Year: 2020

A call to action has been sent to letting agents to make their voices heard about new EPC proposals from the Department for Business, Energy & Industrial Strategy.

Under current regulations the minimum energy performance standard is an EPC Band E for domestic rented properties; this has applied since 2018 to properties let on new tenancies, including renewals, and since April this year it has applied to all privately rented properties whether there has been a change in the tenancy or not.

However within the BEIS proposals, the government’s preferred option for the future is:

– raising the energy performance standard for rental properties to Energy Performance Certificate energy efficiency rating Band C;

– achieving the improvements for new tenancies from 2025 and all tenancies from 2028;

– increasing the maximum investment amount, resulting in an average per-property spend of £4,700 under a £10,000 cap;

– introducing a ‘fabric first’ approach to energy performance improvements (this is improving the performance of the materials that make up the building fabric itself, before considering the use of mechanical systems).

Now Paul Offley, compliance officer at The Guild of Property Professionals, is urging letting agents to explain to the government how difficult this may be for landlord clients.

“I have received a number of concerns relating to the proposal to introduce a new minimum energy efficiency rating for the Private Rental Sector (PRS) in England at level C, which would apply for all new tenancies from 2025 and all existing tenancies from 2028,” says Offley.

“As you can imagine there are a number of properties where this will impact significantly on landlords in some areas where the cost of energy improvements could be high. Landlords may also be concerned at the increased costs they may face, especially as some may have issues with rent arrears from their tenants who have been impacted by coronavirus – but ‘don’t panic’ is my clear message.

“At this stage the government has announced its intention and issued a consultation process, everyone involved with the PRS has until the end of December 2020 to have their say and submit a response to the consultation; so don’t suffer in silence this is your opportunity to have your say on this topic.”

There are various exemptions likely if the government’s proposal comes to pass.

This may include the ‘all relevant improvements made’ exemption, which applies when a landlord has made improvements to the property up to a cost cap of £3,500 including VAT, and the property still does not meet the minimum standards. Several others apply, depending on the property and the landlord’s unique circumstances, such as having only recently become a landlord.

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The Prime Minister is wrong to believe that those in private rented housing are unable to turn the properties they live in into a home of their own.

The implication –  in his speech today to the Conservative Party Conference – flies in the face of a previous survey of tenants.

This found that 63% of renters had redecorated their home and 52% had made significant changes to their gardens with the permission of their landlord.

Chris Norris, Policy Director for the NRLA said: “Whilst we believe that those who want to should have the opportunity to buy a home of their own, the Prime Minister is wrong to imply that renters cannot turn the properties they live in into a home of their own.

“Indeed, landlords much prefer to have tenants settled long term in a home they feel comfortable in and want to look after.

“If the Government really wants to support homeownership it should consider changes to the tax system to support and encourage landlords considering leaving the market to sell to first time buyers.

“Reports that Ministers are considering an increase in Capital Gains Tax would serve only to incentivise landlords to hold on to properties longer than they might otherwise have done.”

The survey was carried out by the National Landlords Association (NLA) before it merged to form the National Residential Landlords Association (NRLA).

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The Work and Pensions Select Committee has published its report on the five week wait for Universal Credit, which includes a number of recommendations on reforming the current system.

In relation to the coronavirus pandemic, the report recommends that the Government commit to maintaining the increases in support provided during the pandemic, including keeping the Local Housing Allowance at the 30th percentile and also maintain the £20 a week increase in standard allowance for Universal Credit and Working Tax Credit, with annual inflation-based increases thereafter.

The NRLA campaigned for the LHA to be raised to the 30th percentile, and the association is also calling for this increase to be maintained permanently, and ideally for the Government to realign rents to the median market rents (50th percentile).

The Work and Pensions Select Committee report also goes on to recommend a number of other welfare reforms, including a greater emphasis in the Universal Credit system on payments being able to be made directly to landlords.

The report notes that “anyone claiming an Advance should be given the option, at the outset, of having the housing element of the Advance paid directly to their landlord. This would ensure that claimants’ housing costs are covered during the wait for their first payment, and that they will not face the risk of falling into arrears or eviction as a result”.

