How will EPC legislation impact your lettings business?

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Post-COVID, the landscape for landlords and lettings business owners faces further regulation.

The latest potential squeeze on landlords revolves around the Minimum Energy Efficiency Standards, which could take effect in 2025; these changes will impact the domestic rental property in England and Wales.

In practice, this will likely lead to tougher rules regarding your Energy Performance Certificates for each of your properties and the measurement of how efficient your properties are.

New legislation proposes that if you wish to advertise your property for rental from 2025 and onwards, you’ll be required to give lettings agents an updated and compliant EPC of a minimum of a C (currently an E).

This can potentially cost landlords thousands.

Landlords will be expected to pay for either insulating their properties to retain heat or use other ‘fabric first’ features that can help to improve heating and lighting.

What’s the trigger for the added requirement? Well the government is focused on the ‘green recovery’.

The current government mandate is to ensure that homes are energy-efficient and reduce

carbon waste, helping towards the government’s net-zero target.

We listen to dozens of Landlords a week at our parent company allervices4u.co.uk and one of the big ‘pain questions’ that we receive is, ‘how many more changes are there going to be, which will cut into my margins’?

It’s a tough question to answer, however, we can only answer by saying ‘we cant be 100% sure but likely yes’.

There is one thing that we are 100% sure of, however, and it is the fact that landlords must find solutions that protect themselves against the inevitable changes and do it in the most cost effective manner possible.

Our clients a kept on asking us for help, so we created the Total Asset Protection Plan

(landlord-protection.co.uk)

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‘Landlords have bills to pay too’, leading figure reminds Ministers as evictions loom

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A leading PRS figure has warned that the easing of Covid restrictions on July 19^th and the government’s plans to wind-down Covid support for the economy will have a significant effect on the private rented sector.

Tim Clark (pictured), chairman of the UK Association of Letting Agents (UKALA), says his members are worried about a surge in evictions and a contraction in the size of the rental market as the support for – and protection of – tenants ends following months of Covid.

“The restrictions on evictions during the last year, while appropriate for the time, could result in an explosive situation without the government providing more support to tenants,” he says.

“Landlord mortgage payments still need to be made and rent arrears will still exist.

“Without more support to tenants, as has been done elsewhere, there will be wide-spread evictions, leaving many tenants in impossible positions.

Kicked the can

“The government has effectively kicked the can down the road on this one. Currently, potential evictions are merely being postponed, but tangible help for tenants could help avoid them and the distress they bring.”

Clark also says this uncertainty within the private rental sector is driving more landlord to change their strategies, with over 50% of his members’ client landlords putting off plans to buy more properties and 40% planning to reduce their portfolio’s size.

“This situation, suggesting a possible reduction in the size of the PRS, adds a further potential squeeze on top of the evictions boiling pot,” adds Clark.

“Unfortunately the government has yet to recognise that, without help, tenants may not be able to rent again.”

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Lancashire town to extend selective licensing and raise fees for landlords

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The town of Burnley is set to ask residents and landlords whether it should extend its selective licensing schemes for another five years.

Its schemes in Burnley Wood and Healey Wood, along with the Leyland Road area of the town, are due to end in November but Burnley Council reports that both areas have seen improvements in the last five years.

Housing disrepair complaints have fallen, as well as the number of empty houses, while there’s also been a reduction in ASB and environmental crime and a rise in average house prices.

Fees are set to go up under the new scheme: from £715 for a new application and £640 for each additional property to £750 per new application and £670 for each additional property, with a 30% discount for anyone in the council’s good landlord and agent scheme.

Secretary of State

If it gets the go-ahead, an 11-week public consultation would start on 9th August, although the size of the schemes mean they would need Secretary of State sign off.

The council has been operating selective licensing since October 2008 and says that between 2013 and 2021, 25 landlords representing 41 properties were prosecuted for failing to apply for a licence while it served 20 financial civil penalties totalling £161,500.

In the Burnley Wood/Healey Wood and Leyland Road selective licensing areas, six financial civil penalties totalling £33,000 have been served.

