Buy to Let mortgage rates starting to increase

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With the stamp duty holiday having come into force a little over a month ago, the latest research from Moneyfacts.co.uk explores how the buy-to-let (BTL) mortgage market may react to a UK economy experiencing its first recession in 11 years and also what this may mean for landlords.

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NRLA issues the facts about the ending of the eviction ban…

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On the 24th August the courts are due to begin to hear cases related to the repossession of properties again. This comes following a five-month suspension of all residential evictions in England – both new and ongoing cases – due to COVID-19.

Court eviction proceedings have been on hold since March. The government prevented landlords starting or continuing eviction proceedings to give tenants some security during the furlough and lockdown periods.

The ban was initially for a period of three months, but the government later extended it by a further two months and landlords will argue strongly that this ban should not be extended further.

From the 24th August, landlords should again be able to start or resume evictions. This will mean courts can begin to hear repossession cases once again for landlords. However, unfortunately, even if the lifting goes ahead as planned there is likely to be a backlog of cases from pre-lockdown, as well as a number of new cases and there are some strict condition to be complied with – see below.

The NRLA says:

This period has caused considerable challenges both for tenants and landlords. 94% of landlords rent property as an individual and have unlimited liability should their businesses fail. Many rely on their rental income for their livelihood, 44% entered the market to contribute to their pension and 39% report a gross non-rental income of less than £20,000 a year.

It is vital that as the ban on repossessions is lifted, unnecessary scaremongering is avoided, and policy makers and others focus on the facts It is wrong to assume that every tenant that has built rent arrears because of COVID-19 will automatically be at risk of eviction.

Independent polling for the National Residential Landlords Association by the research firm Dynata has found that just over 95 per cent of private tenants are paying their rent or have made an arrangement with their landlord to pay a lower rent or defer payment during the pandemic. Less than a third of all those with arrears (two per cent of the entire survey sample) have been served with a possession notice.

Information for landlords from the NRLA:

Protections for Tenants Affected by COVID-19

When the courts start hearing claims for repossession again, a landlord with a claim already in progress will have to provide a ‘re-activation notice’ informing the court (and the tenant) in writing. If they don’t, the case will remain dormant.

Where these, or a new claim, include non-payment of rent, the landlord has to set out what knowledge they have about the tenant’s circumstances including the effect of the coronavirus pandemic on them and their dependants.

If this information is not forthcoming or is deemed inadequate by the courts, the judges will have powers to adjourn the case. Such a delay would mean that the landlord may continue to receive no rent from the tenant and so this will hit them in the pocket. This will encourage landlords to engage with their tenants prior to court action including seeking ways to sustain tenancies using the NRLA’s rent arrears management guidance.

The courts will prioritise cases involving extreme arrears built before the lockdown, anti-social behaviour and domestic violence. Those that are not a priority case will take longer, offering further time for alternative accommodation to be sought and providing further incentive for landlords to seek agreement outside of the courts.

Until 30th September, landlords renting property in England have to give tenants a minimum of three months’ notice of their intention to seek possession giving more time for payment arrangements to be agreed. In Wales it is six months for all cases except those related to anti-social behaviour.

The NRLA believes that to support the above the Government should develop a financial package, as has happened in Wales, to support tenants to pay off rent arrears built as a result of COVID-19.

Why Does the Repossessions Ban Need to be Lifted?

• The repossessions ban has not been without consequence. Landlords have been unable to:
• Take action against anti-social tenants who blight the lives of fellow tenants and neighbours.
• End tenancies where it might help victims of domestic violence leave the perpetrator.
• Address situation where they have faced months of rent arrears building before the pandemic (and hence have nothing to do with COVID-19).

There will be a backlog of cases when the repossessions ban ends. Between January and March, just before the ban was put in place, there were 24,320 claims made by private and social landlords to repossess property; 8,093 claims led to a repossession order being made and 1, 336 led to a warrant being issued for repossession in England and Wales.

