BREAKING: Leading developer removes doubling ground rent clauses from all its properties

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Home owners who bought their homes or rental properties from developer Countryside will no longer be subject to ground rents that double every ten or 15 years, the Competition and Markets Authority (CMA) has announced.

Following CMA action, the company has voluntarily undertaken to remove terms from leasehold contracts that cause ground rents to double in price.

The effect of these increases, which kick in every 10 to 15 years, is that people often struggle to sell or mortgage their home and their property rights can be at risk, for example, if they fall behind on their ground rent.

Countryside will also remove terms which were originally doubling clauses but were converted so that the ground rent increased in line with the Retail Prices Index (RPI).

The CMA says the original terms were ‘potentially unfair’ and should have been completely removed, instead of being replaced with another term that still increases the ground rent.

This decision by Countryside follows enforcement action by the CMA against the firm last year, along with Taylor Wimpey, Barratt and Persimmon, and the CMA says it is now expecting these companies to follow Countryside’s lead.

“If they refuse, we stand ready to step in and take further action – through the courts if necessary,” says Andrea Coscelli, Chief Executive of the CMA (pictured).

Countryside leaseholders will now see their ground rents remain at the original amount when the property was first sold, and the developer has also confirmed that it has stopped selling leasehold properties with doubling ground rent clauses.

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Britain’s total residential rent roll falls by £5bn

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With more millennials (those born between 1980-1996) increasingly getting a foot-hold on the housing ladder, Covid restricted Generation Z (Generation Z is the generation succeeding the Millennials) are opting to stay home with Mum and Dad for now, preferring to save for a mortgage, researchers on behalf of Hamptons International have discovered.

In aggregate, millennials are likely to have paid more rent that any generation in history, at the peak which was hit in in 2017 they paid something like £33.3bn in rent, making up around 55% of Britain’s total residential rent bill.

Millennials had a propensity to leave home for city living early, moving out and around for jobs and maintaining their job mobility, while finding it difficult to save for a deposit as house prices were continually rising and moving away from them.

Now, as the older end of the Millennials generation turn 40, their total rental bill is dropping as they become less likely to rent and more likely to gravitate to home ownership. In consequence, this year, Millennials total rent bill is likely to be in the region of £24.0bn, or a 28% reduction over the peak total in 2017, making their contribution to just 42% of all rent paid in Great Britain.

The upshot is that although property prices are still rising, along with rents, and rental occupation is at record levels, there is a hint of a declining aggregate rental demand going into the future.

When the renter number was growing year-on-year, and as the follow up generation flew the nest, and they in turn looked to move out and rent, now Generation Z, constrained by Covid, are staying home with their parents much longer, and many are instead saving hard for a deposit to buy.

Rents still rising

According to Hampton’s, rents in Great Britain are containing to rise, with the average rent of a new let in Great Britain rising by 7.4% or £75 in August to just over one thousand pounds pcm. Twelve months ago it was a differer story with rents falling by 1.0% annually.

Southern counties around London are seeing strongest growth, with rents in the South West rising by 13.9%, the South East by 12.8% and the East of England 10.9%. London however, from a low base, saw the weakest growth, with annual rents up by just 1.4%, but now recovering.

Generation Z’s total rent bill has doubled from £1.8bn to £3.6bn between 2020 and 2021, and according to Hampton’s research, is likely to double again into next year. But the total amount of rent this generation will pay will be quite a bit less when compared the Millennial rent bill previously.

So it seems that during the pandemic, Generation Z are moving out of their childhood home at a slower rate than their forebears, the Millennials. It seems they are choosing to to stay with their Mum and Dad until they can afford to buy, and to take advantage of the low interest rates and lower deposits, providing they can raise that deposit.

Aneisha Beveridge, head of research at Hamptons, says:

“Leaving home in the middle of a financial crisis, like most millennials did over a decade ago, made buying a home difficult.

“But as the oldest millennials turn 40, their rental bill is now dropping sharply as they become less likely to be a tenant and more likely to own their home.

“We expect millennials’ collective rental bill to continue dropping sharply for the next couple of years, before flattening out as those who want, or are able to buy, have already done so.’

Hamptons research shows that Millennials still account for 42 per cent of all rent paid in Great Britain, down from that peak of 55 per cent in 2016 but it’s always possible that more of Generation Z will skip renting altogether.

The trend says Hamptons is exacerbated by the pandemic, as many have preferred to stay home and often work from home in what is often better-equipped accommodation as opposed to moving out into cramped rented flats or house shares.

So, the combination of Millennials getting themselves on to the property ladder at long last, and more of Generation Z staying home, means that inevitably the total amount of rent paid in the UK will fall and the market size will shrink.

Aneisha Beveridge says that the change is being facilitated by the recent increase in the availability of mortgages for those with 5 per cent deposits, which could easily see some younger people skipping renting altogether, moving straight from their parents’ house into their preferred first purchased home.