Councillor John Harbour (pictured), executive member for housing, says tenants, landlords and the wider communities have all benefited from the initiative.

He adds: “It’s now time to consider whether selective licensing should continue in these areas and we want to hear from all those affected so we can make an informed decision.”

Read more about Burnley.

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Tenants more worried about fire safety in their homes than homeowners – official

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Renters are more likely to feel unsafe in their home than owner occupiers, according to the latest English Housing Survey.

The Ministry of Housing Communities & Local Government (MHCLG) research found that only 5% of people on average felt unsafe and feared that a fire would break out.

But 7% of private renters didn’t feel safe along with 10% of social renters, compared with 3% of owner occupiers.

The 2019-2020 survey found that those who live in low (11%) and high (21%) rise flats were more likely than those in houses (6%) to feel unsafe in their homes.

Younger people were more likely to feel this way, with 15% of those aged 16-24 agreeing – higher than any other age group.

Those from an ethnic minority background were more likely than those from a White background to report a lack of confidence (8% compared to 5%).

Related

The MHCLG reports: “It is likely that all these findings are related. For example, younger people and those from an ethnic minority background are more likely to be renters and renters are more likely to live in flats.”

The national survey of people’s housing circumstances and the condition and energy efficiency of housing in England is one of the longest standing government surveys and was first run in 1967.

This was the first time a question on safety confidence had been included the survey.

Read more about fire safety in the PRS.

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Private tenants ‘most worried’ about fire safety in their homes

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Renters are more likely to feel unsafe in their home than owner occupiers, according to the latest English Housing Survey.

The Ministry of Housing Communities & Local Government (MHCLG) research found that only 5% of people on average felt unsafe and feared that a fire would break out.

But 7% of private renters didn’t feel safe along with 10% of social renters, compared with 3% of owner occupiers.

The 2019-2020 survey found that those who live in low (11%) and high (21%) rise flats were more likely than those in houses (6%) to feel unsafe in their homes.

Younger people were more likely to feel this way, with 15% of those aged 16-24 agreeing – higher than any other age group.

Those from an ethnic minority background were more likely than those from a White background to report a lack of confidence (8% compared to 5%).

Related

The MHCLG reports: “It is likely that all these findings are related. For example, younger people and those from an ethnic minority background are more likely to be renters and renters are more likely to live in flats.”

The national survey of people’s housing circumstances and the condition and energy efficiency of housing in England is one of the longest standing government surveys and was first run in 1967.

This was the first time a question on safety confidence had been included the survey.

Read more about fire safety in the PRS.

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Leasehold reforms will help 1.8m landlord properties, Ministers reveal

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New government figures show that there are 1.8 million leasehold properties in the private rented sector.

The Ministry of Housing Communities & Local Government has confirmed its provisional figures, reporting that 39% of leasehold properties are privately owned and let in the PRS.

It illustrates the importance of new leasehold reform plans for landlords; in January, the government announced new measures that mean owners of leasehold houses will be able to extend their leaseholds by 990 years at a zero ground rent, removing the much-publicised attempts by some freeholders and developers to sell properties with escalating ground rents and restricting extensions to 50 years.

It also promised to make it fairer and cheaper to extend leases or convert them to freehold or commonhold status.

In 2019-20, there were an estimated 4.6 million leasehold properties in England, equivalent to 19% of the English housing stock.

Highest proportion

London and the North West of England had the highest proportion, at 34% and 31% respectively, while the East Midlands had the lowest (9%).

In the private sector, 82% of flats were owned on a leasehold basis – 93% of owner-occupied flats and 73% of privately rented flats. Leasehold houses were less prevalent than flats with 8% of houses owned on a leasehold basis. This was highest in the private rented sector at 9%.

The proportion of leasehold houses also varied by region; 28% of houses in the North West were owned on a leasehold basis, significantly greater than in any other region, with the next highest in Yorkshire and the Humber at 8%.

For flats, this ranged from 43% in Yorkshire and the Humber to 63% in the South East.

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BREAKING: Report says landlords can be forced to mediate during evictions

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An official report into whether people involved in litigation should be forced to take part in alternative dispute resolution (ADR) has cleared the way for this – until now – voluntary mechanism to be forced on warring parties.

