SW city to clampdown on HMO conversions with harsher rules

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Exeter is considering extending its Article 4 direction to help manage the impact of the city’s student population.

The current Article 4 – restricting landlords’ rights to convert properties into HMOs – is in an area close to the University of Exeter’s Streatham and St Luke’s campuses.

The council hopes to enlarge this to include postcodes where student-only homes make up more than 20% of housing, or which are expected to exceed that threshold.

It would also include the university’s Streatham Campus and areas of purpose-built student accommodation bordering the affected postcodes.

It would not change exempt areas as it says this would cause severe personal hardship to homeowners, on the grounds that these streets already have a very high concentration of student properties.

New areas

The exempt areas are: Culverland Road, Danes Road, Edgerton Park Road, Hillsborough Avenue, Mowbray Avenue, Old Park Road, Springfield Road, Victoria Street and Wrentham Estate.

The authority says the changes would help to maintain a balance between student and non-student housing in the area and wouldn’t unduly restrict HMOs for non-student residents, such as lower income households and households with specialist requirements.

Exeter Council admits that one drawback is a possible increase in private rents, due to further restrictions on HMO supply.

It adds that since 2010, changes in the number of HMOs have been relatively limited and that the university expects future growth in student numbers to be slower, resulting in less demand for HMOs, although the council is not convinced this will be the case.

It is looking for feedback on four possible options in the consultation which runs until 3rd July.

Pic: Google Streetview

Read more about Exeter HMOs.

View Full Article: SW city to clampdown on HMO conversions with harsher rules

OFFICIAL: Latest evictions surge ‘due to Welsh reforms pushing out landlords’

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The Minsitry of Justice has blamed a 23% jump in the number of private landlord possession during the first three months of the year on the Welsh PRS reforms, although volumes are still below pre-Covid levels.

Quarterly figures from the Ministry of Justice show that claims increased from 19,031 to 23,395 (23%), orders from 12,966 to 17,660 (36%), warrants from 6,874 to 10,469 (52%) and repossessions from 3,809 to 6,421 (69%) compared with the same quarter in 2022.

The highest private landlord possession claim rates were seen in London.

Possession claims now sit at 77% of their pre-Covid baselines, mainly driven by private and accelerated claims. This increase was particularly noticeable in Wales where the accelerated procedure for claims, orders and warrants increased by 236%, 249% and 275% respectively.

For England this increase was 16%, 46% and 95% respectively. The MoJ says landlords exiting the sector due to the Renting Homes (Wales) Act – with more changes set to come in from June 2023 – was probably behind the rise.

Despite the increase in volumes, the civil court is managing demand, according to the government, which reports that the median average time from claim to landlord repossession is now 22.3 weeks, down from 27.3 weeks in the same period last year.

Legal aid

However, the Law Society of England and Wales warns that 25.3 million people (42%) do not have access to a local legal aid provider for housing advice.

President Lubna Shuja says it’s extremely concerned that the government is struggling to attract bids for its new Housing Loss Prevention Advice Service scheme.

“Unless we see significant and immediate investment across the legal aid system including housing, more of these schemes will collapse leaving people without help when they need it,” she adds.

View Full Article: OFFICIAL: Latest evictions surge ‘due to Welsh reforms pushing out landlords’

‘This is why built-to-rent will outperform BTL in the long term’

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Property management professional David Goldberg recently revealed that in the long term, investing in so-called ‘build-to-rent’ developments will prove to be more profitable for investors than buy to let.

He claimed that “built-to-rent looks to be a win-win for both tenants and investors alike and with more than £75 billion forecasted to be invested in this sector by 2025, it’s showing no sign of slowing down”.

Given the provocative nature of this viewpoint, we asked Goldberg, who is CEO of property firm POD Management, to explain how he has come to this conclusion.

“Yes, I believe that returns are greater in the build-to-rent sector, as opposed to buy-to-let, but only when compared over the long-term,” he tells LandlordZONE.

“The speed of acquisition and relatively low capital outlay in buy-to-let typically offers greater returns in the short-term.

Impact returns

“But factors like spread of the portfolio (i.e. where they are) and dealing with each tenancy in isolation, plus individual maintenance requirements – both reactive and proactive – impact returns.

“Also, a buy-to-let landlord can’t adapt to the changing needs of the tenant, for example moving from a 1 bed to a 2 bed apartment, or generally offer amenity, which can increase the likelihood of voids.