This structural change in the market could have a negative impact on the buy-to-let market in the medium to long-term.

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Throuple trouble? Modern relationships making HMO compliance tricky, warns top lawyer

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Landlords and agents must make sure they don’t come a cropper deciding what constitutes a single household when vetting HMO tenants in an age of ‘polyamorous’ relationships, warns a top property lawyer.

While the legal definition of a household can be explained quickly, real life relationships are not so easily classified, says Robin Stewart, a solicitor specialising in property law at Anthony Gold.

He points to a recent Property Ombudsman case study where a polyamorous ‘throuple’ were refused accommodation by agents who told them that the local authority would treat them as forming more than one household, making the property an HMO, which would not be allowed.

“This was an interesting case study, and agents are quite likely to start to encounter this sort of issue slightly more often,” says Stewart. “It does not attempt to offer any legal analysis, and we may be waiting some time for any authoritative case law on how to apply the Housing Act’s concept of ‘household’ to polyamorous groupings.”

Long term commitment

He explains that government policy guidance over social security entitlement considers that two people who are living together as a married couple would be expected to have the intention of sharing their lives together in the long term.

This guidance takes the view that those living together in a non-monogamous relationship would not be living together as a married couple because exclusivity is a key element of marriage.

However, Stewart (pictured) adds that if it’s possible to be a member of more than one couple, the members of the ‘throuple’, and any relatives of those persons, might be regarded as members of the same family, and hence one household.

He adds: “Where prospective tenants state that they are one household, agents should ensure that they understand what the relationships are, and then record this in writing.

“If there are ‘red flags’ suggesting that the tenants’ relationships might not be as claimed, it is very risky to ignore this.”

Read more: Complete guide to managing an HMO.

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42% of Welsh Landlords reporting arrears issues

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Research published by the National Residential Landlords Association (NRLA) highlights the rent arrears crisis which affected the Welsh private rented sector throughout the first half of 2021.

The research findings, which are based on extensive surveys of English and Welsh landlords conducted by research consultancy BVA/BDRC in the first two quarters of 2021

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A Smart Way To Pay For Tax and National Insurance Increases

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To ease the pressure on the NHS the Government is increasing National Insurance by 1.25%, which means that your contribution will actually increase by more than 10%. But how will you find the funds to pay for this?

Recent research shows that more than a quarter of homeowners are currently on their lenders highest possible rate of interest

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Double standards? ITV documentary uncovers the worst council landlords

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A new documentary has revealed the shocking conditions endured by scores of social renters around the country, often with council landlords who at the same time bring private landlords to book for similar poor management of their properties.

Surviving Squalor: Britain’s Housing Shame aired on Sunday night and was full of horror stories, apologies and a few happy endings.

It included footage of residents squelching across sodden carpets, being injured by falling ceiling debris and suffering breathing problems due to rampant mould.

The ITV documentary met tenants whose lives have been destroyed by squalid, dangerous social housing, with nearly all the interviewees in tears as they described their terrible living conditions.

In one flat, water dripped through electrical sockets, prompting an independent assessor to determine that there was a “100% chance of electrocution”. Many told of how they felt sub-human and ignored by councils and housing associations; one woman recorded at least 20 phone calls to Croydon Council, without success.

Based largely on the news reports ITV has carried in London, Birmingham and Croydon during the last year, it revisited residents for updates.

Repairs done

Reporter Daniel Hewitt said these stories had put pressure on social landlords and indeed, all were followed by promises that councils and housing associations were going to rehome tenants or get repairs done.

However, Hewitt said these reports had generated thousands more messages from residents around the country suffering similar problems.

A Birmingham housing officer admitted how powerless they were to help the many thousands on its social housing list, while a councillor acknowledged that many were in properties that weren’t fit for purpose, but that there wasn’t enough cash to build all the new homes the city needed.

With one million fewer social rented homes than in 1980, and councils’ repair budgets slashed, there’s a perfect storm which has created slums similar to those they were built to eradicate, according to the programme, which is costing the NHS dearly as a result of tenants’ resulting health problems.

Housing Secretary Robert Jenrick was also interviewed and put the blame firmly on councils’ and housing associations’ poor management.

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Gas Safe Week kicks off to save more lives from dodgy appliances

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Gas Safety Week kicks off today to help the gas industry and consumer groups highlight the topic and raise public awareness.

Coordinated by Gas Safe Register, the campaign webpage includes a ‘gas map’ where users can input their post code to find out about the dangerous gas appliances found in the area as well as ‘Ten top tips to stay safe’ which reveals how to recognise the six signs of carbon monoxide poisoning. 

Supporter Swale Heating says both landlords and tenants need to stay gas safe. It advises tenants to check their landlord’s Gas Safety Record and encourages them to report any landlord who refuses to provide one to the HSE. 

