Year: 2020

A property management firm says there’s been a big surge in rentals with the majority of deals being completed using virtual viewings, without the tenant even entering the property.

DJ Alexander, which operates mostly in Edinburgh and Glasgow, says completed rentals were up by 30 per cent in July, with the company recording 235 new rentals during the month.

A statement from the firm says: “Virtual viewings are undoubtedly the biggest change the rental property market has experienced, and the majority of rentals have been finalised through virtual viewings, with tenants going through the whole process without stepping foot on the property.”

David Alexander, joint managing director of the firm, comments: “Technology has kept many of us in touch with family, friends, and work during the lockdown and there appears to be much greater acceptance in using new methods to view properties than any of us would have believed six months ago.”

He adds: “People are desperate to return to some sort of normality and their acceptance of virtual viewings is an interesting development.”

The firm reports that the high demand has sustained rents at their existing or rising levels at a time when many in the sector believed that pricing might be vulnerable.

“These figures are extremely encouraging and perhaps reflect the pent-up demand which may have built up in the previous months. It is hard to say whether this will continue but it is an extremely encouraging and hopeful start to the easing of lockdown” adds David Alexander.

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A leading lettings sector trade body has set out reasons why the eviction ban should be lifted – which may help agents explaining to customers, too.

From next Monday the courts will begin to hear cases related to the repossession of properties. This will come following a five month suspensions of such cases due to COVID-19.

And the National Residential Landlords Association has set out facts and figures to debunk criticisms of the ban being lifted.

It says that its own independent and extensive research has shown that during the five months 94 per cent of landlords rent property as an individual and have unlimited liability should their businesses fail.

Many rely on their rental income for their livelihood: 44 per cent entered the market to contribute to their pension and 39 per cent report a gross non-rental income of less than £20,000 a year.

The association says: “It is vital that as the ban on repossessions is lifted, unnecessary scaremongering is avoided, and policy makers and others focus on the facts  It is wrong to assume that every tenant that has built rent arrears because of COVID-19 will automatically be at risk of eviction.”

The NRLA also usefully summarises changes initiated by government to protect tenants despite the lifting of the ban.

When the courts start hearing claims for repossession again, a landlord with a claim already in progress will have to provide a ‘re-activation notice’ informing the court (and the tenant) in writing. If they don’t, the case will remain dormant.

Where these, or a new claim, include non-payment of rent, the landlord has to set out what knowledge they have about the tenant’s circumstances including the effect of the coronavirus pandemic on them and their dependants.

If this information is not forthcoming or is deemed inadequate by the courts, the judges will have powers to adjourn the case. Such a delay would mean that the landlord may continue to receive no rent from the tenant and so this will hit them in the pocket.

This will encourage landlords to engage with their tenants prior to court action including seeking ways to sustain tenancies using the NRLA’s rent arrears management guidance.

The courts will prioritise cases involving extreme arrears built before the lockdown, anti-social behaviour and domestic violence. Those that are not a priority case will take longer, offering further time for alternative accommodation to be sought and providing further incentive for landlords to seek agreement outside of the courts.

Until September 30 landlords letting property in England have to give tenants a minimum of three months’ notice of their intention to seek possession giving more time for payment arrangements to be agreed. In Wales it is six months for all cases except those related to anti-social behaviour.

The association adds that side-effects of the ban have made life difficult for many, including some tenants.

During the ban landlords have been unable to take action against anti-social tenants who blight the lives of fellow tenants and neighbours, or end tenancies where it might help victims of domestic violence leave the perpetrator, or address the circumstances where they have faced months of rent arrears building before the pandemic and having nothing to do with COVID-19.

It’s estimated that between January and March, just before the ban was put in place, there were 24,320 claims made by private and social landlords to repossess property; 8,093 claims led to a repossession order being made and 1,336 led to a warrant being issued for repossession in England and Wales.

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The government put forward its Renters’ Rights Bill which will change the repossession process, introduce a ‘lifetime’s rental deposit’ and the biggest pledge of all scrapping the Section 21 notice.

But the latest housing minister Christopher Pincher has just recently intimated that the Bill may not be introduced into the House of Commons for debate until 2021.

As a ‘stop gap’ the government has introduced a number of temporary changes to the eviction court process following the ban on evictions coming to an end on August 23rd.

Unsurprisingly many anti section 21 politicians are outraged as Lib Dem Baroness Olly Grender has just invoked the little known and barely used Parliamentary procedure known as a “prayer against.”