“Build-to-rent developments can be built to a higher quality and standard (of course depending on the individual project), provide flexibility, and often have more competitive facilities, which means landlords can demand higher rents (as they deliver tenants exceptional value), generating stronger financial returns.

“Professional landlords can offer greater security to renters and likely provide more flexible options on deposits and rental terms.

Buy to lets

However, in the short-term I believe returns are stronger for buy-to-lets.

“They can deploy capital quickly, will have less of an initial outlay on refurbishment, and quickly secure rental income. Within the build-to-rent sector, the asset owner has to acquire the land, refurbish all of the properties, and stabilise the asset, although they will continue to hold the asset, meaning they can spread this cost over a longer period and, given the advantages outlined above, achieve higher rents and thus great returns.

“Although, there are of course many factors which can affect returns, such as the operator, provided amenities, the quality of the build, and the landlord.”

View Full Article: ‘This is why built-to-rent will outperform BTL in the long term’

How to increase the profit from your property portfolio

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As we all know, thanks to the current high-interest rates, purchases of single-let properties don’t really stack up for many investors at the moment.

For those property investors who already own single-let properties on variable rate BTL mortgages

View Full Article: How to increase the profit from your property portfolio

Forged signature? Court hearing for possession claim

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Hello, I have a tenant who denied that she signed the tenancy receipt document at the court hearing in April. I tried to evict her using section 21.

The judge told her to write a witness statement that she did not sign the NRLA Tenant Receipt Document.

View Full Article: Forged signature? Court hearing for possession claim

41% of landlords see the ‘importance of EPC regulations’

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Landlords are apparently feeling the pressure over proposed environmental regulations with 41% believing it is essential to meet the planned Energy Performance Certificate (EPC) requirements, research reveals.

According to Mortgage Advice Bureau, landlords are keen to do their bit ‘for the greater good of the planet’.

View Full Article: 41% of landlords see the ‘importance of EPC regulations’

BLOG: Tomorrow and tomorrow and tomorrow – Renters (Reform) Bill heralds big changes

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In the second in a series of blogs for LandlordZONE on rental reform, Sean Hooker, Head of Redress at the Property Redress Scheme, shares his reaction to the Bill and what stands out for him.

So the wait was finally over and at shortly after 2.15pm on 17th May 2023, the Bill was presented and had its first reading.

Historic moment

For those geeky people, like me, who are into all this, we had Parliament TV on in the background waiting for this historic moment and having sat through a debate on bus funding and hearing about the problems of the number 622 from Doncaster to Keighley in what seemed reminiscent of eavesdropping on a pensioner conversation in an afternoon session of a local Wetherspoons, the bombshell was dropped and yes, like an amateur astronomer waiting hours to see an alignment of the planets, it came and was almost immediately over.  The long title of the Bill was read out by a Whip, the sponsors (MPs supporting the Bill) named and the Speaker of the House asked for the date of the Second Reading, to which the response was ‘tomorrow’. The order to print the Bill was given but it took a good half an hour more of refreshing the Parliament website, where the printed version of the Bill was to appear, for me at last to get my hands on it.

The first thing to note was yes, the name of the Bill had, as predicted, changed. However this only involved the insertion of parentheses around the word (Reform) and the dropping of the problematic apostrophe after Renters’. Yes, a senior civil servant confirmed to me, they toyed with the idea of changing the name to something akin to the ‘Rented Homes Bill’ or similar, but had reverted to the original name at the last minute. The addition of the brackets was to keep in line with the correct parliamentary convention for naming bills. It was also made clear that the delay in the presentation was done purely because of procedure, something to do with ‘Royal Protocol’ rather than any rebellion of backbench MPs, although this may come later.

Sandwiched in the news

The other thing that was obvious was the length of the Bill, just shy of 90 pages. This was after we were led to believe the Bill was to be on the light side. A lot of reading was in store! That was fine, but given that I was due to appear on the Vanessa Feltz show on Talk TV for my instant reaction to the proposals, a lot of skim reading was required to get the gist of the proposals. A mad panic and a page of scribbled notes later, I had enough for an educated comment, however as the 4pm deadline for my Zoom appearance on the TV show approached, the breaking news of a near catastrophic car accident featuring Meghan and Harry bumped the story down the pecking order and it was a further hour till my 15 seconds (almost literally) of fame. I even had to wait whilst a panel debated the merits or not of former MP Ann Widdecombe’s Marie Antoinette utterances on a cheese sandwich! What does that say about where the biggest shift in the private rental sector lies in the media’s mind?

