Do you agree? New Shelter report hightlights national ‘housing emergency’

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Shelter has condemned Britain’s housing system as unaffordable, unfit, unstable and discriminatory – a situation made worse by benefit cuts and the pandemic.

The charity’s new report, Denied the Right to a Safe Home, highlights a housing emergency, reveals gross inequality in the housing system and calls on the government to build at least 90,000 good quality social homes a year.

Shelter’s survey of 13,000 people found that 23% are living in homes with significant damp, mould and condensation, or homes that they can’t keep warm in winter, while 8% report regularly cutting back on essential items, such as food and heating, to pay their housing costs. 

Another 8% fear losing or being asked to leave their current home – largely driven by private renters who live in the least secure housing.

The research found that race, disability, sexuality and socio-economic status are all barriers to a safe home. Black people are 70% more likely to be impacted by the housing emergency than white people and Asian people are 50% more likely.

Disability

Shelter says 54% of people with a significant disability don’t have a safe or secure home, compared with 30% of those without a disability.

Chief executive Polly Neate (main picture) says decades of neglect have left Britain’s housing system on its knees.

“Lives are being ruined by benefit cuts, blatant discrimination and the total failure to build social homes,” says Neate.

“Shelter believes a safe home is a human right, but the pain and desperation our frontline staff see every day shows this is still a long way off.

“We are fighting for everyone impacted by the housing emergency and as we emerge from the pandemic, we want the public and politicians to do the same.”

Download the Shelter report.

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Campaign group claims banning ‘unfair evictions’ will save councils £161m a year

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Generation Rent has claimed that ending unfair evictions could reduce homelessness by nine percent and save councils £161 million a year.

By unfair evictions it means banning Section 21 ‘no fault’ evictions that follow a tenant complaining about a property or its maintenance, or when a landlord decides to sell a property in order to sell it or re-let it to new tenants at a higher price. Generation Rent says 68,430 households have faced homelessness in this way since April 2018.

Tenants can protect themselves from ‘revenge evictions’ over complaints by reporting the matter to the council both before and after a Section 21 notice is issued, but few do this.

Generation Rent says it wants revenge evictions banned and also make landlords who to sell up compensate their tenants for the cost of moving home.

Section 21 evictions are a hot political potato at the moment as landlords wait to hear when all kinds of Section 21 ‘no fault’ evictions will be banned via the government Autumn White Paper, and what they will be replaced with.

Government data

Generation Rent is basing its evictions claims on MHCLG data that shows out of 755,250 households made homeless or threatened with homelessness between April 2018 and December 2020, 140,950 had been in a private assured shorthold tenancy (19%).

Of these households, 68,430 had faced an unfair eviction – either following a complaint about disrepair or due to their landlord selling or re-letting the property (49% of private rented sector cases and 9% of the total).

Evictions specialist Paul Shamplina of Landlord Action says: “Further to these figures quoted by Generation Rent, our data from the courts shows that at the coal face the possession cases situation is not as severe as they are suggesting,” says Paul Shamplina.

“It is also up for debate what ‘unfair eviction’ means as many landlords use Section 21 notice evictions for good reasons including to remove tenants who have stopped paying their rent but who have not been affected by the pandemic.

“That is why when Section 21 is banned, there needs to be special measures put in place to ensure landlords with legitimate reasons for repossession have a way to achieve that.

“And remember that many of the landlords that the Landlord Action team speak to are often repossessing because they have had enough of the new rules and extra taxation and want to sell up.”

Generation Rent have also published a report recommending the tenancy reforms it would like to see in the White Paper ‘to end unfair evictions and give renters’ greater long-term security in their home’.

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Rubbish idea? Islington latest council to fine landlords for tenants’ recycling mistakes

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A leading London council is set to approve a controversial new scheme that will fine HMO landlords when tenants put non-recyclable materials into communal bins.

If Islington Council gets the green light, landlords will have to fork out £47 each time that refuse collectors find “significant amounts of non-recyclable material” in the bin.

Currently, each time this happens, a separate refuse crew has to go back and empty the bins, with the council absorbing any extra costs.