It attempts to stop the new rules added to the eviction processes to help cope with the Covid-19 backlog.

Speaking to a national newspaper, Baroness Grender said of her tactic in the Lords: “This is the strongest opposition Parliament can take to the Civil Procedure Rules change – and we hope everyone will rally behind this. The Liberal Democrats will continue to hold this government to account and stand up for renters rights.

“Ministers have signed off for their summer holidays without so much as a backward glance at all the renters they have left in the lurch this summer … What the government should have done is fulfilled their election promise and scrapped no-fault evictions altogether, but instead they have just gone back to business as usual, allowing evictions of tenants with no explanation.

“The fact they snuck these rules out without guidance and without Parliamentary scrutiny demonstrates once again that for this government, renters will always be left behind.”

And now a second Baroness, Alicia Kennedy who is the director of Generation Rent, is also quoted in the same article saying: “These rules alone are worthless and will not help the vast majority of renters who are at risk of losing their home.

“Coronavirus has created a rent debt crisis, which is set to get worse as the furlough scheme is wound down. Renters who have been left out of government support schemes have now been left in the dark. The government must provide clarity on how renters affected by coronavirus will be protected from eviction and homelessness.”

Baroness Grender’s ‘game play’ forces the government to address the issue, however it is within a 40 day deadline, consequently it will not debated in Parliament until September by which time the court repossession cases will have already started.

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BTL investment is proving to be far more of an asset class due to the high increase in numbers of tenants looking for new ‘homes’, according to the latest data from a letting agent comparison website.

With the Chancellor’s July announcement of a stamp duty holiday for BTL investors and second home owners there has been a 21% increase in searches on the comparison website.

The data analysis by the website indicates that some investors are getting ready for their newly purchased properties to be let out and managed, with others considering buying new properties to let out.

Raj Dosanjh, founder of the website, said: “The stamp duty holiday has brought a flood of positivity across the property market.

“The increase in the number of comparisons run on our platform indicates landlords are looking to add to their portfolios, or that a new wave of landlords is looking to enter the market.”

The 21% increase in landlord searches to compare lettings agents is throughout England, however there are some areas/regions that have much higher interest levels; Manchester rose by 31% and East London by 27%.

Dosanjh added: “Traffic on the site increased prior to Rishi Sunak’s announcement, based upon rumours that the holiday may apply to the buy-to-let sector.

“From the 8th of July, when it was confirmed that the holiday applied wider than first time buyers, the number of letting agent comparisons conducted increased dramatically.”

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Many landlords are suffering financial hardship because of Covid-19 and have been told by the chancellor that they are able to defer their July tax payment on account.

However those who are able to afford to pay now are being advised they should do so as they will have to face the double whammy of paying next year’s January tax on top of July’s.

The majority of self assessment tax payers make two payments in a calendar year in January and July known as ‘payments on account’.

There isn’t an application process for those wishing to defer their payment as it is classed as an automatic offer without incurring any penalties or extra interest charges for the ‘late’ July payment, if paid by January 31st 2021.

However tax payers are being urged to pay now if they can afford to.

Andy Sanford, a partner at a tax and advisory firm, said: “Many taxpayers will be taking advantage of the self-assessment tax holiday that they were given. However, this is a tax deferral measure, rather than a relief and this will have to be paid in January.”

Stanford explains that there are three types of tax payers for whom it is not necessarily a good option to take a tax holiday.

He said: “If you are a partner in an LLP or partnership, and your firm makes your tax payments for you, then you are risking that the firm will be sufficiently solvent to make the payment in January.

“The tax liability is the responsibility of the individual, so if you have any concerns, you should really press for the tax bill to be paid in July.”

He continued: “The second group of taxpayers are those who are ‘spenders’. They should bear in mind, that in the first three months of 2021, the self-employed will have to make not only two self-assessment payments, but also make two VAT payments, catching up on the deferred VAT payment from earlier this year. This will require careful budgeting. For some it may be simpler to pay the liability now if there is spare cash.”

“Finally, there are a group of taxpayers, who may have either been unaffected, or in an industry that has seen an increase in trade through the pandemic. They may simply feel it is not right to take advantage of the deferral.

“For those who are fearing double tax payments in January, consider getting your tax return finished early this year. Not only will it determine your tax liability for the tax year 2019/2020, but it will also be a sensible point to see if payments on account can be reduced for the 2020/2021 tax year.”