Quotes from the NRLA

Chris Norris, Policy Director for the National Residential Landlords Association, said:

“Extending the ban on repossessions is not necessary. Our research clearly shows that the vast majority of landlords and tenants are working together constructively to sustain tenancies wherever possible.

“We need the courts to deal with cases where tenants are committing anti-social behaviour or where there are long-standing rent arrears that have nothing to do with the pandemic. Over the last five months landlords have been powerless to take any action against those who cause misery for fellow tenants and neighbours.”

Case Studies

Mrs R

Mrs R is a single parent who finds herself potentially unemployed as a new job she was about to start fell through due to the pandemic. She does not make any money on the property as it is in negative equity and has kept rent levels the same for a decade.

She submitted court papers to repossess a property because a tenant had not paid rent since around November last year and has convictions for harassing the neighbours. The repossessions ban means that the tenant continues to stay in the property, living without paying any rent despite him receiving furlough money.

Ben

Twickenham based landlord Ben Khosa has a few rental properties which he and his wife rent out.

At the start of the pandemic Ben got in touch with all his tenants to check they were ok and to ask that they get in touch if they need support.

Some tenants did get in touch about additional help. For some Ben was able to defer the rent, or signpost them to support in applying for universal credit. He even did the shopping for a time for one of his vulnerable tenants.

When it comes to the end of the repossessions ban, Ben says he does have one tenant who is not paying the rent and has been ignoring all his attempts to reach out and offer support.

Ben says the arrears are building up, and that: “The tenant was in arrears prior to the Covid-19 outbreak but was paying instalments. He however stopped paying all rent in March altogether with no explanation despite our repeated requests to work together during this time.”

Sarah (Not her real name)

Sarah is a nurse in Accident and Emergency.

A change in her personal circumstances last year meant she needed to move back into the rental property she owns in South Wales which is currently let. Living with her parents is out of the question –they are shielding due to the coronavirus.

She currently finds herself sofa surfing, facing a nervous wait for the three month notice she served on her tenants in May to expire. She’s unsure if the tenants will comply with the notice as communication broke down when they stopped paying rent or answering Sarah’s calls to help them several months ago.

When Sarah let the tenants know about her intention to move back into the property herself and her reasons for doing so, she also offered to help them find somewhere else to live. “The tenants requested I serve a Section 21, so they could access social housing more easily”, she says.

In March and April, despite receiving Universal Credit payments, the tenants stopped paying rent altogether, and ignored Sarah’s attempts to get in touch and come to an arrangement with the rent.

After several attempts of trying to get in touch, Sarah served Section 21 and Section 8 notice on her tenants. Sarah had never served notice before-and due to a slight error in the dates written on the Section 21 notice, it proved to be invalid. She says: “If the tenants don’t move out this month when the notice expires, or there’s an issue with the notice for whatever reason, I fear I will be waiting months to get my property back, especially if I have to re-serve notice and comply with the new six month rules.”

·         Details of who landlords are can be found in the Government’s Survey of Private Landlords in England published last year. It can be accessed at:  https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/775002/EPLS_main_report.pdf.

·         The NRLA commissioned the marketing research firm, Dynata, to understand the impact that coronavirus has had on tenants in the private rented sector.  The fieldwork was carried out between 20th July and 4th August.  It is based on the responses of 2,243 tenants in England and Wales.

·         The NRLA’s guidance on managing rent arrears as a result of COVID-19 can be accessed at: https://www.nrla.org.uk/resources/managing-your-tenancy/managing-arrears-effectively.

·         The Ministry of Justice figures on the number of orders and warrants issued in Q1 2020 for landlords to repossession properties can be access in table 5 at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/884729/Mortgage_and_Landlord_Possession_Statistics_Tables_Jan-Mar_20.ods.

Suspension of Evictions

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Facts behind the end of the eviction ban

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On the 24th August, the courts will begin to hear cases related to the repossession of properties. This will come following a five-month suspension of such cases due to COVID-19.

This period has caused considerable challenges both for tenants and landlords.

