Year: 2020

The latest monthly rental index produced by insurance provider HomeLet shows a four per cent surge in the all-UK average rent over just three months, but big differences across different regions.

The average rent in the UK is now £987, up just 0.2 per cent on last month but four per cent higher than June’s figure of £951. When London is excluded, the average rent in the UK is now £828, up by 3.9 per cent annually.

Seven of the 12 regions monitored showed an increase in rental values between August and September this year, with the North East seeing the biggest increase of 2.2 per cent.

In September – last month – the average rental value in London (£1,646) was no less than 99 per cent higher than the rest of the UK, excluding London.

Looked at on an annual basis, 10 of the 12 regions showed an increase in rental values between September 2019 and September 2020, with the South West the winner – it has witnessed a 6.6 per cent rise.

But there’s more bad news for London; year-on-year rents are down 2.4 per cent; Northern Ireland also shows a yearly decrease, also with a 2.4 per cent fall between September 2019 and September 2020.

“Whilst it’s undoubtedly the case many landlords are being supportive of their tenants and agreeing temporary reductions or deferrals, it will be encouraging for them to see rents agreed on new tenancies, in almost all parts of the country, are continuing to hold up and generally edge forward” says Martin Totty, chief executive at HomeLet.

“This is likely because tenant demand remains strong whilst supply may be a little more constrained if some landlords are selling into a stronger sales market, even if that could be a short term phenomenon. It also doesn`t help tenants much if, for them, the prospect of securing first time mortgage finance remains as elusive as ever” Totty continues.

“So, those landlords committed to the sector for the long term and having shown their willingness to confront the multiple headwinds of: taxation change; new regulatory requirements; and, in certain circumstances, longer notice periods to gain possession of their properties, may still be rewarded for their flexibility and their perseverance with reasonable returns on their investment risk.”

Blog Post from Letting Agent Today

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Landlords could soon be able to use a new online service to check the Right to Rent status of a prospective tenant.

In a statement by Immigration Minister Chris Philip MP this week, the new online Right to Rent checking service could be launched as soon as November with new regulations; the Immigration (Residential Accommodation) (Prescribed Requirements and Codes of Practice) (Amendment) Order 2020, laid before parliament this week.

How the online Right to Rent checks could work

In a statement about the online Right to Rent checks, Chris Philip MP said that the service will work on the basis of an individual first viewing their home office profile, and they may share this information with a landlord if they wish by providing the landlord with a “share code” which can be used to access the prospective tenant’s record. This authorisation represents an important safeguard and means landlords will only be able to view an individual’s right to rent information, and no other unrelated personal information.

• Landlords will be able to undertake either the online check or the existing document-based check; online checks will, therefore, be a voluntary option whilst migrants and landlords develop familiarity with the new service and take-up becomes more widespread. EEA citizens will continue to be able to demonstrate their entitlement to rent to landlords by showing a valid passport or national ID card until 30^th June 2021.

In England, landlords are normally required to carry out Right to Rent checks of prospective tenants. This requires a landlord to meet all adult occupiers in person before the tenancy is signed, and check they have one, or potentially two valid documents to show they have a right to rent in England.

However due to the coronavirus pandemic, Right to Rent checks were temporarily adjusted by the Government for landlords to be able to carry them out differently. This means that:

• checks can be carried out over video calls
• tenants can send scanned documents or a photo of documents for checks using email or a mobile app, rather than sending originals
• landlords should use the Landlord’s Checking Service if a prospective or existing tenant cannot provide any of the existing documents

The Minister has also said that:

• Landlords will be able to undertake a right to rent check in real time for non-EEA citizens with a valid biometric resident permit or card, or an EEA citizen with status granted under the EU Settlement Scheme. In addition, the Order makes sure that landlords will be able to undertake online checks on those whose leave will be granted under the new points-based system.
• The online service makes it “simpler for landlords to carry out the checks and protects them. It allows checks to be carried out by video call, and landlords will not need to see documents as the right to rent information is provided in real time directly from Home Office systems.”
• The service works on the basis of the individual first viewing their own Home Office profile. They may then share this information with a landlord if they wish, by providing the landlord with a ‘share code’, which can be used to access the prospective tenant’s record. This authorisation represents an important safeguard and means landlords will only be able to view an individual’s right to rent information, and no other unrelated personal information.
• Landlords will be able to undertake either the online check or the existing document-based check; online checks will, therefore, be a voluntary option whilst migrants and landlords develop familiarity with the new service and take-up becomes more widespread. EEA citizens will continue to be able to demonstrate their entitlement to rent to landlords by showing a valid passport or national ID card until 30^th June 2021.

Blog Post from NRLA

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NRLA deputy director of policy Meera Chindooroy writes about new Green Homes Grants that are available to landlords and a new consultation on minimum energy efficiency standards.

Today, the Government has launched its consultation on the next phase of energy efficiency measures in the private rented sector.