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According to a leading accountancy firm, landlords should take maximum advantage of the Stamp Duty holiday by their changing their existing portfolio into a limited company.

Matt Warwick, tax senior at the accountancy firm, said: “Although landlords buying additional properties still face a 3% SDLT surcharge on their property purchases, they are not required to pay the standard rate of SDLT on top for homes valued £500,000 or less.

“This also applies to the transfer of properties into a business, which would normally attract a substantial SDLT bill. In fact, the savings could mean they pay up to half as much.”

He also advises landlords that having a limited company structure allows landlords to take advantage of mortgage interest tax relief on BTL properties, whereas ‘single’ landlords are unable to do this.

Ever since April 2017, mortgage interest tax relief for landlords has been reduced in phases, and from April 2020 individual landlords are no longer able to deduct any of their mortgage expenses from their rental income to declare against property profits.

Any financial costs that landlords incur will only be allowed at a basic tax reduction of 25%; but limited companies’ properties are considered to be a business and therefore most expenses can be deducted for tax purposes.

Warwick added: “Before the SDLT holiday there had been a lot of debate about whether incorporation is the right approach to take and whether it saves sufficient money to merit the switch,” he added.

“Now, though, it is clear to see that there is a chance for landlords to take advantage of the higher allowance and lower property prices to expand their property empires.”

“Of course, each person’s situation is different, but with a potential saving of £15,000 in stamp duty per property there surely isn’t a better time to re-evaluate your position and consider incorporation. With only six months or less of relief available, investors must act soon.”

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It will be of no surprise that the massive backlog of eviction cases waiting to be re-applied for from the post Covid-19 period, is going to take many months to clear up and some within the sector are saying it could be a whole year before the mess is finally put to rest.

The government’s relative success with creating Nightingale Hospitals is now hopefully going to be ‘mirrored’ with the creation of Nightingale Courts to ease the pain on the judiciary.

So far there will be nine new courts which will be in Telford, Stevenage, Swansea, Leeds, Middlesbrough, Chichester, Fleetwood, Peterborough, and London.

Most of the courts will be ‘housed’ in conversions of former courts and or different type of council buildings used in other duties, will undergo an extreme makeover to be ‘morphed’ into modern day court offices.

A trade body says that the government has not stated if the new courts have specific areas to target, however it can be assumed that they will at least assist in clearing the backlog of eviction cases.

The government has also laid out measures to ease the pressure on the judicial system which includes, using video technology if appropriate as well as keeping courts open longer to deal with cases on a daily basis, and it will also plough in an extra £140 + million to modernise existing court buildings.

The government has already announced the new procedures for existing possession cases to be resumed from August 24th onwards:

• All applications for repossession orders made before August 3rd the claimants (agents or landlords) must send correspondence directly to the courts and defendant (tenants), that they wish to continue with proceedings. Failure to do this is in writing to both parties will not re-activate the case, so it will remain dormant.

• The agent or landlord must find out whether the tenant is vulnerable and/or having to shield themselves because of the coronavirus.

• The claimant must notarise the arrears in writing as being the main or one of the reasons for reactivation with all of the relevant information, and must be sent with the reactivation correspondence to the court, it will not be accepted in person at court.

• Lastly the court officers will be given extra flexibility over the timetable for proceedings so proper safety measures and social distancing procedures can be strictly adhered to.
All of the new regulations/processes will continue until March 28th 2021 unless an earlier review is called for.

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The Property Redress Scheme, one of the two government-authorised redress services, claims its new mediation option is a success.

In March this year it launched the tenancy mediation service for landlords and lettings agents to aid finding a resolution over tenancy disputes.

Preliminary reports from the first three months show the service has been able to resolve 50 per cent of those cases where the tenant was willing to engage.

To date, of the total number of mediation requests sent out, only six per cent have declined the service; although 45 per cent have not responded.

However, where tenants were willing to engage, half of cases resulted in a successful resolution, which includes a mediation repayment agreement, and/or the parties reaching their own solution after using the service.

Tim Frome, legal director at Landlord Action, says: “The Ministry of Housing, Communities and Local Government has confirmed that the government is working with the Master of the Rolls to widen the existing ‘pre-action protocol’ on possession proceedings to require private landlords to adhere to the same rules as social landlords before issuing possession proceedings.

“This means that mediation is more important than ever. Once the current Covid-19 related delay on issuing eviction proceedings has ended, landlords will be required to reach out to tenants to understand their financial position before taking possession action through the courts.

