LATEST: MPs call for new fund to pay landlords who let students quit tenancies early

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A cross-party group of MPs and peers has suggested that students should be allowed to leave contracts more easily and has called for a new council tax fund to subsidise landlords for empty properties.

It says landlords would then avoid paying charges for releasing tenants from their contracts.

It also wants the government to work with landlords to introduce measures increasing flexibility in re-letting accommodation to different types of tenants without a permanent licensing change.

The group believes students urgently need financial assistance through an emergency hardship fund and that they deserve full compensation for rents when they haven’t been using accommodation due to lockdown measures.

Hardship

This fund would also provide support for students experiencing hardship as a result of lost income from term-time jobs in retail and hospitality.

The report says the approach is fairer and more effective than any general reduction in tuition fees.

It adds: “We believe that an additional sum more than doubling existing student premium funding, of £256m, would be required. Applying the Welsh approach would suggest a figure around £700m for England.”

It has heard from universities, accommodation providers, private landlords, the National Residential Landlords Association, student unions and students across the UK.

The report says that among those it quizzed, there was a general view that support should go to students directly, rather than to landlords, and that this would be best addressed through a substantial increase in hardship funds.

It adds: “We appreciate that our recommendations involve significant government spending, although not in the context of the overall costs of the pandemic, but we would emphasise the major financial costs incurred by universities, landlords and students themselves.”

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‘No fault’ evictions ban delayed until Covid is over, minister tells landlord chief

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The much-debated Renters Reform Bill that is expected to ban Section 21 ‘no fault’ evictions has been kicked into the long grass by Covid, housing minister Christopher Pincher (pictured, below) has revealed.

His comments were made to National Residential Landlord Association chief Ben Beadle (pictured above), who reports that it’s now unlikely that the reforms the bill is due to bring in will take place now until after the pandemic is over.

Speaking during the NRLA’s inaugural ‘Listen Up Landlords’ blog hosted by landlord and broadcaster Richard Blanco (pictured, above), Beadle said the government will now wait for the economic and social situation to stabilise before attempting any major PRS surgery.

“I don’t think we’re going to see social and economic stability any time soon so I think what we’re looking at is some sort of bridge between what we have now and the Renters Reform Bill,” says Beadle, who reminded listeners that the bill has yet to be formally published never mind begun its passage through parliament.

Bills normally take approximately a year to gain royal assent and pass into law, so an outright ban on no-fault evictions is unlikely before late 2022 at the earliest.

“But we know it will include measures to abolish Section 21 evictions and, whether landlords like it or not, that has widespread political support,” says Beadle.

He also said the NRLA understands the ban will not be retrospective and will only apply to new tenancies, and that he hoped it would also tidy up many of the existing pain points in the evictions process.

Once the bill does become law, it will create a new type of tenancy that can only be ended forcibly by a landlord via a modified Section 8 notice eviction which will cover rent arrears, anti-social behaviour and a landlord moving back into or selling their property.

Read more about the Renters Reform Bill.

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Residential to Ltd co for capital raising?

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I have a 10 property BTL portfolio in a Ltd Company. I want to expand, but my lender option is compromised by their current policies.

My own home is unencumbered, but I’m being rejected for finance on that because “my income is from property”.

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The looming David and Goliath battles of commercial rent arrears

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In a world where significant constraints are being placed on a landlords’ ability to recover outstanding rents, many suspect that some tenants are using the crisis to avoid paying, or avoid paying in full. This when it is claimed they can easily afford to pay, especially in the case of large international corporations.

Landlords in England and Wales (Scottish legislation differs) still retain the ability to recover full rent and other sums due to them under commercial leases, but practical difficulties often prevent this. Landlords’ urgent cash flow issues are often not helped by the fact that payments may be deliberately withheld, coupled with long delays in court proceedings.

Section 82 of the Coronavirus Act 2020 still applies. It prevents any major threats to tenants’ tenure through lease forfeiture in England and Wales between 26 March 2020 and 31 March 2021. This is whether by court proceedings or peaceable re-entry, for the majority of commercial leases, by reason of non-payment of any sums due under the lease.

Depending on the circumstances however, landlords still have other options which might include recovering sums owed by tenants of their commercial properties from guarantors, former tenants, recovering directly from any subtenants, or through going to court for debt recovery proceedings.

