Year: 2020

The huge backlog of eviction and other cases anticipated in the coming months will be helped by the creation of a series of so-called Nightingale Courts – the justice system’s version of the much-praised Nightingale Hospitals.

These are to be at Telford in Shropshire, Stevenage in Hertfordshire, Swansea, Leeds, Middlesbrough on Teesside, Chichester, Fleetwood in Lancashire, Peterborough, and London.

Most involve the conversion of former courts or buildings already being used for other purposes, to become modern court offices.

ARLA Propertymark says that while no specific uses have been set out for the Nightgale Courts, it is likely that they will assist in clearing the backlog of eviction cases.

The government has revealed other measures to help ease pressure on the court system, including opening courts for longer to increase the number of cases that can be heard safely, using video technology where appropriate, and a £140m-plus programme to rapidly modernise some existing court buildings.

The government has already outlined new court procedures to address the expected backlog of cases when eviction proceedings resume on August 24.

For all applications made before August 3 – that’s today – the landlord or agent must notify both the court and defendant in writing that they wish to continue the case. Without this reactivation notice cases started prior to August 3 will not resume.

Secondly, the landlord or agent should ascertain whether the tenant is shielding or is in some other way vulnerable to Coronavirus.

The landlord or agent must also itemise arrears in writing, ideally as part of the reactivation notice, if this is relevant to the eviction.

Finally the court officers are to have greater leeway over the timetable for proceedings to ensure social distancing and other safety measures can be ensured.

These processes will be in place until March 28 2021 with an earlier review if circumstances change.

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A law firm is warning that agents and landlords should carefully follow correct procedures if they suspect a rented property is being used as a cannabis farm.

Hägen Wolf says the lockdown has seen a proliferation of cannabis farms being created, with increased numbers of police raids as a result: Nottinghamshire Police, for example, says it has seen a rise of 280 per cent in cannabis plant seizures during lockdown over the same period last year.

Philip Copley, a solicitor at Hägen Wolf, says: “Landlords should seek to terminate the tenancy, but in reality that can be easier said than done. The landlord needs to take some action, and quickly so that they are not seen as condoning the behaviour.”

The firm advises that in the case of a standard assured shorthold tenancy, the landlord can rely upon section 8 of the Housing Act 1988, and serve a notice to terminate the tenancy based on ground 12 (a discretionary ground-based on any breach of the tenancy agreement) or ground 14 (applicable where the tenant is guilty of a nuisance or has been convicted of illegal conduct).

Usually, only two weeks’ notice is required before court action can begin, although this has been temporarily changed to three months during the coronavirus pandemic.

However, there are no such restrictions on applying for an injunction requiring the tenant to cease the illegal use.

Copley continues: “A landlord cannot just change the locks – that is illegal, and so court proceedings must be initiated to recover possession of the property. Both grounds are discretionary, which means the onus is on the landlord to prove that the tenant’s conduct is so bad that the Judge is justified in evicting them.

“That means that the landlord, and any helpful neighbours, should keep a detailed log of conduct such as night-time visitors, strange noises, or any funny smells, which might indicate that illegal activity is taking place, and ideally supported by photographs and videos. If it is safe and possible to report the matter to the council or police, then do so – that can create a paper trail which strengthens the landlord’s case.”

In the case of a long residential lease, as is common with flats, a clause against ‘illegal or immoral conduct’, will likely exist.

In these situations, where the owner of a flat is undertaking illegal action at the property,  the building owner should make an application to the Residential Property division of the First-tier Tribunal (Property Chamber) for a determination that there has been a breach.

Once that has happened, the landlord should then serve the flat owner with a notice under section 146 of the Law of Property Act 1925, and then begin court proceedings to evict them.

The process is known as ‘forfeiture’, and it means that the ownership of the flat will revert to the landlord, who can then sell it to, often for a substantial return.  In most cases though starting this process will simply prompt the flat owner to take steps to evict or injunct the tenant in order to avoid losing their flat.

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Landlords who took out bounce-back loans to keep their businesses afloat during the lock-down period, often in trouble with zero rent being paid, now face being refused mortgages.

The loans have been offered to businesses during the coronavirus crisis when they have lost vital revenue needed to keep their firms afloat and staff on the payroll.

The scheme has meant that businesses can borrow up to £50,000 interest-free for the first year of operation before payments kick-in at an interest rate of 2.5 per cent.

The generous Government scheme has resulted in some major controversy in the property investment community however. Some controversial “millionaire property guru” characters, the likes of Paul Smith and Samuel Leeds, have been running property training courses for amateur property investors and have been encouraging them to apply for the government loans to fund their property purchases.

However, investors are being warned that anti-fraud organisations and white-collar crime experts have raised significant concerns about the potential for loss to the public purse as a result of fraudulent claims for Coronavirus bounce-back loans. These property investment claims are clearly not what the Government intended the money to be used for and they leave claimants open to prosecution.

One landlord posting on the property Blog, Property Tribes, said he had received a £12,000 bounce-back loan when one of his properties came vacant during the lock-down, while another of his tenants was unable to pay rent.

The loan was taken out as a “precautionary measure” in case other tenants missed payments the landlord said, despite having a healthy bank balance. But when the landlord came to apply to remortgage one of his properties with Paragon Mortgages, so that he could release some equity, he was rejected.

The landlord said that:

“The mortgage was denied because they determined that the business was in financial difficulties as it had to rely on a bounce-back loan, even though my balance remained well in excess of the balance of the loan.”

In another case a landlord’s application was rejected by The Mortgage Works, part of the Nationwide Building Society, because the applicant had taken out a £27,000 bounce-back loan.