Islington will first issue a section 46 notice to all landlords and managing agents of properties that use communal recycling bins, explaining which containers to use.

But if their bin is then found to be ‘contaminated’ they’ll have to pay the £47 charge.

If they refuse, the bin won’t be emptied and they’ll be invited to remove the rubbish themselves and the recycling bin will be emptied as normal on the next scheduled collection day. If this doesn’t happen, they’ll be served with a community protection notice.

The council says this plan will offset the additional cost of collection for which there is currently no budget and improve the quality of recycling collected.

Not the first

Islington is not the first council to take this type of action; among those who charge for the service are Cambridge City Council (£30), Wigan Council (£20), and Watford Council which charges up to £90.

In 2017, the government extended HMO licencing and as part of the measures promised to make landlords responsible for bins and the associated dumped rubbish, declaring: “Landlords will be held responsible for making sure the council’s rules on refuse and recycling are followed.”

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Can I increase the rent?

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It’s a sensitive time to be talking about increasing the rent, but the time will come when this question needs to be addressed

Most landlords have done their utmost to help their tenants through the pandemic crisis, when they can afford it, but as the crisis comes to an end, and it must inevitably do so in time, landlords will need to address this difficult question, if they are to keep their businesses viable.

It’s so easy to let this issue slip, to let the rent fall so far behind the true market value that any increase back to the correct level becomes so painful that tenants start looking around for a move.

Responsible landlords want to keep their tenants as long as possible, but this should not be at any cost; it makes sense to instigate a series of small increases to keep rents in-line with the market, than risk a confrontation over a big increase – tenants rarely appreciate the benefit they got from living on a below market rent for an extended period, when the big increase eventually comes.

It we are to believe the economic pundits, there’s a good chance that inflation will take off as we pull out of the crisis and the country gets back to full activity. So operating costs will begin to rise and as any accountant will tell you, income should be kept in-line with costs whenever possible.

How much can a landlord increase rent by?

Under an Assured Shorthold Tenancy there’s no legal constrain, it’s a matter of agreement between the parties but using the market as a guide is the obvious answer.

Ask too much and the tenant will start to look around, so it’s a good idea to start that look around first, yourself. Trying to ascertain comparable rents within the locality and pitch the rent slightly below that level is a good strategy which has stood the test of time. Shop around the agents and letting ads, you can even make a few explorative enquiries as a prospective tenant yourself, to gauge the market values locally.

With house prices at record levels, it’s unlikely that demand for renting will decline any time soon, so you can rest assured that tenants will need to rent regardless, but that’s no excuse for exploitative behaviour.

Ask a fair rent for the type of premises you are letting and you are likely to hang on to your tenants for longer. Remember, void periods and reletting costs – not to mention the risk involved with new unknown tenants – will bring down your average returns dramatically. It makes no sense to maximise rents at the expense of constant turnover.

Most Assured Shorthold Tenancies (ASTs), as the term implies, are quite short, so the issue of a rent increase with an existing tenant does not arise. It then becomes a less contentious process to set a new rent with a new tenancy.

However, some shorthold tenancies last for many years, and Covid may well increase tenancy lengths. There is no legal time limit when the tenancy becomes periodic, or the number of renewals that can be signed, so rent increases do become an issue when a new rent needs to be agreed in a long-term – landlords or their agents then need to become involved in processing a rent increase.

With all ASTs rents can only be increased after the initial fixed term has ended, unless:

1. A rent increase or formulae for increase has been agreed beforehand and stated in the agreement

2. The tenancy agreement contains a rent review clause.

3. The landlord and tenant come to a mutually agreed rent increase.

Most standard AST agreements have a rent increase clause setting out the procedure for rent increases, which by definition is then agreed at the start of the tenancy.

If the tenancy agreement is silent on the matter and the tenant objects to an increase, then, if the landlord still wishes to pursue the matter, he or she has recourse to a procedure laid down in the Housing Act 1988.

This procedure was originally intended for use with tenants on an Assured Tenancy (AT) but it can also be used for ASTs.