Still, the following day and having absorbed as best as I could the fine print of the Bill, I was reassured that, as suspected, the proposals do not contain any huge surprises and the direction of travel is broadly where most informed commentators believed it was going. Yes, there were some glaring omissions, for example there is absolutely no mention of Decent Home Standards, however I have been reassured that this will be introduced, but how and when is to be decided.

Commons speak

The other thing that confused me was that despite what was said the day before, no Second Reading occurred. However, I subsequently learned that in parliamentary parlance, “Tomorrow” does not actually mean the next day but is a mechanism to get the Bill on the list of upcoming business. My apologies if myself and other commentators misled you on this and suffice to say the next stage of the Bill’s passage will not now occur until sometime after the Whitsun Recess in June or July. I love the arcane parliamentary jargon – tomorrow evidently never comes!  

What stood out for me in the Bill?  Well, of course the most detailed part of it relates to the scrapping of no-fault evictions and the introduction of new periodic assured tenancies. Of course, this is hugely important, however there are far cleverer people than me looking at this and I will politely defer to them to give their analysis in the first instance. However, two areas I want to briefly comment on at the moment, not least as I have had the most input with the Government on these, are the introduction of landlord redress and the form landlord registration will take.

A different story

Firstly, I must note that what the Government announced they are putting forward, both in their White Paper and their press release just before the Bill went live, differs slightly from what is actually in the Bill’s wording.

The press release said, “A new Ombudsman will provide quicker and cheaper resolutions to disputes, while a new digital Property Portal will enable landlords to understand their obligations and help tenants make better decisions when signing a new tenancy agreement. This will give confidence to good landlords, while driving the criminal minority out of business.”

The Bill however says they may introduce landlord redress schemes and a private rental sector database and confers powers on the Secretary of State to procure these provisions in a manner they see fit. We will therefore get both a register and redress, but when and what this will look like remains to be seen.

My view on this is that it is positive and helps address the gap in dispute resolution for tenants whose landlords do not use an agent or where the issues fall under the obligations of the landlord and not their agent. It should be emphasised that the final details of what will be put in place have yet to be revealed and the Government is still working on the model.

Happy to help

We at the Property Redress Scheme will work with them to help develop a joined up and easily accessible system that helps raise standards in the sector and provides the reassurance and protection to the tenant that is needed.

I am excited about the introduction of the Property Portal as it has the potential of improving the transparency and information available to tenants, but also allows for the opportunity to help and assist landlords, and indeed agents, to understand and comply with their obligations and be able to measure themselves on what ‘being good’ looks like. It will also make it harder for bad operators to hide and help focus enforcement effectively on those who flout the law.

Devil in the detail

Of course, the caveat is that the technology is correct and the process of registering and complying is straight forward and affordable, and we await the details of how this will be achieved in a realistic timescale as it is the lynchpin of so much of the other reforms proposed.

The Bill also introduces penalties for landlords not registering or joining a redress scheme, which is welcomed. However, as has been continuously stressed, the success of the Renters (Reform) Bill will be predicated on enforcement.

There is a huge amount of work to do and I hope and anticipate that the Government will press on with these plans as soon as possible after this becomes law and we can get on with the job!

View Full Article: BLOG: Tomorrow and tomorrow and tomorrow – Renters (Reform) Bill heralds big changes

The UK’s £1bn self-storage business boosted by the shortage of rentals

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Running a storage rentals business, supplying and letting space for inanimate objects, as opposed to people, is potentially far more lucrative and a lot less troublesome than operating as a residential landlord.

The UK self-storage industry has grown steadily over the last twenty years or so, with enough stuff stashed away in steel boxes, with locked roller shutter doors, to fill 100 Wembley seized stadia.

Drive to the edge of most towns and you will nearly always find a bunch of brightly coloured self-storage units where domestic and business renters can store their items, out of sight and often out of mind. Yes, one of the great drivers of the trend to self-storing is inertia. People fill up their units with long forgotten paraphernalia, pay their rent painlessly month-by-month by automatic transfer (standing orders), and then forget about it.

There are many drivers of why both consumers and businesses are using self-storage more than before. Domestic needs such as house moves, downsizing, temporary flat dwelling, marriage, divorce, bereavements and inheritance and retirement. Bicycles, motorcycles, small vehicles, classic cars and all manner of domestic and sports items are fair game here. In the case of businesses, self storage often proves useful for storing archived data, old invoices (HMRC demands 7 years of accounting records), stock, office equipment and machinery.  

Self-storage unit’s high visibility, brightly coloured and with centres located on key arterial roads around most towns in the country, helps bring this service to the attention of the business owners and the general public.

