Car parking giant in survival bid to reduce rent bill

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The pandemic has had a dramatic effect on property usage, not least on the demand of in-town parking spaces.

NCP’s revenues have fallen by around 80% during the pandemic as, according to a company spokesperson, many town and city centres and urban train stations are unlikely to fully recover their pre-pandemic footfall.

A combination of declining high streets, uncertainty of the future volume of office traffic as people experience increased flexible working, and the rapid growth of home delivery, means that some locations may become unviable.

NCP is not the only company struggling to keep to its lease commitments in the UK and is not the only one to seek to use a new court procedure to help it restructure and cut costs. A court case in London is currently ongoing which will shortly rule on a similar plan to that proposed by NCP, brought by the nationwide gym operator, Virgin Active.

The Corporate Insolvency and Governance Act, which received Royal Assent on 25 June last year, contains a new Restructuring Plan process known as “the super scheme”.

The first such restructuring plan was used in the financial restructuring of Virgin Atlantic Airways (VAA). It is said to represent a new landmark in the UK for company restructuring, sanctioned by the High Court.

The Plan is a tool which has the potential to change the way many UK restructurings are implemented by moving UK restructuring processes and procedures closer to a US “Chapter 11” type of model.

The new plan is developed from the Scheme of Arrangement under Part 26 of the Companies Act 2006 (Scheme), but the Plan is a more flexible court supervised arrangement, a restructuring process that will likely be welcomed by many struggling companies.

New proposal

NCP has failed to reach an agreement with all its landlords, but the company says it has received “significant support” from its creditors and estimates that at least 85% of its A1 landlords will back the new proposal.

The first court hearing on the NCP restructuring plan case, the procedure to help the struggling firms reduce their liabilities, even without support from a majority of creditors, is due to take place on the 28^th of May.

The restructuring, says NCP, is necessary to avoid insolvency, as the company battles to recover from the Covid pandemic. Major shareholder Park24 Co., Ltd. has threatened to cease funding the business if the restructuring attempt fails, according company sources.

Following workforce cuts and taking government support through the various schemes, the company says that if the plan is approved it will retain its existing management to implement the recovery plan by reducing rents and closing down unprofitable parking facilities.

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YOUR forum questions answered: Why is my flood insurance going up?

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The hugely popular LandlordZONE forum is a friendly community where landlords share their experiences, exchange tips and ask for advice. Here we answer a recent question and ask the experts at Hamilton Fraser to give their best answer.

The issue:

A landlord’s insurance company has decided that their property’s flood risk has increased, despite it being in an area with a low probability of flooding. They want to know why their premium and excess on any flooding claim have gone up.

The answer:

Steve Barnes (pictured), Associate Director at LandlordZONE insurance partner, Hamilton Fraser Total Landlord Insurance, offers an explanation.

“Although it’s not possible to comment on this particular case without knowing the specific details of the property, there are a number of reasons why this landlord’s premium and excess may have increased, despite no apparent change in flood risk,” he says.

Flood data

“Insurance companies rely on a range of data to inform their long-term risk management, including climate change analytics to assess future flood risk, and flood mapping.

“Lots of insurers will be working off the same data and therefore it’s likely that they will make comparable decisions when it comes to assessing the flood risk of a property. However, with forward planning and a clear checklist of what you’re looking for, you should still be able to find protective, competitive cover that meets all your insurance needs as a landlord.

More storms

“Flooding has always been a substantial risk for certain parts of the UK, and it can happen anywhere, not just in riverside locations. For example, torrential rain, burst water mains and backed-up sewers can result in surface water that can flood properties and make them completely uninhabitable. But an influx of named storms in recent times has further impacted insurers’ risk appetite and ultimately the cover they are willing to provide.

“Last year saw 10 named storms, doubling the 2019 figure of five. At Hamilton Fraser Total Landlord Insurance, we experienced a 95 per cent increase in storm claims compared to the previous year. In one recent case, we paid out £143,755 for a claim where a major flood caused by Storm Desmond had caused extensive damage to a property.

“In 2020, storms Dennis and Ciara alone resulted in an estimated cost of over £500 million to insurers. This dramatic rise in claims is one of the primary reasons landlord insurance providers are increasing their premiums.

