financial behemoth KKR is investing £610 million in a joint venture with Apache Capital Partners. The property investment specialist is to build on development sites in Birmingham, Brighton and Hove and London. They are also keen to look at what they call other “core cities” in the UK.

According to The Times newspaper, these flats are to be built by Moda Living, a company owned by family money, the Caddick family, who are also owners of the Headingley cricket ground, Yorkshire county cricket club’s home, and they co-own the Leeds Rhinos rugby league team.

Moda are sourcing sites and will take them through planning and development stage, while Apache Capital will look for investors, in the current case KKR.

Once they are built, the 4,000 flats are estimated to be worth about £1.7 billion. The rentals will be high-end units aimed at professionals with on site community facilities like co-working spaces, gyms, cinema rooms, and terraces. Moda and Apache are to manage the buildings, while KKR will collect the rent. Apache is to hang on to a minority stake in the flats, and will take a small slice of the rent.

Big finance

One of the world’s biggest biggest private equity firms, KKR co founded by Americans Jerome Kohlberg, Henry Kravis and George Roberts was the inspiration behind the book and eventually the film “Barbarians at the Gate.”

It’s several years ago that the UK Government tried to kick start the build-to-rent initiative, and it’s taken years for the movement to gather momentum, but gather momentum it has. It’s beginning to happen now and the market is starting to establish itself in Britain.

Join the club – they are getting in on the act

Legal & General and Lloyds Bank have both made big commitments into build-to-rent in recent years. More recently The John Lewis Partnership made a surprise announcement that it too was to join the fray. It plans to build around 10,000 rental homes on land it already owns over the next decade or so are materialising, as a part of its diversification strategy.

Wall Street bank Goldman Sachs has committed £200 million to buying 700 homes which are to be rented out to families, while Savills, the estate agency, estimates that 14,000 build-to-rent homes were completed last year, twice as many as were built in 2017.

Savills has forecast that the number of build-to-rent homes built each year could double again by 2026. It has said that “the appetite for build-to-rent from the investment community could support such a level of growth” and that “The only part of the private house building market that we expect to be appreciably larger in 2026 compared with 2020 is build-to-rent.”

Look out in the future

These are important trends and developments in the UK rented sector. It’s something that all small-scale landlords need to keep a wary eye on. It will take some time for this scale of development to affect the gigantic PRS small-scale landlord market as a whole, but in some locations the effect will be substantial.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – ANALYSIS: The build-to-rent movement is gathering pace… | LandlordZONE.

View Full Article: ANALYSIS: The build-to-rent movement is gathering pace…

OFFICIAL data: Sharp decline in Section 21 evictions debunks ‘crisis’ claims

admin    Uncategorized     agents

Fewer landlords are using Section 21 notices to evict tenants, assessment of official data by the National Residential Landlords Association has revealed.

These are the ‘no fault’ eviction notices that landlords use to evict tenants often when they wish to sell a property or move back in themselves, and the tenant will not leave voluntarily.

This kind of eviction is under the spotlight – many housing groups including Shelter and Generation Rent want to see them banned, and the government has said they will be replaced when its rental reform bill goes through parliament next year.

But the government’s own data shows that the use of Section 21 notices plummeted by 55% over the past two years and, although this is in part due to the Covid evictions ban, it’s also part of a trend.

Section 21 cases dropped by 50% between 2015 and 2019 which can be explained, to a significant extent, by more and more landlords using Section 8 evictions which, although more expensive, can be faster than a Section 21 when notice periods are included.

Peddled

“These figures dispel the myth, peddled by some, that landlords spend much of their time looking for ways to evict tenants for no reason,” says Ben Beadle (pictured), Chief Executive of the NRLA.

“Whilst we condemn any landlord who abuses the system, it is vital to remember that most tenants and landlords enjoy a good relationship.

“It is in that spirit that the Government should develop its plans for a system to replace Section 21 in its forthcoming White Paper on rental reform.”

The NRLA is calling for clear and comprehensive grounds upon which landlords can legitimately repossess properties including anti-social behaviour, and for the process in these cases to be speeded up.

At present, it can take an average of almost 59 weeks from a private landlord making a claim to repossess a property to it actually happening.