Last year the government published a code of practice for landlords and tenants of commercial property across the UK. It has been endorsed by a number of industry organisations including the RICS, but it is voluntary. The main principle of this is “transparency and collaboration”, the government’s aim being to encourage landlords and tenants to act “reasonably and responsibly” whilst the crisis lasts.

A recently reported court case illustrates the point about the alleged unequal balance of power between smaller-scale landlords and large corporations. Fast-food giant Burger King, owned by Restaurant Brands International, a Canadian-American multinational fast food holding company, itself backed by Brazilian-American multibillion-dollar investment firm 3G Capital, is being pursued by one landlord over unpaid rent.

The UK arm, Burger king Ltd, has proposed that its quarterly rent due from last March be waived altogether, rent due from last June be discounted by 70%, and a new lease arrangement entered into whereby rent is linked to sales (turnover rents) after that.

The UK subsidiary of Brands International leases its restaurant properties from landlords and sublets them to the chain’s franchisees. According to The Sunday Times, it is claimed that the company owes £461,174 to the owner of its branch in Queensway, west London.

The court filing by the claimant landlord argues that because of the big difference in the size of the parties, it considers that a more appropriate arrangement, in line with the code of practice, might be a deferral of some of the rent to be repaid over a period of time.

Given the size of the commercial rent arrears problem, which has been building up since the start of the pandemic, the landlord – tenant stand-off is threatening to explode over coming months. With the tenant protection measures still in place for another couple of months, and the courts likely to be overwhelmed when restrictions are lifted, there seems little by way of relief in the short-term.

Neither party in the above dispute has made themselves available for comment.

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Informing Local Authority of EICR?

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Re. EICRs, from the .gov site click here

We must:- Supply the local authority with a copy of this report within 7 days of receiving a request for a copy.

-Supply written confirmation of the completion of the remedial works from the electrician to the tenant and the local authority within 28 days of completion of the works.

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Should landlords be worried by the pet changes in the latest Model Tenancy Agreement?

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The government has published its latest Model Tenancy Agreement and within it given tenants the right to rent a property with their pet, with the onus on landlords to explain why they think it’s inappropriate for the property.

Although this is a significant deviation from previous government policy, the new model agreement is only recommended to landlords and letting agents when issuing rental contracts. But it marks a significant shift by Ministers.

What do landlords and other players in the housing market think of this mild government U-turn on pets?

Suzy Hershman, mydeposits

“Unfortunately, The Tenant Fees Act scuppered all ways of taking extra money in return for allowing a tenant to keep a pet in the property, other than taking a well-advertised and ‘reasonably placed’ higher rent.

“A tenant is only responsible for leaving the property in the same condition it was in at the start, allowing for reasonable wear and tear.

“If you agree to a tenant with a pet, then ‘reasonable wear and tear’ could extend to minor damage caused by the pet. 

“Whether a deduction is made from a deposit or is a claim for a no-deposit alternative such as the Ome like any claim, it can only succeed for a breach of the tenancy agreement – i.e. damage that is beyond reasonable wear and tear, which is supported by evidence.”

The National Residential Landlords Association

A spokesperson says: “Pets are not always suitable in certain properties such as large dogs in small flats without gardens. There is often more a risk of damage to a property where there is a pet.

“We call on the Government to enable the level at which deposits are set to be more flexible to reflect this greater risk.

“We are also calling for a tenant to either have pet insurance or to pay the landlord for it to be allowed as a requirement for a tenancy where relevant.

“At present payments such as this are banned under the Tenant Fees Act.” 

Terri Dunne, Chief Delivery Officer at Hamilton Fraser

“Allowing responsible tenants to have pets will increase the market reach for the property and attract a wider supply of tenants and possibly longer tenancies.

“But it is generally accepted that no matter how well trained the pet is, there is likely to be damage to the property.

“Under a landlord property insurance policy there are likely to be exclusions or limitations regarding whether a claim can be submitted for any damage caused by a pet.

“As such, you should always check your landlord insurance policy or speak with your insurance broker.”               

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Should landlords be worried by the pet changes in the latest Model Tenancy Agreement? | LandlordZONE.

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Cities will return to rental popularity once Covid ends, say landlords

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Landlords investing in property at the moment believe the UK’s cities will return to normal after the pandemic is over, and are ignoring claims that semi-rural suburbia is where home-working renters will want to live in the future.