Britain’s homes too small

So long as developers build new houses that are too small for their occupants to live with their items stored comfortably, there’s going to be demand for self-storage units. According to the Royal Institute of British Architects over 50 per cent of new family houses in the UK are, in their words, “rabbit hutch” homes, too small for most buyers.

The way that developers pack-in as many homes as possible into a development site, the average new three-bedroom home in the UK is lacking around four metres squared of necessary floor space – that’s equivalent to an extra room. That’s according to a 2015 RIBA report and nothing has changed since then.

A Space Standards for Homes report also found that some family homes are failing so far below recommended space standards, they are essentially squeezing in three bedrooms into a two-bedroom house.

Cheaper than renting a bigger home 

Self-storage units are a lot cheaper than renting, buying a bigger home or extending an existing one, that’s why the regular shuttle between home and storage unit is becoming a family routine in many  households.

Amid increasing signs that shuttling to and from a self-storage facility is becoming a routine part of urban life for hundreds of thousands of people, nearly 70 per cent of customers continue renting these storage units for two years, while nearly 20 per cent stay for at least five years.

Modern consumerism creates endless possessions

Couple the space problem with the way Britons pack away superfluous possessions, and the rate they do this is bolstered by modern consumerism and a sentimental attachment to objects of all descriptions. This includes the paraphernalia surrounding the sport and exercise trend, and it all means that self-storage is forecast to grow by another 10 per cent over the next 3 years.

Retail as well as business usage

The self-storage business has gained from both sides of the online boom. While consumers buy more goods that need storing, there’s a host of new online businesses, the new small-scale retailers. They are online retailers who dispatch products to consumers but don’t have storage capacity at home, don’t have a high street shop, and they find self-storage is much cheaper than renting a commercial building.

Self-storage offers businesses storage space with a minimum of hassle and commitment. Small and even medium companies are now finding these storage facilities give them the flexible storage space they need without having to sign a long-lease. What’s more they can quickly take more or less space easily and quickly. 

There are no utility bills or business rates to pay, space is flexible from as little as one week’s hire, and some facilities offer free fork lifting and delivery acceptance.

Businesses can expand their stock levels as required which is particularly desirable for a business with big variations in seasonal demand. Their costs can be kept down by only using self-storage space when needed, as opposed to the inflexibility and cost of renting a warehouse on a long-term lease.

Where did this all start?

According to the Self Storage Association UK, self storage units first appeared in the United States in the 1960’s and since then the US industry has grown to over 5,000 such facilities across the country.

In the UK the industry started in the early 1980s, initially only in London, but now there are more than 2,00 facilities and growing across the UK, this equates to around 52 million square feet of rentable storage space.

The industry includes some large operators as well as some small-scale and local niche operations developed by local land owners. Farmers in particular have found niche self-storage a profitable business, one in which to diversify their agricultural earnings.

A housing crisis

The high cost of buying and renting a home in today’s housing market, coupled with the shrinking size of  floor space, particularly on new estates and in towns and city centres, underpin the increasing demand for these units.

People living in flats and small properties may acquire items in anticipation of moving into a larger home but have been thwarted by the rising costs of moving, higher house prices as well as increased mortgage costs. 

More people than ever are renting as opposed to taking their first step onto the housing ladder, but rental costs and a severe shortage of suitable rental accommodation is forcing more young people back into their family homes, or living with in-laws. This creates a storage problem for this so-called “boomerang  generation”, and this is where self-storage saves the day.

According to The Guardian newspaper, a 90 sq ft (just short of 10ft by 10ft) self-storage unit will typically set you back around  £270 per month in London or around  £130 in the north of England, far cheaper than renting a residential property.

An industry survey of more than 1,800 UK customers found that the most common reason for using self-storage was a lack of room for the items at home, followed by a house move, major life event such as a death, inheritance or divorce, and renovations. One in five renters are now business customers, often e-commerce retailers.

Security

Security is often an issue in domestic housing. With a bolted and padlocked self-storage container in a self-storage centre, with its own security systems in place, means that items are not only away from cluttering up the home, they are also more secure.

An Investment opportunity for landlords

As an investment opportunity, self-storage offers small-scale niche operators, with a small amount of strategically located land with planning permission. This could very quickly develop into a profitable cash flow operation by renting out small storage units.

According to The Guardian, Big Yellow, the biggest UK operator, with 108 centres, has recorded a 30% increase in adjusted profits before tax in 2022, or £96.8m, while Safestore, the next biggest, increased its revenue by 14% to £213m.

