Proposed Fair Rents Bill could lead to more frequent rent increases

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Tenants could be subjected to higher and more frequent rent rises if the Fair Rents Bill is passed through the Scottish Parliament as planned.

In its response to the Call for Evidence on the Bill, which is calling for a rent cap on private rented properties in Scotland

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EXLUSIVE: Buy-to-let mortgage trouble as surveyors lower rent estimates

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Surveyors have begun downgrading rents when measuring up properties to inform lending for landlord mortgages, it has been claimed.

Dan Lee of brokerage Total Landlord Mortgages says increasing numbers of his landlord clients applying for mortgages at the moment are seeing their rental estimate down-graded by lenders’ surveyors, making it harder to get applications over the line.

This is particularly so for properties being purchased in central and inner London. The city’s central office districts are still almost ghost towns at the moment as many commuters continue to work from home.

This has weakened demand for rental property particularly within London’s pricey inner-city areas such as Finchley, Clapham and

Wandsworth, where many younger renters are shipping out to cheaper rural or suburban area as their employer’s offices remain close due to Covid.

“It is obvious from the lending decisions coming across my team’s desks that many lenders are getting nervous about rent levels both in London and in other urban centres where demand is weakening, and that landlords are accepting lower rents,” says Dan (pictured).

Hesays he believes landlords faced with tenants who have lost their jobs or been forced to take pay cuts are happy to drop their rents rather than lose a good tenant, while others whose tenants move out are being forced to drop their asking rents to get viewings.

Less demand

LandlordZONE has spoken to one landlord in SW London who normally has to organise ‘open houses’ to deal with the dozens of tenants who cram in to view his flat in Balham when it comes up for rent.

But the landlord, who wishes to remain anonymous, says this time last month only one couple turned up to view the property and said they’d take it if the rent was dropped by 10%.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – EXLUSIVE: Buy-to-let mortgage trouble as surveyors lower rent estimates | LandlordZONE.

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Student accommodation collapse next year ‘very unlikely’

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Predictions of a student accommodation meltdown in the New Year are wide of the mark, latest research among under-graduates has claimed.

Property management platform Bunk believes predictions about the demise of student accommodation next year have been greatly exaggerated.

Its poll of 300 first and second-year students found that the student property market has been largely unaffected by the Covid escalation, despite the fact most students will be returning to their university digs next year without being vaccinated against the virus.

It found that 85% of current students plan to return to rent at university in 2021, while four out of five of them say that while the experience has been different to how they had imagined, they ​would still rather be enrolled and living at university than at home.

Meanwhile, 78% of students say any disappointment they feel is towards the university rather than their living situation.

Bunk adds that although Covid will have an impact on the future developments of student accommodation, both landlords and purpose-built accommodation (PBSA) providers should expect to see their properties being filled quickly.

Ali Fazel, 21, (left) a second-year politics student at Birmingham University, says: “While the coronavirus pandemic has made lots of students reconsider their future pathway, I feel more determined than ever to re-enrol in the student lifestyle which is incomplete without a fun house filled with my mates.”

It follows research from StuRents that the PBSA sector has grown by 2.6% in 2020 with more than 25,000 new beds coming to the UK market, meaning that the number of private PBSA beds has surpassed university supplied accommodation for the first time.

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UK comes top in world rankings for property taxes…

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Landlords have long suspected that UK property taxes are higher than in many other countries, and previous studies have shown this to be the case, but to come out at the top of the rankings is somewhat galling for UK owners to say the least.

It’s the second year running that the UK has topped these rankings for the highest property taxes as a percentage of overall taxation. The highest in the developed world, that’s according to new OECD data.

According the OECD’s latest figures, tax revenues from UK property were at £90.6 billion during the financial year for 2019/20, that figure is up from £88.4 billion in the previous year – it also means that the UK has seen the highest property taxes in six of the last 10 years, according to the organisation.

The OECD’s definitions state that taxes on immovable property – often simply called “property” or “real estate” tax – comprise levies on land and buildings and other physical capital like machinery. They can be considered a capital tax since they tax an asset or an input to production. They can be considered a consumption tax since they tax the services that derive from living in an apartment or a house. They can also be considered an income tax since they tax the imputed rent from owning a house.

Property taxes are generally based on the value of immovable property assets, and unlike most other taxes, property values are generally based on estimates. Therefore accurate valuation and assessment of properties is key to a fair, efficient property tax system. Valuations in turn are based on a property’s potential market value which is generally considered to be the most appropriate yardstick for determining the property tax base.