Recommendations within the report by The Civil Justice Council, which was commissioned by the Master of the Rolls Sir Geoffrey Voss, would usher in new regulations to mandate landlords and tenants who are involved in contested evictions to enter into mediation before going to court.

Published today, the lengthy report (see link below) will have far-reaching ramification for the courts and tribunal service and particular for possession cases involving landlords and tenants.

It also name-checks the pilot ADR scheme set up earlier this year to try out mediation among feuding landlords and tenants prior, largely to try and alleviate the pressure on courts as eviction volumes rise post-Covid, highlighting some of the problems encountered.

“One of the early lessons of the possession ADR pilot has been that because no legal advice is available during the mediation, duty solicitors are reluctant to advise clients to mediate under the pilot scheme and litigants-in-person were very reluctant to take,” it says.

The Master of the Rolls (pictured) adds: “I am grateful to Lady Justice Asplin and the working group for this excellent report.

“They conclude that it is possible, where a court process remains available, lawfully to mandate ADR.

“As I have said before, ADR should no longer be viewed as ‘alternative’ but as an integral part of the dispute resolution process; that process should focus on ‘resolution’ rather than ‘dispute’. This report opens the door to a significant shift towards earlier resolution.”

Mike Morgan (pictured), Legal Division Manager at HF Assist and Mediation, says: “We’re pleased to see this report into the potential for compulsory ADR, and the recognition that forms of ADR, such as mediation, need to be made an integral part of the justice process.

“Doing this will make them more common and more widely used. For housing and tenancy disputes our experience shows that to be effective and get the best results, the earlier mediation happens the better. 

“Offering this when disputes have reached court can be too late, and highlights the need for better education of consumers as to how they can resolve disputes quickly and effectively.”

Tim Frome, Head of Legal at evictions specialist Landlord Action, says: “Achieving resolution through an ADR process is much quicker and more cost effective than using the courts.”

Read more about mediation. Read the report in full.

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MHCLG to spend £100k on national landlord database investigation

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The government is to spend up to £100,000 investigating how best to set up a national register in England for the country’s estimated 2.3 million private landlords.

Details of the work have been revealed in a tender document published on an official ‘supplier opportunities’ website.

The document says the Government wants to understand the ‘different models available for pursuing solutions to our identified problems and to further understand the difficulties individuals face when renting, letting or enforcing property standards in the Private Rented Sector’.

The ‘problems’ referred to are that central and local government authorities have limited and un-joined up records on landlords in England.

Check information

Sources include HMRC tax records, local authority licensing schemes and national mandatory deposit registration scheme data.
Private tenants, on the other hand, have only limited ways to check information about their landlord or property before signing a tenancy.

The exploratory work required by the tender includes looking at the Welsh and Scottish landlord registration scheme.

Wales’ RentSmart programme is heavy on regulation, enforcement and expense (£200+ a year), while Scotland’s lighter and more straightforward scheme charges fees of £67 for each landlord and £15 per property.

The consultancy ‘discovery’ work tender closes later this week and is due to start at the end of August and last up to ten weeks.

In May the Queen’s Speech included reference to the government’s plans for major reform of the PRS including a national register and compulsory redress scheme membership for landlords.

Sean Hooker (pictured), Head of Redress at the PRS, say he hopes the consultation will recommend that all the existing sources of information are ‘joined up’ to create the register, rather than it relying solely on landlords to upload their details.

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Why landlords are facing a buy to let mortgage rate dilemma

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Mortgage broker, Hamilton Fraser Total Landlord Mortgages explains the current predicament landlords have with whether to stick or twist on mortgage rates as inflation bursts through the Bank of England target.

The year-on-year cost of living surged from 1.5 per cent in April 2019 to 2.1 per cent in May, nudging above the Bank of England’s self-imposed two per cent ceiling.

The latest report from the Monetary Policy Committee – the team of rate-setters – reveals inflation is 0.3 per cent higher than expected and is forecast to soar above three per cent due to rising energy and commodity prices.