Other suggestions include:

• A recommendation that the five week wait is scrapped for all claimants moving to Universal Credit through managed migration, including for claimants moving from tax credits
• That the DWP pays all first time claimants of Universal Credit a “starter payment” equivalent to three weeks of the Standard Allowance of Universal Credit. It continued: “This payment should be made two weeks after the initial claim, and only once the claimant’s identity has been verified, to mitigate the risk of fraud. The starter payment should also be given to people who move to Universal Credit by “natural” migration, in cases where it is not possible for them to be moved seamlessly to Universal Credit.”
• That UC advances should be renamed “new claim loans”, so that it is clear to claimants that they will need to be repaid. It continues: “Before a new claim loan is granted in full, the Department should provide personalised budgeting support—when possible, with a face-to-face option—with a full assessment of the claimant’s financial situation and the impact that future repayments of the loan will have on their household finances. We recognise that, for people in acute financial crisis, it may be necessary for the Department to pay part of the loan before this support can be offered.”

NRLA campaigning

As well as our call for a package of financial support for landlords and tenants affected by Covid-19, the NRLA is also campaigning for a number of other welfare reforms.

On Universal Credit, the NRLA is calling for:

• an end to the five-week wait for Universal Credit at the beginning of a claim, with the advance payment currently made as a loan converted to a grant, so tenants do not automatically fall into debt at the outset
• direct payment of the housing element of Universal Credit to landlords as default
• allowing landlords to discuss a tenant’s claim where the rent has not been paid.

On Local Housing Allowance, the NRLA is calling for:

• at minimum, the Government to commit to aligning LHA rates to the 30th percentile of market rents permanently, rather than as a short term response to the coronavirus crisis. We are further calling for the Government to realign rents to the median market rents (50th percentile)
• the Government to reassess the size of Broad Rental Market Areas, so that they better represent the local rental market
• an end to the benefit cap so that tenants can receive the full LHA rate towards their rent.

Blog Post from NRLA

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London rents fell significantly for the second quarter running.

For two consecutive quarters London saw a significant decline in average room rents, down -7% on Q3 2019.

The London postcodes seeing the most significant drop in rents are:

• EC3 (Aldgate)* -34%
• W9 (Maida Vale/Paddington) -20%
• SW1 (Westminster/Belgravia / Pimlico) -17%

• Excluding London, the UK saw an overall increase in room rents, up 2% on 2019
• Scotland is the only other UK region where rents fell, down 2% from £490 to £481

Although Covid-19 restrictions began to ease in Q3, the rental market in the capital still struggled to recover, with the average London room rent down 7%, from £780 in Q3 2019 to £725 in Q3 2020.

Rents in EC3/Aldgate (-34%) *, W9/Maida Vale/Paddington (-20%) and SW1/Westminster/Belgravia/Pimlico (-17%) saw the biggest falls in London, decreasing dramatically from £1,244, £983 and £1,108 to £824, £788 and £922 respectively year-on-year. In fact, the only London postcode district that didn’t see a drop is SE, with rents sitting at £713.

Taking a closer look at the capital’s postcodes, there were also dramatic rent decreases in W10 (North Kensington), NW8 (St John’s Wood) and W8 (Holland Park), all down by 16% from £932, £944 and £1,132 to £785, £797 and £956 respectively. NW1 (Camden) saw rents drop from £1,011 to £860 (-15%), with SW6 (Fulham) down 14% (£939 to £807) and SW8 (South Lambeth) down 13% (£856 to £744).

Although London fared worse than other English cities, Edinburgh saw the biggest rent drop out of the UK’s 50 largest towns and cities, with rents down 10% between Q3 2019 and Q3 2020. This decline played a role in making Scotland the only other UK region to experience an average drop in rents (down 2% YOY, from £490 in 2019 to £481 in 2020).

Of the UK’s 50 largest towns and cities, here are the places which saw the most dramatic declines:

• Edinburgh (down 10%)
• London (down 7%)
• Telford, Glasgow, Gloucester, Ipswich (all down 2%)
• Birmingham, Reading, Aberdeen, Stoke-on-Trent (all down 1%)

The data is the latest to be compiled as part of SpareRoom’s Quarterly Rental Index: a comprehensive overview of how the rental market is performing across the country, based on over 500,000 room listings.