With extreme weather events increasing steadily over recent years, it’s vital for landlords to not only do as much as possible to prevent flooding in the first place, but to ensure they’re properly covered too.

“Hamilton Fraser Total Landlord Insurance is signed up to the Flood Re scheme, which will cover buy to let properties as long as they meet the criteria outlined here. The scheme raises funds to cover flood risks in insurance policies and reimburses the insurer after a paid claim is made, helping to keep premiums down.

Hardening market

“Another reason why this landlord’s premium and excess have increased could be to do with the fact that the insurance market is currently hardening. After several years of a ‘soft’ market with competitive premiums, relaxed criteria and wider cover, premiums and excesses are now going up. In a hardening market, it’s particularly important to make sure you’re fully protected.

“In our recent article, Six risks in a hardening market and how to avoid them, we provide a more detailed explanation of what landlords can do to avoid hefty pay-outs in a hardening market.

“For example, you can sometimes reduce your premiums by increasing your excess, without affecting your level of cover – an option which might make sense if you rarely make a claim. Or, if the excess is already very high, as in this case, you might be able to shop around for a more competitive provider.

“However, while a soft market offers landlords a wide range of choice, in a hardening market, insurance options are fewer as some insurers mitigate their risks by pulling out of the market altogether, leaving fewer quote options.

“It’s important to emphasise that, in the current climate of a hardening market, landlords should be careful not to leave insurance renewals to the last minute, as you may find your provider is no longer offering a policy which is good value for money and suits your needs.”

Listen in

You can listen to Steve Barnes discussing the causes of the current hardening insurance market, what landlords can do to mitigate any problems with their portfolio and how to get the best value for money, in the latest episode of Hamilton Fraser’s Property Podcast, ‘Caught between a rock and a hardening insurance market’.

To ensure you get insurance which adequately covers you for all eventualities, follow the Hamilton Fraser Total Landlord Insurance checklist, which you can find at the end of our article on the hardening insurance market.

As a valued LandlordZONE reader you’re entitled to 20% off Hamilton Fraser Total Landlord Insurance’s policies, call the team today on 0800 63 43 880 quoting code LZ2021 or get a quote online in under 4 minutes. 

Hamilton Fraser supports landlords, letting agents and tenants by offering a range of solutions and thought leadership to help them navigate the private rented sector. Most recognised in the private rented sector for providing award winning landlord insurance, the Hamilton Fraser family includes Total Landlord Insurance, mydeposits, the Property Redress Scheme, Client Money Protect, Landlord Action, Ome, HF Assist and Total Landlord Mortgages.

Join LandlordZONE’s forum here.

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Fix Universal Credit housing payments once and for all, says leading trade association

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The Department of Work and Pensions (DWP) has been criticised once again for the way it pays Universal Credit (UC) direct to tenants and in arrears, causing problems for landlords.

Property industry trade association ARLA Propertymark says paying UC in arrears makes it impossible for many tenants to pay their rent on time and that it is time the government ensures “UC is adequate and more effective”.

Its comments, which are unusually forthright for an organisation that is not usually keen to publicly challenge government policy and performance, follows last month’s Equality Act 2010 court win for Shelter.

It secured damages of £4,500 plus costs for house hunter Hayleigh Pearce, who was told by Brighton letting agency Michael Jones & Company that she could not view a property because she was in receipt of benefits.

UC problems

Propertymark says the problem is not so much the blanket ‘No DSS’ bans operated by some agencies, but the reluctance of landlords to get involved in the often labyrinthine UC payments system.

As LandlordZONE has reported many times in the past, landlords struggle to persuade the DWP to pay UC’s housing element direct to them even when the tenant is co-operative, and that tenants spend their housing element before it can be passed to their landlord, leading to rent arrears.

“ARLA Propertymark is a member of the DWP Universal Credit Private Rented Sector Strategic Landlord Group and has worked hard to lobby for change to improve how Universal Credit works in the private rented sector,” a statement says.

The organisation is calling for direct payments to landlords to be made easier to organise, for payments to be more flexible to help tenants budget, and that tenants should not have to wait five weeks to get their first UC rental payment.