“The aim of the protocol is to encourage landlords and tenants to work together to agree on an affordable rent repayment plan if their tenants fall into rent arrears.”

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A group of Labour and Liberal Democrat MPs have together claimed that England could witness “a new wave of homelessness” when a ban on evictions ends next week.

Twenty MPs – including a Democratic Unionist from Northern Ireland – have signed a letter sent to the government complaining at the end of the evictions ban, following its introduction in March as part of emergency legislation as the pandemic emerged.

The Welsh government has doubled the notice period required for evictions issued on or after 24 July to six months, excluding cases relating to anti-social behaviour; the Scottish government is set to extend its ban on evicting renters until March 2021.

Now the MPs – nine Labour, 10 Lib Dem and one DUP – have urged the government to do more to protect the homeless and those at risk of becoming homeless in England “given the ongoing threat of Coronavirus and the risk of a potential second wave”.

The Lib Dem signatories include the two party leadership candidates, Sir Ed Davey and Layla Moran.

The Westminster government says allowing eviction hearings to resume is an important step towards protecting landlords’ rights. It adds that new repossession rules in England will provide appropriate protection for renters after eviction court hearings resume.

A group of Labour and Liberal Democrat MPs have together claimed that England could witness "a new wave of homelessness" when a ban on evictions ends next week. Twenty MPs – including a Democratic Unionist from Northern Ireland – have signed a letter sent to the government complaining at the end of the evictions ban, following its introduction in March as part of emergency legislation as the pandemic emerged. The Welsh government has doubled the notice period required for evictions issued on or after 24 July to six months, excluding cases relating to anti-social behaviour; the Scottish government is set to extend its ban on evicting renters until March 2021. Now the MPs – nine Labour, 10 Lib Dem and one DUP – have urged the government to do more to protect the homeless and those at risk of becoming homeless in England "given the ongoing threat of Coronavirus and the risk of a potential second wave”. Zero Deposit Rentshield ValPal The Lib Dem signatories include the two party leadership candidates, Sir Ed Davey and Layla Moran. The Westminster government says allowing eviction hearings to resume is an important step towards protecting landlords’ rights. It adds that new repossession rules in England will provide appropriate protection for renters after eviction court hearings resume.”

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One in eight homes coming onto the rental market in inner London since May has previously been an Airbnb or other short let property.

That’s the conclusion from new research conducted by Hamptons International.

The number of homes available to rent in Inner London is up 42 per cent on the same time last year, putting downward pressure on rents says the agency.

Of the 20 local authority areas which saw the highest proportion of short lets being offered on the long-term rental market, 16 are in the capital.

The Vale of White Horse in Oxfordshire is the first local authority outside the capital to appear on the list, with 3.6 per cent of its instructions previously listed as a short let.

In July the average cost of a newly let property in Great Britain fell to £1,001 pcm, 0.1 per cent lower than the same month last year.

Rents across Greater London as a whole fell 4.2 per cent year-on-year in July, led by a record rent fall of 8.4 per cent in Inner London.

The impact of lockdowns across the world on both the number of tourists and corporate relocations into the UK has resulted in some landlords choosing to move their short let properties onto the long-term rental market.

This trend has mainly been concentrated in Inner London, and is one of the biggest factors leading to record rent falls in the area, insists Hamptons.

So between the lifting of lockdown in late May and the end of July, some 12 per cent of homes that came onto the rental market in London’s Zone 1 had previously been let on a short-term basis.

Across London as a whole, the figure stood at 5.1 per cent over the same period.

In total 37 per cent of homes in London which had previously been advertised on a short let basis are now being offered for long-term occupation.

However landlords switching their property from a short to a long-term let are likely to see a significant reduction in rent.

On average the change means a 35 per cent reduction in rent, equating to £1,952 a month less.

Homes previously let on a short-term basis have contributed to the increasing number of overall properties available to rent in the capital.

In July there were 26 per cent more rental homes available in London than at the same time last year.

Indeed London was the only region in Great Britain to record a year-on-year increase in the number of rental homes on the market. Almost all this increase took place in Inner London where the number of homes to rent rose 42 per cent on last year.

Hamptons believes that the shift from the short let to the long let market is almost exclusively London driven. Of the 20 local authorities with the highest share of short lets being offered on the long-term rental market, 16 were in the capital, suggesting rural and coastal short let markets are performing more strongly.

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