They propose introducing new minimum standards in England and Wales, with properties needing an EPC rating of C or higher from April 2025 for new tenancies and from 2028 for existing tenancies.

In addition, their recommendation is that the cost cap is raised to £10,000 per property.

Both measures would be significant increases from the current Minimum Energy Efficiency Standard of an E rating with a maximum cost of £3,500 per property.

Stick, and a carrot?

However, alongside the consultation, the Government is also launching its Green Homes Grants. Initially announced over the summer, grants of up to £5,000 are available for private landlords to upgrade their properties in England.

Grants will be issued as vouchers, cover up to two-thirds of costs, and are available for specific measures.

Works must be undertaken by a Trustmark registered installer, and include a ‘primary measure’ of either insulation or low-carbon heating, such as a ground or air source heat pump, before ‘secondary measures’, such as replacement of windows and doors or draught proofing can be funded. You can see more about the grants here and you can read the full guidance and apply via the gov.uk website.

The grants are currently only available until 31 March 2021 – so landlords need to be proactive now and access the grants if they can.

The Government is clear that they will be increasing the requirement of the private rented sector, as part of their legal commitment to achieve net-zero carbon emissions by 2050.

With housing accounting for around one-fifth of the UK’s emissions, it is a key sector for meeting this target.

What landlords need to do

Whatever the outcome of the consultation – and it closes on 30th December 2020, so any new laws likely won’t be passed before the end of March next year – the direction of travel is clear. Landlords must accelerate the upgrade of their properties.

The Government is looking to move to ‘low carbon-heat ready’ in the private rented sector by 2030, which means making as many changes to the fabric of buildings as is possible in anticipation of the phasing out of gas boilers, as has already been announced for new-build properties.

We have consistently called for further funding to be made available to the sector to encourage landlords to go above and beyond the legal minimum.

That funding is now available – and the Simple Energy Advice website will provide a clear guide as to what upgrades are eligible for the Green Homes Grants, as well as other sources such as ECO funding and local grants.

Blog Post from NRLA

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Leading property investment mentor and landlord Ranjan Bhattacharya has launched a petition calling for tenants to face eviction if they fall more than two weeks behind in rent payments.

This, Bhattacharya argues, would put the UK on the same footing as Australia.

“You can’t go into a supermarket and steal your weeks groceries,” he says.

“There are laws in place to protect shop keepers large and small. Not paying rent is also theft with the Landlord being the victim.”

He is asking fellow landlords to sign his petition and help him get it to 10,000 signatures at which point the parliamentary e-petition rules require the government to provide a response.

At 100,000 signatures the petition would have to be formally debated within the Houses of Parliament.

Bhattacharya argues that the existing evictions system – even when the current restrictions on evictions are discounted – are unfair to landlords, claiming it can take up to a year in normal times to evict a tenant.

“In that time the landlord still has to pay mortgage and other costs,” he says.

“This can ruin many small scale Landlords. Furthermore, it incentives landlords to only rent their properties to tenants with higher than average income who are likely to care about getting a bad credit rating.”

Bhattacharya’s follows a similar and successful petition completed last month which garnered over 126,000 signatures. It called for landlords to freeze rents for the duration of Covid and was debated in parliament on 17th September.

Blog Post from Landlord Zone

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New long-term targets for improving energy efficiency across the private rental sector simply are not realistic, the government has been warned.

The broadside comes from the Association of Residential Lettings Agents‘ policy and campaigns manager, Timothy Douglas, following a consultation document released by government this week.

The target is to lift the minimum EPC for all privately rented homes to Band C – this would apply to new tenancies from 2025 and all tenancies from 2028. The government has outlined penalties of up to £30,000 for landlords who do not comply, and is considering banning agents and portals from listing properties that do not meet the standards.

“On the face of it these proposals simply do not take into account the state of the UK’s housing stock. We all want to see more energy efficient homes, but the new rules and requirements must be realistic and achievable” says Douglas.

The ARLA Propertymark chief continues: “Landlords and their letting agents are already taking the brunt of tax changes and many are providing support to tenants with Covid-related arrears.

“A simplified [EPC] exemptions regime and additional financial support must be made available otherwise the measures in their current form, will not be achievable and that would mean further reductions in the supply of rented accommodation available.”

The government’s consultation document runs to 48 pages and includes options and detailed requirements regarding energy efficiency improvements it expects from the sector.

Blog Post from Letting Agent Today

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Consumer charity Citizens Advice has given guidance to student tenants who may have to return home early this term because of the Coronavirus crisis.

The charity says students who move out before the end of their tenancy are, generally, liable for any rent due until the end of their fixed rental term, with any guarantor liable to be pursued if the student themselves do not pay.

Students in this circumstance are also advised to check if their tenancy agreement contains a break clause – although this would be unusual in a student tenancy agreement where the letting is intended to be for an academic year, and the landlord is only likely to be able to re-let it for the following academic year.