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TECH LATEST: Property management platform launches FCA-regulated landlord bank account

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A new current account exclusively for landlords is being launched by online property management tool Hammock to help them collect rent and monitor income and expenses.

The platform – launched in March – already automatically monitors rent collection, tracks payments and expenses then provides live analytical reporting on the status of each rental house or flat.

It also means that compiling a tax statement goes from taking hours to just minutes, as users always know where they stand in terms of profit and loss.

Now Hammock is launching an FCA-regulated current account designed specifically for landlords and property managers, which it says will make the experience even more seamless.

Founder and CEO Manoj Varsani (pictured, above) says he wants to save landlords time and money in an industry which has yet to benefit from new tech solutions.

Spreadsheet

“As a landlord, I know too well how time-consuming and inefficient it is to manage your properties with spreadsheets, paper notes and to collate data from multiple bank accounts,” explains Varsani.

Landlords using Hammock have tracked more than £7m of rent payments on the platform, across more than 1,700 properties, and he tells LandlordZONE that the current user base is expected to double by the end of 2020.

“As more and more landlords are switching the management of their properties to limited companies, the Hammock current account will be the right product for their needs,” adds Varsani.

“We’ve spoken with many landlords who are looking for a current account specifically designed for them, so we’re expecting to be busy as soon as we launch our current account.”

Customers pay a monthly subscription to use the platform based on the number of properties managed, with most paying £9.99 per month.

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Online troll attacks YouTube star who shone a light on property guru’s courses

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A rising star in the YouTube investigative blogger world has been trolled online after publishing a two-part investigation into property guru Samuel Leeds.

During it Georgie Taylor or Münecat, as she calls herself online, spends nearly an hour in each video examining the background, motivations, modus operandi and psychological profile of Leeds, as well as the consequences for some students of attending his academy’s courses.

But the videos, which together have already been viewed nearly 30,000 times on YouTube, have been met with displeasure among online supporters of the courses.

A Facebook user calling himself Ronald Simms – who is strongly suspected to be Leeds himself – has posted some characteristically strong views on the Truth About Samuel Leeds Facebook page, comments that were subsequently taken down by the person posting them.

This is the same Facebook group that Leeds last week attempted to have shut down via legal letters sent to one of its moderators, Anthony Burgess.

In one post, Simms addresses Münecat, saying: “Your work is basically pornography for loser men to make them feel better about failures in life”, and then addressing the Facebook group, saying: “Little Miss Münecat spends two hours scantily dressed and insulting a business program that has helped literally THOUSANDS of people become financially free.

Referring to the former students featured in the videos, Simms says: “Georgie has clipped together hundreds of other videos and comments of other life failures who did not work hard enough or care enough about their own futures to fully commit to the AMAZING programme Mr Samuel Leeds offers an incredibly low price”.

Taylor has told LandlordZONE that has never experienced this level of animosity since she started posting he ‘deep dive’ videos on YouTube 18 month ago.

“It is obvious to me that it is high time that the activities of property gurus like Samuel Leeds and their academies are regulated properly once and for all”, she says.

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Rent Guarantee and Legal Expenses provider gone bust?

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All my rental properties are covered with rent guarantee and legal expenses cover. One of the properties is up for renewal on 21st August, and I am struggling to find cover due to COVID-19.

If anyone has been through this process recently

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Thank heavens for landlords

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This is one of the best pieces I have seen valuing the work of us as private landlords. If only we could get this message across to combat all the anti-landlord rhetoric that is so polluting discussions about the private rented sector and leading to the onslaught of destructive policies which are ruining things for tenants just as much as they are damaging landlords’

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Labour’s former Chancellor John McDonnell declares all-out war on landlords

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The evictions band should be extended for at least another year after August 23^rd, says Labour’s former shadow Chancellor John McDonnell, just one of several anti-Landlord measures he has proposed over the weekend.

His comments, made to a national newspaper, are part of his plans to introduce a radical package of changes to the rental market that are unlikely to help win the landlord vote for Labour.