Lender Paragon says it has found that landlords continue to target urban locations for buy-to-let purchases; 16% of landlords plan to buy an average of 2.2 properties in the next 12 months, with 68% looking at buying in urban areas.

Suitability for home working was only named by 27% of landlords as important, while proximity to green space was picked by 17% of those who plan to invest in the next year.

Paragon’s study of 846 landlords found that more than a third (36%) plan to buy in a suburban area and 6% are looking at rural locations. Two thirds (66%) of landlords are going to buy in the same area as their existing properties, with 10% targeting new areas, and 20% planning a mixture of both.

MD Richard Rowntree (pictured) says that while investors need to be able to adapt to changing market conditions, it’s also important to look at the bigger picture.

He adds: “While we have seen some move out of urban areas, this isn’t possible or desirable for everyone. The successful landlords will be the ones who invest with the intention of meeting the diverse demand for good quality, affordable housing.”

When deciding what to buy, terraced houses were cited as most popular, followed by semi-detached houses. Potential for rental yield is the most important aspect, according to most landlords, followed by the ability to add value.

Listen to the Hamilton Fraser podcast on mortgages for landlords.

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Kensington Flat For £45K At Auction?

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Property Auction Review video of some of the best property investment deals (both Residential & Commercial) coming at property auctions Allsop & Auction House London reviewed by myself, Rod Turner, Jay Howard and Piotr Rusinek.

In this episode

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One of us? New housing minister reveals he is also a landlord

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Landlords sometimes complain that those in Whitehall’s corridors of power do not understand the day-to-day challenges of being a landlord when fashioning new regulations and laws.

But now one of their own has been made a housing minister. Eddie Hughes MP, who was appointed to the housing ministry team on 18^th January following the resignation of Kelly Tolhurst for family reasons, has told the MCHLG committee during his first parliamentary outing that he is also an ‘accidental landlord’.

At the moment this is not mentioned in the parliamentary Register of Member Interests, which requires rental income over £10,000 and properties worth over £100,000 to be declared.

Hughes is not alone – a recent investigation among MPs using the Register during May last year found that out of the 650 MPs in the current parliament 110 (17%) are landlords.

This compares to the general population, among whom just 5% or one in 20 are landlords.

Conservative majority

More Conservatives are landlords than amost Labour or other party MPs; 87 out of 365 Tory MPs (24%) are landlords and 45 of those (or 15%) including Boris Johnson rent out more than one property.

Johnson has two rental properties – one in London and a 20% share in a rented property in Somerset.

The other parties are less landlord heavy. Two out of 11 Lib Dem MPs (18%) are landlords along with four out of 47 SNP MPs (9%) and 17 of 202 Labour MPs (8%).

These figures make the Conservative’s all-out assault on landlords all the more baffling – given 87 of its own party will personally feel the increased costs and taxation imposed on landlords since they took power in 2015.

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Landlords are in ‘last chance saloon’ to buy properties before Rishi’s stamp duty deadline

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Nearly half of all buy-to-let mortgage lenders say they will be unable to get new transaction across the line by the 31^st March stamp duty deadline, landlords have been warned.

The research, by a leading mortgage broker, reveals that even the lenders still capable of doing deals in this sort of time frame may well struggle to hit the deadline if solicitors or local authorities drag their feet.

“Typically, a landlord would want about 100 days to complete a purchase,” says Jeni Browne, director of Mortgages for Business.

“Clearly, landlords don’t have that sort of time on their hands anymore and I’d urge them to do everything they can to push through a new buy-to-let purchase before the stamp duty holiday ends.”

At the moment, although landlords still have to pay the additional 3% stamp duty levied on ‘second home’ property purchases, like all other home buyers they do not have to pay any ‘standard’ stamp duty on the value of the home they buy under £500,000.

Gutted

“I think most landlords would be completely gutted to miss the deadline simply because the lender they’d chosen couldn’t turn their transaction around in time,” says Browne (pictured, below)

“With volumes so high, many lender’s service levels have slipped – it’s taking some of the big players 10 minutes just to pick up a sales call while others are taking 35 working days just to undertake their processing. 

“It’s therefore absolutely critical that landlords speak to a specialist broker who can ensure they not only get a competitive deal but that they also get one that has a realistic chance of going through before the deadline runs out. 

“Frankly, it’s absolutely to the wire, even with the right lender.”

A parliamentary debate is due on the stamp duty deadline on Monday.

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