For the UK, the OECD’s property tax figures include all receipts from council tax, business rates and stamp duty, while for Scotland they also include land and building transaction taxes.

Covid-19 has “muddied the waters” somewhat given that, in particular commercial retail property values have been in rapid decline, while most residential property has actually increased in value slightly, meaning that it’s difficult for fair tax rates to keep pace.

During the UK lockdowns retailers big and small and hospitality firms have been given a business rates holidays to ease the burden. Meanwhile several retailers, including supermarkets that have gained somewhat from the crisis, have subsequently agreed to hand over the savings, including Tesco, Sainsbury’s and Aldi, in total to around £2 billion. Rishi Sunak the Chancellor has also introduced a stamp duty holiday for those buying a house below £500,000 in England until 31, March 2021.

Property taxes in the UK accounted for 12.4% of overall taxation, with in second place the US at 12.1%, Canada at 11.6%, South Korea at 11.4% and Israel at 10.1%.

Robert Hayton, head of property tax at Altus Group, told TheExpressandStar.com:

“The unexpected cost of Covid might mean that the Chancellor has limited short-term scope to meet his commitment to reduce the burden of tax on commercial property, but that mustn’t also mean potential reforms are shelved.

“There are fiscally neutral, and blindingly obvious, changes that could be made to property taxes that would increase fairness and pave the way for a better system in the future.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – UK comes top in world rankings for property taxes… | LandlordZONE.

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Tenants liable to pay Stamp Duty?

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Stamp Duty Land Tax (SDLT) is normally directly associated with purchasing a property or land rather than with our renting tenants, but it may come as a surprise to know that certain long term renters have had to pay 1% SDLT.

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Tracking an Errant owner/Landlord?

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The tenant has complained of mice in the property – and she knows for sure they are coming from the adjoining house as a previous tenant of the neighbouring house left for that exact reason!

The house in question is an HMO now with people coming and going all the time according to my tenant.

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Landlord failed by chaotic Universal Credit support system says ‘never again’

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Landlord Moira Lumb has vowed never to rent to tenants on Universal Credit again after struggling to get help with a non-paying tenant claiming benefit.

Despite her tenant being two months’ in arrears and spending the benefits, Moira has been told there’s a four-month waiting list before the Universal Credit office can investigate her problem.

“When I first tried to contact the office the numbers didn’t work, then I tried emailing and the messages bounced back,” Moira tells LandlordZONE. “Now they’ve told me it’s four months – I feel let down by the system.”

Her tenants, a woman and her children, moved into one of Moira’s six properties in Halifax (pictured) in September, funded by the council’s children’s services department using Universal Credit.

After not paying her £520 a month rent for two months without explanation, Moira has been forced to start legal proceedings using Landlord Action.

Six months’ notice

“I’ll have to serve a six-month notice and if she refuses to leave it could be over a year before it gets sorted, while I’m having to use my savings to cover the mortgage payments on that property,” she says.

Moira’s tenant has been uncooperative throughout the short tenancy and tried to force her to lay carpets when the tenants had already got the money from the council to pay for it.

Now she won’t let Moira access the property, who fears if she won’t let anyone in to service the boiler in a few weeks, her warranty won’t be valid if it breaks down.

“I’ve been a landlord for 16 years and never had anyone evicted. We work hard to make sure tenants’ repairs are done quickly and have also had other tenants who claim Universal Credit and never had a problem with them.”

Moira is resigned to paying £2,000 in legal fees for the eventual eviction as she says at least she’ll eventually have her house back.

But with no support for landlords in situations like this – made even harder by the current climate – this experience has changed her views. She adds: “We’re reasonable people but we’re not going to be reasonable anymore.”

Read more about the problems with Universal Credit.

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ROGUE LATEST: Landlords in Warrington and Brighton prosecuted for ignoring law

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A Warrington letting agency boss has been fined for putting his tenants’ lives at risk in three HMOs.

Kristian Johnstone, 28, a director of Easylet Residential, admitted 38 offences relating to the property he owns and rents out in Evelyn Street, and two he rents out Goulden Street and Algernon Street.

He was convicted at Chester Magistrates Court for fire safety offences and failure to licence a HMO, and was fined £19,000, plus £1,000 in legal costs and a £181 victim surcharge.

The magistrate said the offences showed a complete failure to grapple with the regulatory regime and that there was a “significant number of people exposed to serious risk of death”.