Below is a summary of the findings of The Self Storage Association UK Annual Industry Report 2023. These include data collected from industry operators, business customers currently using self-storage and the general public:

Occupancy maintained at 83.3%.

The UK average net rental rate is £27.19 per square foot per annum, up 4% on last year.

Churn rate has risen slightly but remains below pre pandemic levels at 81%.

Discounts have increased again in 2022 after being lowered in 2021

People renovating their home are 3 times more likely to consider using self storage.

75% of stores allow you to book and pay for unit online

16% of customers have changed how they use self storage as a result of increasing inflation but 68% of them are now using self storage more frequently as a result

41.2% of self storage customers have used self storage previously

33% of operators think 2013 will see a drop in profits

People moving house are 3 times more likely to use self storage

People under 45 are more likely to be short term users while older people keep their unit for much longer.

A death in the family is the most common life event that people use storage for.

19% of customers do not think their storage unit is good value

51% of the public have a good awareness of self storage

39% of customers could have bought more packing materials from their self storage store

32.2% of customers have used self storage before.

View Full Article: The UK’s £1bn self-storage business boosted by the shortage of rentals

More landlords lose properties as interest rates and rising prices hit home

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At least 410 buy-to-let mortgaged properties were repossessed in the first quarter of 2023, 28% higher than in the previous quarter – the highest level since the start of the pandemic.

UK Finance reports that 970 buy-to-let mortgages fell into arrears during the same period as higher interest rates and cost-of-living bite.

There were 7,030 BTL mortgages in arrears of 2.5% or more of the outstanding balance, 16% higher than in the previous quarter. Of those, 3,420 were in the lightest arrears band (representing between 2.5 and 5% of the outstanding balance) which was 33% greater than in the previous quarter.

Faster rate

It appears that buy-to-let mortgages in arrears are increasing at a faster rate than residential mortgages, according to the banking industry body, which adds that percentage increases can look large when there is a low base. “Similarly, buy-to-let mortgages in early arrears increased 33% from the previous quarter, an increase of 850 mortgages. While these numbers are small, lenders know that people are worried about their finances. This is why buy-to-let landlords are offered the same tailored forbearance and proactive support from their lender.”

Exit market

Lee Grandin at Landlord Mortgages fears landlords may decide to exit the market only to wish, in hindsight, they hadn’t. “I am sure landlords are already concerned and will be looking at ways to improve their position such as selling, increasing rents or re-mortgaging,” he tells LandlordZONE.

Grandin adds that lenders seem willing to offer an increasing number of five-year fixed rate buy-to-let mortgages where the interest rate is kept low by adding a large fee to the loan. “In five years when these loans mature the landlord will have a bigger loan balance than today. Maybe lenders are confident that in five years’ time the landlord will be better positioned and that rising interest rates is a storm that will simply blow over.”

View Full Article: More landlords lose properties as interest rates and rising prices hit home

Green mortgage aims to make an impact on BTL investors

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Buy-to-let landlords could add the cost of making properties more energy efficient onto their mortgage in an initiative to make more UK homes greener.

Ashman Bank will design and run the trial for PRS investors who would be able to borrow the money for improvements and include it in their monthly repayments. Under the new variant – Impact Buy to Let – it would assess a property’s energy efficiency, provide options on how it can be improved and incorporate the cost of carrying out the work onto the duration of the mortgage.

Loft insulation

It is one of 26 innovative green finance projects sharing £4.1 million worth of funding from the Department for Energy Security and Net Zero. Each aims to encourage homeowners to make their properties more energy efficient with measures such as loft insulation and double glazing and help them save more than £460 a year on their energy bills, according to the government.

Another trial initiative run by Energy Saving Trust Enterprises will explore a Pathways to Green Finance service aimed at those in the PRS looking to retrofit homes. After six months the firms can apply for more funding to run a pilot scheme.

Reduce bills

Lord Callanan, Minister for Energy Efficiency and Green Finance, says it has put in place long-term commitments to ensure homes across the country have greater energy efficiency to reduce bills, drive down energy use and lower emissions. He adds: “We are supporting these organisations to develop fresh and innovative ways of helping more people get better access to energy efficiency measures, such as loft insulation, double glazing and heat pumps.”

Landlords are still waiting for confirmation that the proposed date for meeting EPC band C has been delayed until 2028, with increasing numbers opting to sell up instead.

View Full Article: Green mortgage aims to make an impact on BTL investors