“If you share accommodation with other people, then unless you each have a separate agreement, you are likely to be jointly and separately liable for rent” advises the charity.

It adds: “This means that the landlord can pursue any of the tenants (or their guarantor) for any rent due under the joint agreement, regardless of which tenant failed to pay their share.”

However, Citizens Advice then suggests that if a student finds themselves in this position, it is worth seeking a negotiation with the agent or landlord. They could release the student from the tenancy, or waive or reduce rent during the period the property is unoccupied, the charity believes.

“Unfortunately, there’s not much good news for students who decide to change households for the medium to long-term, by returning to their family home for example. It’s likely that in many cases they will be tied into their accommodation agreements and not entitled to any refund” says a spokeswoman.

“It’s always worth getting in touch with your landlord and trying to negotiate. But realistically, if there is no obligation for them to release you from the contract, they may well be unwilling to do so.

“Where the landlord is the university, they may be more sympathetic to a short-term reduction in rent, or ending a contract early, if there is no longer any reason for you to remain in halls.

“However, it is early in the academic year, and it may be difficult to find alternative halls of residence accommodation if a student gives up their place, but later wishes to return.”

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A rent guarantor service says the rental sector has investors and landlords who are happy for tenants to defer rent payments but cannot countenance having nothing at all – and so government action to clear debt is absolutely essential.

That’s the view of Housing Hand which says the situation is worsening thanks to the dilemma of students moving into locations only to be locked down as a precaution against Coronavirus.

The company says that if the students are obliged to move out, some want a ‘no stay, no pay’ policy – although they are still legally obliged to pay their landlords under their AST agreements.

“Again, it is private landlords who are left to deal with the financial and legal fallout of such situations if the student decides not to pay” explains Housing Hand, which claims this adds to the need for a government solution to the tenant debt issue.

“The private rental sector is vital to the UK’s housing make-up. If tenants genuinely cannot pay their rent, the government must step in and support them” insists the rent guarantor service’s group managing director, Jeremy Robinson.

“Private accommodation providers cannot be expected to provide homes without being paid. In many instances, rent covers the landlord’s mortgage and maintenance costs, meaning that non-payment puts both the tenant and the landlord at risk” he continues.

“We need a solution in place before the second wave really hits and delivers a huge economic as well as health impact.”

Blog Post from Letting Agent Today

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As the residential property market sits in the wake of prolonged uncertainty from Brexit and the unprecedented blow of the Covid-19 pandemic, I hear many conversations that conclude London will never be able to recover and the population must be running for the hills (or the suburbs of nearby market towns).

Covid-19 has undoubtedly had a negative impact on city centres and none more apparent than London, exacerbated by its over-crowded public transport network that people are understandably reluctant to return to.

But I think there is more to this trend than initially meets the eye.

Consulting the data issued by Savills on the return of the housing market since lockdown, although central London is showing signs of weakness, the suburbs of London have fared relatively well in recent months.

And it seems to me that in the longer-term, London’s status as an international hub for travel, entertainment and culture will support its resiliency. The major uncertainty remains the timing of this, as the pandemic is of course not over, but city-living will always offer a unique range of facilities and infrastructure that will prove resilient and attractive in the longer term.

Of course, I acknowledge that remote working and significant time spent in the home in 2020 has led people to reassess what is important to them. And going forward outdoor space and home office areas will be a compelling feature of any development.

But I don’t see a world where the whole country moves to traditional housing in the suburbs and countryside. Instead, there are some interesting trends that could accelerate.

For instance, an increasing amount of city living may be rental in tenure and perhaps favoured by younger tenants wanting to live near others their age and make the most of the lifestyle benefits of being close to a range of facilities such as restaurants and bars.

In addition, the government has clearly prioritised the recovery of the housing market post-Covid with an extension of Help to Buy and temporary reliefs from SDLT to all buyers.

This will especially favour the higher priced London/South East England markets where a ‘discount’ of up to £15k is available to buyers of new and second-hand homes.

Where I would reserve more caution is in the parts of recent planning reform that are seeking to drive more conversions of office space into residential units.

This part of so-called Permitted Development has seen some success , but with the potential for an increase in available office space, it may be questioned if more converted commercial buildings are the answer in regenerating areas of cities that were once thriving business hubs.

In our experience, the quality and suitability of these buildings to deliver low cost housing and their longevity is questionable.

This has been highlighted recently by mortgage lenders who are notably put off on exit.

So, on balance, whilst London may be seen as having the most to lose from the impact of Brexit and the pandemic, we believe that through watching market data and listening to the emerging trends, there is still a large amount of opportunity for lending to developers who are building appropriate property at the right price.

For Ingenious real estate investments, our focus remains on the quality of our loan book, working with experienced developers who we can trust to deliver projects in response to established demand.

Blog Post from Property Notify

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