Fire safety

Another Warrington landlord, David Cooper, 70, of Thorneycroft Drive, appeared at Warrington Combined Crown and Magistrates Court Centre to deny six HMO offences for letting out an HMO for offences relating to fire safety, the production of gas and electrical safety documentation and failure to provide documentation. He was found guilty and fined £1,895.

Councillor Maureen McLaughlin (pictured), cabinet member for housing, public health and wellbeing, says the properties posed a significant risk of danger to the tenants. She adds: “We’re satisfied that we were able to drive these cases to the point of two successful convictions and bring awareness to landlords of what measures must be taken to ensure the safety of their tenants.”

ROGUE LANDLORDS UPDATE: Meanwhile, a landlady has been prosecuted in Brighton for ignoring an enforcement notice after she unlawfully converted a family home into an HMO.

Shirley White, 56, divided up the property in Bevendean Crescent without planning permission. Her retrospective application and subsequent appeal were refused but White, of Friars Walk, north London, ignored a recent enforcement order preventing her from letting it out. She was fined £7,830 and ordered to pay £2,003 in costs at Brighton Magistrates Court.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – ROGUE LATEST: Landlords in Warrington and Brighton prosecuted for ignoring law | LandlordZONE.

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Join me on 9th December 2020

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I am really pleased to be part of something very exciting this month. Simon Zutshi, the founder of property investors network (pin), has invited me and four other industry experts to join him for the first-ever National pin Meeting!

There are no local pin Meetings held in December

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Crown Estate commits to net zero carbon by 2030

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The Crown Estate is one of the largest property managers in the United Kingdom, administering property worth £14.1 billion, with urban properties valued at £9.1 billion.

It’s an independent commercial business, created by an Act of Parliament, with a diverse portfolio of UK buildings, shoreline, seabed, forestry, agriculture and common land – over the last 10 years it has contributed £2.6 billion to the government’s Consolidated Fund.

The sovereign is not involved with the management or administration of the estate, it being overseen by an incorporated public body headed by the Crown Estate Commissioners. As reported by hospitalityandcateringnews.com the estate is home to countless hospitality businesses across the UK.

The Managing Agents’ Partnership (BPP) says:

“Managing agents have a critical role to play in improving the sustainability performance of the buildings they manage. They are an intrinsic part of the day-to-day management of commercial property and often at the ‘coal face’ of addressing sustainability in the built environment.”

A major thrust in The Crown Estate’s green energy drive is the potential make more use of the seabed, a resource which it manages around the coats of England, Wales and Northern Ireland. It’s green targets include:

1) To become a net zero business by 2030 and be climate positive thereafter, aligning with a 1.5°C climate scenario. This commitment includes all Scope 1-3 emissions associated with the operation of directly managed assets.

2) Rapidly decarbonising its real estate portfolio across the country by reducing carbon embodied in development, improving energy performance of existing assets and procurement of 100% renewable energy across the portfolio.

3) Championing a comprehensive approach to sustainable investment, including application of the TCFD (Task Force for Climate-related Financial Disclosures) framework and an internal carbon price.

The estate aims to be completely fossil-free as soon as possible and will be working with the Science Based Target initiative (SBTi) to agree appropriate decarbonisation targets in line with its 2030 1.5°C trajectory. Progress against these green targets will be reviewed annually.

As manager of the seabed around England, Wales and Northern Ireland, The Crown Estate is committed to develop of offshore wind to help enable the Government’s goal of delivering 40GW by 2030 and enabling new technologies like floating wind, all in a way which protects marine biodiversity and the natural environment.

Dan Labbad, The Crown Estate’s Chief Executive says:

“The impacts of Covid-19 and the wider volatility we face today only underline the importance of businesses like ours stepping up with purpose, pace and ambition to address systemic challenges facing our society and environment.

“This cannot wait, and we make our commitment to net zero today, knowing that we don’t have all the answers. We understand there will be big challenges to solve along the way and to succeed we will need to rapidly innovate in areas like technology and digital, to think differently about how we optimise the green potential of the seabed, as well as find new solutions by collaborating with our many customers and partners who share our ambitions.

“We are committed to investing to support our goal and pushing ourselves to work as hard and as fast as we can towards it, adjusting accordingly if we need to, as we better understand the opportunities and challenges further in the years ahead”.

Anyone managing a property business, of whatever size, can now see the direction of travel vis-a-vis environmental issues – in their own interest they should be looking to play their part. Soon renters and buyers will become much more conscious of the merits of environmentally efficient buildings and the benefits to themselves, so now is the time to plan your own green drive.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Crown Estate commits to net zero carbon by 2030 | LandlordZONE.

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