Matt Hutchinson, SpareRoom Director comments:

“Once again, London dominates the headlines in terms of falling rents, and it’s generally the most expensive neighbourhoods that are worst affected. With so many young renters leaving the Capital, either to find cheaper rents, to move with family, or to leave the UK altogether, it’s hard to know when, or even if, London will regain the appeal it had before the pandemic.”

“What we’re seeing might just be a temporary shift in the rental market, or it may be the start of the UK’s rental map being redrawn permanently. Even if young renters do return to the Capital in their previous numbers, affordability will be their absolute top priority, in a city that already had an affordability crisis coming into this.”

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The government is asking bailiffs not to enforce court possession orders in areas with the highest Coronavirus restrictions.

So although evictions can still proceed through the courts, bailiffs will not enforce court orders in Tier 2 and 3 areas – currently London, Greater Manchester, Merseyside, Wales and much of the north east of England.

Bailiff trade bodies have agreed to a request made by Justice Secretary Robert Buckland who at the end of last week wrote: “We would request that your members should instruct the enforcement agents working under their authorisation not to enter properties that are classified as local alert level 2 (high) or 3 (very high).”

Buckland describes the situation as “changing rapidly” and under continual review.

The High Court Enforcement Officers Association has agreed to the request, which means that in effect tenants in Tier 2 and Tier 3 areas will not be evicted until at least January 12.

This is because the Ministry of Housing, Communities and Local Government has already announced a suspension of evictions across England and Wales over the Christmas period between 11 December and 11 January.

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How to: Tackle condensation

There’s a chill in the air and across the country heaters are being turned on – in some cases for the first time in months.

As the weather turns cooler, you may begin to notice that familiar cluster of tiny droplets on the window, or indeed your tenants may report it.

Condensation. At first not too alarming to look at, but if it is not dealt with swiftly, condensation can be the cause of serious issues including damp and mould- which are one of the 29 hazards under the Housing Health & Safety Rating System (HHSRS).

The good news is there are things that both landlords and tenants can do to help reduce the issue.

What is it?

Condensation is the appearance of water on cold surfaces. It occurs where moist air comes into contact with air, or a surface, which is at a lower temperature.

Water produced from condensation is generally noticeable where it forms on non-absorbent surfaces (i.e. windows or tiles) but it can form on any surface and it may not be noticed until mould growth or rotting of material occurs.

How to deal with the issue

To help members learn how to deal with the issue in the best way, the NRLA has a handy factsheet on how to reduce condensation over in the resources section of the website.

In addition to this, there is also a downloadable factsheet landlords can give to tenants on things they can do to help reduce condensation, such as not dry washing directly on room radiators and how to ventilate the property without causing a draught.

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Rents continue to fall in Prime Central London according to agency Knight Frank.

After September’s data is taken into account the annual decline in PCL is 8.1 per cent.

Knight Frank says weaker demand and relatively high levels of supply, which accumulated during and since the market lockdown, have led to the largest annual falls in more than a decade.

Supply has soared because of short-term rental properties coming onto the market as a result of the pandemic. Supply also increased during the market lockdown as more would-be sellers opted to let properties due to the widespread uncertainty caused by Covid-19.

Meanwhile, demand in London and the Home Counties has been hurt by fewer international students and corporate tenants.

However, the agency says there are signs the imbalance is starting to reduce as supply is absorbed by the market and demand comes back to some extent, driven in part by the falling rental values of recent months.

While the number of new prospective tenants increased by 56 per cent compared to the five-year average in the week ending October 3, the number of new valuation appraisals for landlords only rose by three per cent in the same period.

In prime outer London, the annual decline was 6.9 per cent in September.

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The Chartered Institute of Housing claims there may be a “massive increase” in evictions in the near future.

In a briefing paper the COH warns the UK is ill-prepared to deal with housing needs made worse by the pandemic and that it is young households who suffer most.

It says measures to protect tenants during the pandemic have worked so far but “there is a risk of a massive increase in evictions and homelessness over the coming months.”