But it adds that it’s also up to tenants to check any gas appliances they own every year.

“As would be stated in your tenancy agreement, the landlord is not responsible for gas appliances you own. This means it is your responsibility to arrange for these to be safety checked once a year and regularly serviced by a Gas Safe registered engineer.”

Important

Savills regularly supports the annual event which Theresa Wallace (pictured), head of customer relations, says is important to the estate agency chain.

She adds: “We continually work to educate our landlords about the obligations involved and work to ensure all our properties meet the requirements. As agents, we play a critical part in ensuring tenants are living in safe and habitable properties and gas safety comes sits at the top of this priority list.”

Visit the Gas Safe Week homepage.

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HMRC claws back £254 MILLION from landlords via Let Property campaign

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Just over a quarter of a billion pounds has been clawed back from landlords since HMRC’s Let Property campaign began eight years ago, it has been revealed.

The latest figure for the campaign were revealed by Financial Secretary to the Treasury Jesse Norman in response to a written question by shadow equalities minister Charlotte Nichols.

She asked whether HMRC would fund a more direct approach to tracking down private landlords who fail to declare rental income, rather than the current mostly voluntary system.

This includes the Let Property Campaign, which encourages landlords to come clean about undeclared rental income in return for a lower penalty, along with more aggressive ‘nudge letters’ sent out to suspected miscreant landlords.

Non-compliance

“The Government is committed to reducing non-compliance in the tax system among all taxpayers, including landlords, and continues to give HMRC the resources they need to tackle the tax gap,” replied Norman.

“HMRC do not rely on voluntary disclosure from landlords and use a range of data and approaches to identify landlords with undeclared rental income.

“Since 2013-14, HMRC’s Let Property Campaign has prompted approximately 58,000 additional disclosures and raised an estimated £254 million in additional compliance yield for the Exchequer.

“Where landlords do not come forward to declare their rental income, after being prompted, HMRC take further steps including opening formal compliance interventions where necessary.”

Disclosures down

But the Let Property Campaign is not as effective as it used to be. Latest figures for 2020-21 reveal that there were 4,330 voluntary disclosures by landlords during the period, a 42% decrease on the previous year. Similarly, the tax yield from the campaign dropped almost 50% from around £34 million in 2019-20 to around £17 million in 2020-21.

“Taken together, the data suggests that the tax shortfall HMRC suspects exists among landlord taxpayers is likely accounted for by a high volume of low value discrepancies,” says Zena Hanks, a partner at accountancy firm Saffery Champness, which unearthed the data following a FOI request.

Read more about HMRC’s previous position on landlord tax compliance.

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LATEST: Tenants’ union’ latest branch to take ‘direct action’ against landlords

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Fast-growing tenants’ union Acorn has opened its latest branch, this time covering the towns of Falmouth and Penryn in Cornwall.

Lead by local Dan Newman, who recently graduated from Falmouth University, landlords and letting agents in the area can expect action from the group when they are in dispute with tenants.

He says his key concerns are the number of PRS properties being transferred to the short-lets/Airbnb market, rising evictions and unfair treatment of tenants by landlords.

“Newman (pictured) warns landlords that, like other groups within the Acorn network in the UK, he is not afraid to take direct action against property managers and owners including email campaigns, pickets and eviction resistance events/+.

“We deserve affordable housing and rental properties. Cornwall is not a playground, it is not just a tourist-hot-spot and nice place to live by the beach if you have the cash for it – it’s our home, it’s our culture, our family, friends, livelihoods – and we can’t even afford to live here,” he told local media.

Acorn has been growing both in size and both levels and scope in activity in recent years. Its most visible actions have included picketing landlords’ homes and letting agency branches.

The organisations, which was founded in Bristol seven years ago, now has operations in in 18 cities and 21 branches.

Branches

This includes Aberystwyth, Brighton, Cambridge, Cardiff, Coventry, Manchester, Birmingham, Leeds, Newcastle, Norwich, Nottingham Oxford, Sheffield, Stoke, Swindon, York and now Cornwall.

It also has a presence in three London boroughs – Lambeth, Haringey and Enfield.

As well as engaging in direct action, Acorn is also involved in efforts to persuade councils to renew or introduce property licensing schemes in many areas including, recently, in Brighton & Hove, and its Manchester branch is backed by actress Maxine Peake.

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Japanese Knotweed cases up 27.91%

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A study by Horticulture.co.uk has indicated that over the last 5 years, cases of Japanese Knotweed have increased by a national average of 27.91%. They have also produced an interactive map searchable by postcode to show  live and resolved cases by area: Click here

A YouGov survey of homeowners in July last year suggested 80% of potential buyers would walk away from buying a property affected by Knotweed and even if they were still considering the purchase they would expect a discount of 5-10% on the asking price.

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