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Government predict 700,000 will use Breathing Space scheme

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People in England and Wales struggling to pay debts or rent could be eligible to use the Breathing Space scheme, and Government expects around 700,000 people to benefit in the first year of the scheme.

Creditors (landlords) are not allowed to contact tenants directly to request payment of the debt or take enforcement action to recover the debt (including by taking possession of a property) for a maximum of 60 days.

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LATEST: Landlords and housing campaigners unite to slam government over LHA rent freeze

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Landlord groups and housing charities have united to denounce the recent local housing allowance (LHA) freeze.

The benefit was frozen despite widespread rising rents, which will leave tenants in some parts of the country facing a shortfall of more than £100 a month, says Shelter.

Chief executive Polly Neate believes housing benefit should be there as a safety net to protect people who’ve hit rock bottom, and if it’s not fit for purpose, homelessness will rise. 

She adds: “The government can step in and keep more people safe in their homes, by reversing the freeze on housing benefit. Without this, a rising tide of homelessness could be the legacy of the pandemic.”

The National Residential Landlords Association says the pandemic has highlighted the need for a welfare system that provides tenants and landlords with confidence that benefit payments will cover rents.

A spokesman tells LandlordZONE: “For this reason, we strongly oppose the Chancellor’s decision to freeze the Local Housing Allowance in cash terms.

“It will serve only to make it more difficult to sustain tenancies. The Chancellor should think again and, at the very least, restore the allowance to the 30th percentile and preferable ensure it covers average rents in any given area.”  

However, rental agency Pick My Pad reckons that despite the freeze, many tenants on benefits are in a position to cover their rental costs. 

CEO Mish Liyanage says that in Manchester, the LHA rate is £138.08 per week for a one-bed property while the average private rent is £120 a week. He adds: “An agent can secure a higher rate per week eligible for the DSS tenant, vet the tenants, and get a non-cash damage bond on your behalf.”

Read more about Shelter.

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Leaseholder bringing his own builder in to quote?

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We are a small group of leaseholders who are also shareholders in the management company that owns the freehold to our flats. I recently took over from the chap who ran the management company as he sold his flat and nobody else wanted to do it.

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Lease and repair issues – I may need profession help?

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This is a tricky one – we are a newish development (old offices) of 3 new floors and one existing (residential) on the 4th floor. The 4th floor lease has a clause that excludes them from 1st works to the roof as it was to be provided in good order.

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EU citizen’s Right to rent in the UK?

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Does an EU citizen who arrived in this country six months ago have the right to rent a property without having settled or pre settled status?

Advice from our agent who, of course, has an interest in placing this tenant

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Changes to evictions paperwork ‘do not comply with law’ claims lawyer

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Alteration made by the government to a key form that landlords use to evict tenants are inaccurate and ‘do not comply with the law’ a leading legal expert has claimed.

On Friday LandlordZONE reported that legislation covering Section 8 notices had been amended to require landlords to include multiple references to and provisions for the ‘breathing space’ debt respite scheme from today onwards within Form 3.

At the time we flagged up to the housing ministry that many legal experts within the sector were concerned that the update to this template was inaccurate.

The ministry subsequently said it would update the guidance in time for today’s deadline.

Not compliant

But leading property lawyer David Smith (pictured below) of JMW Solicitors says the now updated template does not comply with the law despite his flagging up the problem to the ministry.

“The new form is meant to have its first and second bullet points in the ‘earliest date proceedings can be brought section’ replaced with five bullet points,” he says.

“This hasn’t happened. The first three bullet points have been replaced and one of the other bullet points has been interpolated in between the five new ones. It makes more sense that way but it’s not what the legislation requires.”

The Debt Respite or ‘Breathing Space’ Scheme is designed to protect a variety of people who may have built up problem debt caused by the pandemic.

As the form template sets out, the scheme impacts both the evictions process and how landlords interact with guarantors.

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Who do I pay back?

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The tenant has moved out and Rent in Advance pays everything up to date, so there are no arrears and everything is squared up.

As she left after the Benefit Assessment Period, it will mean I will get her Universal Credit rent paid to me for the last month

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