Assured Tenancies (ATs) give tenants security of tenure, meaning landlords cannot use the s21 eviction process and must therefore have a means of increasing the rent for tenancies, most of which last for a very long time. Section 13(2) of the Housing Act 1988 makes this possible, after the initial fixed term has ended, by serving on the tenant a Section 13 Notice.

Safeguards

There are appeals safeguards for tenants in the process. The rent tribunal complaints procedure will review the cost of renting similar properties in the area and what the landlord could charge if a new tenant was renting the property. It’s important for landlords to try to negotiate and stay on good terms if you want a long-term arrangement with your tenant and try to avoid this.

Currently, until such time as the Section 21 process is abolished, and taking into account the current extended notice periods, landlords of AST’s with the fixed-term ending have an alternative method of increasing the rent: rather than going through the rather protracted process using s13(2), they can simply offer a new fixed-term tenancy at an increased rent, failing which the tenant gets notice that the landlord will be applying for a possession order.

It may seem harsh to resort to these tactics, but it’s a commercial reality – if your lettings business is to survive long-term, rents must be kept in-line with market rents and running costs.

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Continued imbalance of supply and demand is a concern

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Propertymark’s latest Housing Market Report has indicated that a record 32% of properties sold for more than the original asking price. This smashes the previous record back in May 2014 of 19%.

Propertymark Chief Policy Advisor, Mark Hayward

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Right to see payslips if tenant in arrears?

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An elderly family member has rented a property to a council tenant for 20 years plus. My relative hasn’t managed it well and is owed £8,000 in missed rent payments. As my relative is ‘slightly’ at fault (in my view)

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Peers savage government’s ‘too timid’ Leasehold Reform Bill

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The government’s Leasehold Reform Bill making its way through parliament was heavily criticised during its second reading in the Lords yesterday by peers unhappy about its weaknesses and unintended consequences, one describing it as ‘lipstick on a pig’.

The bill is designed principally to abolish escalating ground rents and the huge costs that they can create for leaseholders, so much so that a market for long-term residential leasehold investors has sprung up, such are the profits involved.

But the legislation, which will usher in the most significant changes to property tenure in 800 years, will only apply to new leaseholds once it becomes law, which is not expected until 2023, government minister Lord Greenhalgh (pictured) confirmed.

Baroness Pinnock highlighted how this would create a two-tier property market for leaseholder.

“The failure of the bill to deal with past abuses of ground rent and service charges will leave existing leaseholders in a worst position because it will create a housing market when new-builds with zero ground rent will be far more attractive than those with spiralling ground-rents,” she said.

“Who in their right mind is going to purchase a property with those extortionate additional costs?”.

Also, many peers tackled the government for being too timid in its reforms, which will enable the leasehold system to continue albeit reformed.

Others, including Lord Stummel, said its measures should be implemented now and not in 2023.

Many speakers said it was time to abolish leasehold entirely, arguing that freeholders and managing agents would always cook up new ways to get around the restrictions.

“Buildings should be run for the benefit of those living in them and not the freeholder,” said Baroness Andrew (pitured).

Former chancellor Lord Hammond (pictured, below) also picked up on a key problem with the bill – that its definition of ‘rent’ was too vague and would impact the wider market.

He pointed out that the definition of rent will prevent properties being rented out on medium-term or long-term leases including, most crucially, the build-to-rent developers and investors who often lease their properties to management companies.

Watch the debate in full.

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New global guidance for Land Measurement

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New guidance on the measurement of land for development projects such as new housing and commercial development have been published by the Royal Institution of Chartered Surveyors 25 May 2021, which defines common measurements used across the built environment and associated metrics such as density.

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The number of homeowners taking in lodgers triples over 10 years

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Research into the value of the tax relief claimed using the Rent a Room scheme shows huge take-up.

Since 2009, the total value of relief declared as a result of the government’s Rent-a-Room Scheme has increased by 187%, according to the latest available MHCLG data.

Launched by the Conservatives in 1992 the ”Rent a Room” scheme was intended to encourage people to utilise their otherwise unused spare rooms and provide much needed accommodation for workers and students, encouraging mobility of employment and education.

The original tax-free earnings allowance for lodger-earnings was £4250, increased to £7,500 in the 2016/17 tax year, and this amount is still the current allowance. The earnings must be declared to HMRC but there is no tax payable for annual earnings below the allowance.