Annual decline

“The use of Section 21 accelerated applications has been declining every year for the past five years,” says evictions expert Paul Shamplina (pictured).

“As well as the pandemic, the measures within the Deregulation Act 2015 to prevent retaliatory evictions has played a part in lowering the use of Section 21 notices, as has the increasing use of selective licensing by local authorities.”

Read more about Section 21.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – OFFICIAL data: Sharp decline in Section 21 evictions debunks ‘crisis’ claims | LandlordZONE.

View Full Article: OFFICIAL data: Sharp decline in Section 21 evictions debunks ‘crisis’ claims

OFFICIAL data: Section 21 evictions slump scotches ‘crisis’ claims

admin    Uncategorized     agents

Fewer landlords are using Section 21 notices to evict tenants, assessment of official data by the National Residential Landlords Association has revealed.

These are the ‘no fault’ eviction notices that landlords use to evict tenants often when they wish to sell a property or move back in themselves, and the tenant will not leave voluntarily.

This kind of eviction is under the spotlight – many housing groups including Shelter and Generation Rent want to see them banned, and the government has said they will be replaced when its rental reform bill goes through parliament next year.

But the government’s own data shows that the use of Section 21 notices plummeted by 55% over the past two years and, although this is in part due to the Covid evictions ban, it’s also part of a trend.

Section 21 cases dropped by 50% between 2015 and 2019 which can be explained, to a significant extent, by more and more landlords using Section 8 evictions which, although more expensive, can be faster than a Section 21 when notice periods are included.

Peddled

“These figures dispel the myth, peddled by some, that landlords spend much of their time looking for ways to evict tenants for no reason,” says Ben Beadle (pictured), Chief Executive of the NRLA.

“Whilst we condemn any landlord who abuses the system, it is vital to remember that most tenants and landlords enjoy a good relationship.

“It is in that spirit that the Government should develop its plans for a system to replace Section 21 in its forthcoming White Paper on rental reform.”

The NRLA is calling for clear and comprehensive grounds upon which landlords can legitimately repossess properties including anti-social behaviour, and for the process in these cases to be speeded up.

At present, it can take an average of almost 59 weeks from a private landlord making a claim to repossess a property to it actually happening.

Read more about Section 21.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – OFFICIAL data: Section 21 evictions slump scotches ‘crisis’ claims | LandlordZONE.

View Full Article: OFFICIAL data: Section 21 evictions slump scotches ‘crisis’ claims

ROGUE landlord convicted of illegally evicting pregnant tenant

admin    Uncategorized     agents

A rogue landlord whose proeprty is also the subject of a prohibition order has been fined for illegally evicting a pregnant tenant and her partner from their home and throwing their belongings into the street.

Businesswoman Lidia Szopinska, from Camden, rented a room in a house she owned in Townsend Street, Cheltenham, to the couple for nine months in May 2019. After they gave notice to leave the property early, relations soured and Szopinska made allegations of breach of tenancy.

The couple had agreed to leave the property on 19th August 2019 but on 14th July, when they returned home after visiting relatives, they found the landlord standing outside with all their possessions on the street.

Magistrates ruled that she was guilty of illegally evicting the pair. Szopinska was fined £180 with £2,010 costs and ordered to pay £1,560 compensation to the couple for the distress caused, the non-return of their deposit, rent repayment and for the loss of a bag containing a laptop and other items that were stolen from outside the property.  

Prohibition order

Earlier this year, Szopinska had her appeal against a prohibition order made in December 2020 relating to the same property thrown out.

The council had prevented her from renting the basement after it identified a Category 1 fire hazard; there was no adequate and unobstructed means of escape, fire doors, automatic fire detection or alarm system.

She blamed Covid complications and the fact she had been given the wrong address as the reason for her appeal being made outside the 28-day time limit.

However, a First Tier Property Tribunal ruled that she knew that the limit applied and was not convinced that Covid would impact on her ability to deal with the appeal process.

Cheltenham Council enforcement manager, Mark Nelson, says: “No landlord can act outside the law and we will do everything in our power to ensure tenants can live in rented properties safe in the knowledge that we are there to protect them from illegal eviction.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – ROGUE landlord convicted of illegally evicting pregnant tenant | LandlordZONE.

View Full Article: ROGUE landlord convicted of illegally evicting pregnant tenant