His call to the government goes even further than Scotland’s announcement last week that it was to extend its evictions ban by another six months to the end of March next year.

“Many people are becoming desperately worried that they will now face eviction,” he told The Guardian newspaper.

“Many cannot rely upon the goodwill of their landlords to prevent them losing their homes.

“That’s why it is premature to end the ban on evictions, especially with so many jobs being lost and incomes drying up.”

McDonnell also directly attacked landlords, saying: “Housing should be a right for all, not an investment opportunity for a few”, and has proposed radical reforms to ‘curb the power of landlords’ and tackle the UK’s housing crisis.

Once the Covid crisis is over, McDonnell says a Labour government should bring in increase in capital gains tax for second homes, a legal limit on the number of properties that individual landlords can own, a ban on the purchasing of homes through companies, and cancelling rent arrears caused by Covid-19.

Read more about Johns McDonnell.

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Huge increase in landlords deserting Airbnb for traditional rental market

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A surge of Landlords taking their properties off Airbnb and offering them as traditional long-let rentals is taking place in London, says Hamptons International.

The estate agency says 37% of Airbnb stock in London has been switched to long-term accommodation, and that 12% of all properties being advertised for sale are former short-lets units.

Hamptons International says that consequently there are 26% more rental homes available than at the same time last year across the whole of the capital, and 42% more within inner London.

This dramatic increase in properties coming onto the traditional market is driving down rents on average as the market in some areas is flooded with new stock.

Rent falls

Rent rises in the UK are flat overall but in London fell 4.2% year-on-year in July, sparked by a record rent fall of 8.4% in inner London.

But Hamptons International says the shift from the short lets back to traditional renting is almost exclusively a London trend. 

Of the 20 local authorities with the highest share of short lets being offered on the long-term rental market, 16 were in the capital, suggesting rural and coastal short let markets are performing more strongly. 

Aneisha Beveridge, Head of Research at Hamptons International, says: “For years there had been a steady stream of landlords moving from the long to the short let market in search of higher returns. 

“Following lockdown and in the two months since late May, this shift has been completely reversed with growing numbers of landlords looking to secure longer-term tenants.”

Read more about Airbnb.

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Critic and former pupil of Samuel Leeds receives legal warnings via the property guru’s legal team

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Andrew Burgess, a former student of property trainer Samuel Leeds who says he wants to highlight the guru’s activities after attending several of his courses, has been served with a letter from a law firm asking him to delete all the social media sites that he controls.

These are the well-known Facebook group The Truth About Samuel Leeds and also Burgess’ Property Education Truth Seeker channel on Youtube.

The letter warns that his ‘campaign’ against Leeds is both defamatory and constitutes harassment and that Burgess has made false allegations against Leeds, and incited others to do so. It also accuses him of ‘malicious communication’ after Burgess contacted several former Leeds students.

The legal spat is the latest in a long-running campaign by Leeds to tackle Burgess and other critics of his property investment strategies, methods which are promoted tirelessly on the internet and social media by the guru via his property academy, Property Investors.

Mishcon de Reya

In February this year Burgess was served with a similar ‘cease and desist’ letter from another legal firm, Mishcon de Reya, which informed Burgess that he had been reported to the police, although Burgess claims no further legal action or police investigation has subsequently materialised.

As LandlordZONE, several national newspapers, the BBC and other media outlets have reported in the past, the key criticisms of Leeds and his many copycats is that their courses attempt to teach inexperienced members of the public how to make a ‘passive income’ with ‘no money down’.

These include Rent to Rent and Lease Option agreements, joint ventures, serviced accommodation packaging and deal sourcing – even though these require amazing sales skills, local contacts and property sector experience and knowledge, attributes many of his student do not possess. His courses start at £995 but can cost up to £12,000.

Burgess has told LandlordZONE that he is not phased by the letters that Leeds’ legal representatives continue to send him, and he intends to ignore them as he has done in the past.

“I have asked my solicitor to look at them and have been assured there is no legal basis for their claims or demands,” he says. “They are just an attempt to cower me into silence.”

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