Analysis of the data by property management service provider, Houst, has revealed the record amount of £140,500,000 was declared over the 2018/19 period, up from £48,800,000 in 2008/09.

The data demonstrates a considerable rise in the number of homeowners taking in lodgers over the last ten years, and those figures do not take into account anyone taking in lodgers and not declaring this to HMRC.

The increasing number of Rent-a-Room declarations to HMRC indicates that more people are recognising the benefits of earning extra income from taking in a lodger – as a live-in landlord, you are allowed up to two ‘non-family’ lodgers before your property can be classed as a HMO, with all the additional regulations that implies.  

Covid push

Houst speculates that this trend is likely to have intensified dramatically since the onset of the Coronavirus pandemic, the period of time for which MHCLG data is currently unavailable.

Taking in lodgers received a dramatic boost in numbers during the economic crash and great recession of 2008 and has since continued with the popularity of letting out spare rooms with the advent of Airbnb type renters. Utilising spare rooms as a simple means using new technology to provide an additional income stream has now become a major industry in itself.

Tom Jones, Co-Founder and Chief Commercial Officer of Houst, says: “Thanks to the digital solutions of the last decade, homeowners are now able to fill their properties quickly and efficiently, whether that be a spare room or a second home, and generate a secure and regular source of income. Given the enormous economic uncertainty, people are increasingly viewing personal assets as a vehicle to drive up their incomes by turning their homes into money-making properties.

“The reality of the pandemic is that it has forced many to reconsider their living arrangements and look directly at how we occupy our homes and how exactly they could be used to stave off economic concerns. The pandemic has transformed how millions see and use their homes, leading many to reconsider its potential as a stable driver of income.”

Warning

Anyone considering renting out a room in their home should be aware that permissions may be necessary: from their landlord if they are a leaseholder, from a mortgage provider and from their insurer.

There could also be considerations for the impact this may have on council tax liability, and any benefits the lodger landlord is claiming.

In addition, the property must be safe, free from and hazards that could cause injury. Also, the landlord must be letting out his or her own residence and share facilities such as bathroom and kitchen with the lodger. The property must meet certain general letting requirements including annual gas checks and five yearlyelectrical system checks, and all the furniture must meet the general letting safety standards.

Finally, lodgers come under the Right-to-Rent regulations, where the landlord must check the immigration status of their lodgers. It goes without saying that the income from the lodger arrangement must be declared on the next available tax return.  

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Leading lender says landlords must be given more time to complete EPC upgrades

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A major mortgage lender has backed calls for landlords to be given more time to upgrade properties to the new EPC minimum standard.

Richard Rowntree, MD of mortgages at Paragon Bank, says the proposal that all new tenancies must have an energy rating of at least C by 2025, and all tenancies by 2028, puts too much pressure on landlords, particularly following coronavirus, and could threaten already strained stock levels. 

Last November, The Lettings Industry Council (TLIC) wrote to the Ministry of Housing, Communities and Local Government, urging a more staggered approach to improving energy standards in the private rented sector than those put forward by the Department for Business, Energy and Industrial Strategy (BEIS).

Says Rowntree: “Under TLIC’s proposals, all tenancies would have an EPC rating of C by 2030 – only two years later than the BEIS proposals – and improvements would be phased. This a sensible approach that recognises the need to improve the carbon footprint of the sector, whilst acknowledging the damage that inflexible proposals could cause.”

TLIC chair Theresa Wallace (pictured) tells LandlordZONE that she hasn’t had a response to its proposal but says: “I an email BEIS recently to ask what their next steps were following their consultation of this.

They responded to say that they will publish a government response in due course, which would set out more details on next steps.” She adds: “I have also asked BEIS to look into electric heating which apparently doesn’t score so well on EPCs yet it’s meant to be more energy efficient.”

Rowntree adds that landlords will need finance and innovative solutions to cope with the changes. “We have made a start in this area with the launch of our 80% LTV rates for properties with an EPC rating of A to C, encouraging landlords to invest in more energy efficient stock.”

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