“The committee’s expectation is that the direct impact of rises in commodity prices on inflation will be transitory.  More generally, the committee’s central expectation is that the economy will experience a temporary period of strong GDP growth and above-target inflation. After which growth and inflation will fall back.  There are two-sided risks around this central path, and it is possible that near-term upward pressure on prices could prove somewhat larger than expected,” says the BoE.

Rate setters next meet on 5 August 2021 and have yet to reveal their hand on which way interest rates will go.

Are mortgage rates set to rise?

The current Bank of England interest rate has sat at a record low of 0.1 per cent since March 2020. Raising the rate will likely see buy to let mortgage rates rise as well.

Current best buy to let mortgage rates range from 1.19% for a two-year fix to 1.65% for a five-year term.

Remortgaging now means locking into the current rate as a safety net if inflation continues to rise, explains Total Landlord Mortgages Principal Daniel Lee.

“With inflation rising above the Government target, will this trigger a rise in the coming months? I think we will see the rates remain low for the foreseeable future, but we have to keep a close eye on where inflation is going. Is this a short-term blip or here to stay?” said Daniel  Lee.

Time to review portfolio borrowing

There has never been a more important time to look at your portfolio, get the right advice and assess two-year rates against five-year rates

Generally, landlords should keep an eye on interest rates to keep a lid on property costs.

Daniel Lee added that many landlords need to pay extra attention as they exit five-year fixes following the buy to let bonanza lead up to introducing the three per cent investment property surcharge in April 2016.

Sting in the tail for 80 per cent loans

The Mortgage Works (TMW), the buy to let brand of The Nationwide and one of the UK’s largest landlord lenders, is again offering 80 per cent loan-to-value mortgages for purchases, remortgages and further advances, including buy-to-let. But they have insisted that all rental properties must have an EPC rating of C or above to be eligible.

Daniel Lee (pictured), Principal at Total Landlord Mortgages says, “The decision to begin once more offering 80 per cent LTV mortgages is a significant vote of confidence in the buy to let market after a difficult period.”

The move aligns TMW with several smaller lenders in the buy to let market and likely signals a similar shift may follow from other leading lenders.

The Government has already announced that all private rented homes must match the EPC C rating by 2030 and this new requirement is an indication that The Mortgage Works is behind the Government’s environmental policy.

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Landlord given suspended sentence over property fires at notorious property

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A commercial landlord whose building was damaged by two fires has been handed an 18-month suspended prison sentence, it has been reported.

Wayne Braund, 52, owner of the former Strachan and Henshaw building in Foundry Lane, Bristol (pictured), admitted six fire safety breaches including failing to risk assess for possible asbestos violations and not ensuring fire extinguishers were in place.

Bristol Crown Court heard that it was fortunate no one was harmed during the blaze in the tower block, known locally as The Office, on 31st December 2018 when a number of people were living there.

Just six months later, another fire damaged the building causing significant structural damage.

It had housed more than 40 small and independent businesses, while the adjacent Office tower was infamous for its swinger’s club, cannabis factory, and as a Hells Angels’ haunt for bikers.

Criminal threats

Brendon Moorhouse, defending, said Braund’s life and that of his family had been threatened by criminals, triggering arrests and a criminal investigation.

In February 2020, Braund was the victim of an attempted blackmail by a gang of masked men at his Douglas Road Estate residential development in Kingswood.

His business associate and landlord, Alan Dykes, was later violently assaulted at his Bridge Road Industrial Estate in Kingswood. Dykes had owned the building before selling it to Braund for £1 in April 2018.

Asbestos fine

Braund was also given a six-month suspended sentence for failing to ensure a risk assessment to determine asbestos on the premises of a property on Moravian Road in Kingswood where his company Stairs2U was headquartered.

Prosecutor Sam Jones said Ernest Braund, acting for Braund, had sent false documentation to the HSE purporting to show that an asbestos contractor had been engaged when it had not been. 

Braund admitted the breach and was ordered to pay £50,000 in costs along with a £25,000 fine. Stairs2U was also given a £25,000 fine.

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