The paper – which covers ownership as well as renting – says younger households are bearing the brunt of the reworking of the housing market and the economy as a result of Coronavirus.

It argues that while rents and mortgage payments have not increased as steeply as in years past, incomes are also not increasing, causing significant problems.

Many households wanting to become homeowners may pay less for their mortgages, but are unable to save the deposit they need.

In the rented sector, the large number of individuals faced with unemployment or reduced earnings may find it impossible in the future to pay the rents they could cope with before the pandemic, it pleads.

The briefing paper also says:

– The Westminster government does not yet have investment plans that address the scale of housing need now emerging;

– Governments in Scotland, Wales and Northern Ireland are in the same position – held back in part because of delays in setting the UK Budget;

– While massive investment is needed in social rented housing, the ability of social landlords to invest is affected by their financial capacity and the continuing calls on their resources to make the housing stock safe from fire;

– The government’s carbon targets require 1.2 million homes to be made energy-efficient each year, but the target cannot be met with current resources and without government commitment;

– Rough sleeping has been tackled successfully during the pandemic, but this success is at risk unless measures are taken to help those with no access to benefits.

– Changes to welfare benefits during the crisis have highlighted the severe impact of the benefit cap which prevents many households from getting the help they need.

CIH chief executive Gavin Smart says: “While we need more homes of all kinds, we particularly need homes at lower ‘social’ rents, support for home ownership must not happen at the expense of truly affordable social housing.

“The COVID-19 pandemic and lockdown has, more than ever, highlighted the importance of having a place we can call home – a place where we feel safe and secure – and we need to ensure that for all of our population.”

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Shelter has returned to the attack on the private rental sector.

In a new report it claims a third of tenants in England live in homes which are poorly maintained, low quality and with rents that are unjustifiably expensive.

In a survey of 5,000 tenants, undertaken by polling organisation YouGov, the results show that 35 per cent live in what Shelter describes as poor conditions suffering from infestation, damp or electrical problems.

Shelter also claims that this would represent three million tenants in England suffering sub-standard rented accommodation; it says an even higher number pay too much for the quality of home they have.

“Millions have spent months trapped in private rentals they do not trust to keep them safe. And right now, there is no light at the end of the tunnel” says Shelter’s chief executive Polly Neate.

“After decades of decline, a dire lack of social homes means too many people, pay too much for cramped and poor-quality housing. Or worse yet, they find themselves with nowhere to live. With the stakes so high, the case for building decent social homes is clear.”

The findings from the survey claim:

– 51% of private renters in England say their home has made them feel safe during the coronavirus pandemic;

– 3m live in poor conditions, with electrical hazards, pests or damp-related issues in their home;

– 3.6m say they pay too much for the quality of home they have.

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Most tenants claim they are “intimidated” when agents or landlords telephone them about arrears – and they would much prefer a text.

A small research project amongst 200 tenants and conducted by a PropTech firm found that 57 per cent opposed direct telephone calls about the money they owed, with 62 per cent preferring texts instead.

On top of that, 69 per cent said they would welcome “a flexible payment option to help reduce rental arrears and manage future payments.”

PayPoint, which commissioned the research, says it’s now up to agents and landlords to change their communications to fall in line.

A spokesman says: “Up and down the country, people are finding new ways to manage financial situations. A big part of that is how they are handling overdue and approaching payments. It is crucial that both private and social landlords tune in to the current market and offer tenants innovative solutions such as flexible payment plans and simple transaction processes. Landlords must also adopt a sympathetic approach to communicating.”

A statement from the company claims lettings agencies could accommodate these tenant preferences by “small adjustments” to how they work.

It adds: “With concerns surrounding overdue rent particularly high, it seems that many renters would welcome a gentle nudge, in the form of a text message or email, to remind them of arrears or approaching payments.”

It goes on to say: “The majority of respondents (69 per cent) would welcome a flexible payment option to help reduce rental arrears and manage their future payments … Being able to speak to someone from the tenants’ housing association or letting agencies, who is understanding of the individual’s financial situation, was also important to renters, with 78 per cent saying this would help them manage their finances.”

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