Richard Ignatowicz, a landlord and mortgage broker, told The Sunday Times:

“The lenders are taking the prudent view, and I agree, because landlords are expected to have at least three months of cash reserves to cover for typical eventualities like voids, maintenance and repairs. If you applied for a bounce back-loan, you had to declare that you have been financially affected by the coronavirus, so why would lenders lend to someone in financial distress?”

Other lenders are refusing to approve mortgage applications for landlords when they have taken mortgage payment holidays, again an indication to the lender that they have cash-flow issues. Lenders are very sensitive to borrowers who show signs of financial distress and so they have every right to do so.

Mortgage consultant Chris Sykes from Private Finance told the Sunday Times:

“Lenders can be picky in terms of who they lend to because it is their money. By the end of the year, perhaps lenders will be open to these clients again, but things aren’t back to normal yet.”

And Paragon said:

“We would not turn down an application purely because of a bounce back loan. As a prudent lender we take this into account as part of the overall credit assessment.”

The Mortgage Works said:

“If someone had a bounce back loan, it would be considered as part of the mortgage application. It isn’t a straight decline just because they have had such a loan.”

Speaking about the use of bounce-back loans to fund new property purchases Cyril Thomas, who heads up the Property Investors Bureau, told LandlordZONE:

“We would not encourage investors or individuals to do anything in breach of the terms of their loan – I don’t want to get into the moral maze of what these loans should or shouldn’t be used for, but to keep it factual.

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Comments are made by ARLA Propertymark President Phil Keddie as its latest rental report shows a strong uptick in tenant demand and property supply.

Letting agents have called for tenants to keep up with their rent to ensure the private rental market is ‘sustained and the wider economy is boosted during these uncertain times’.

The comments have been made by Phil Keddie (pictured), President of trade association ARLA Propertymark as its own data shows the post-Covid property market continuing to boom, echoing similar data from tech platform Goodlord during June.

Last month was a record for the private rental market with tenant demand and rental supply both at their highest since records began for June.

ARLA Propertymark, which has gathered the data, says the extraordinary figures are due to the ‘post Covid bounce’ seen in other part of the housing market, and the fact that June is usually a quiet month for landlords.

The spike in activity within the market has also prompted more landlords to increase their rent when properties are re-advertised and Propertymark says nearly a third of its member agents reported this.

“Our latest figures show that the rental market is continuing to pick up following the Covid-19 lockdown,” says Keddie.

“The record-breaking supply of rental stock and demand from tenants for this time of year paints an optimistic picture for the summer months, indicating that the market will be more active than the usual seasonal lull.

“As the market continues to recover from the pandemic, it’s essential that everyone continues to keep up with their rent in order to sustain the market and help boost the economy during these uncertain times.”

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Research by major rent processing platform PayProp shows how far some tenant are, and will be, falling behind in the rent payments.

The average tenant in arrears owed almost a fifth more in May than they did in January, according to analysis published by PayProp, a leading rental payment automation platform.

And as we move towards the end of the Government’s furlough scheme at the end of October, landlords should prepare themselves for further increases in rent arrears as redundancies rise, it warns.

Even before the Government’s Job Retention Scheme comes to an end, the proposed changes to the furlough system are likely to put extra pressure on tenants’ finances.

From 1st August, employers will be once again required to make National Insurance and pension payments for furloughed workers, which may well result in a spike of redundancies if bosses are unable to afford these additional costs.

And from 1st September, employers will have to contribute 10% of the wages of furloughed staff, rising to 20% in October before the scheme is wrapped up at the end of October.

In addition, some employees may already be feeling the pinch as commuting costs re-emerge and the option to spend in pubs and restaurants is an option once again.

Neil Cobbold, Chief Sales Officer at PayProp, says: “The job retention scheme has helped to keep people employed and subsequently allowed many tenants to continue paying rent, but as it starts to wind down, letting agents and landlords should prepare for more tenants to fall behind on rent.

“Or, in the worst case scenario, not be able to pay at all.”

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Temporary courts are being opened to deal with the backlog of eviction cases created by coronavirus. Chief Executive Ben Beadle explains how NRLA campaigning has brought about real change.

The first ‘Nightingale Courts’ set up to tackle the backlog of court cases and tribunals that have built up as a result of coronavirus have opened their doors this week.

The decision to open extra court space for cases, including possession hearings, is a huge win for us here at the NRLA, where we have been campaigning on behalf of members for swift access to justice for landlords – particularly those who had started proceedings prior to lockdown.

Indeed, it is also a big win that section 21 and section 8, ground 8 have been left intact and not made discretionary grounds. We are delighted the Minister has taken on board NRLA’s representations on behalf of landlords

The average time between claim and repossession pre-Covid was far too long already at more than 26 weeks and we have long campaigned for the government to make use of other public buildings to increase capacity.

Improvement to the legal system was one of the major pillars of our roadmap to Covid recovery, a five-point plan that we have been discussing with government. We are delighted that ministers listened to what we had to say, and will be investing £142 million on technological improvements and modernising courtrooms.

We have also been championing the case for wider court reform and the introduction of a specialist housing court and it could be that these new courts could provide a model as to how this could operate.

There have been other wins when it comes to the courts.

Our campaign for priority to be given to cases involving abusive or anti-social tenants, along with those cases started before lockdown, has also been given government backing, with Housing Minister Christopher Pincher confirming this will happen.

These moves prove our work with Government is seeing results, with the news giving landlords greater certainty and confidence.

New rules

What any landlord progressing with a possession claim needs to be aware of, is that the Government has changed the rules around the court process as a result of Covid-19.

The new Civil Procedure Rules, announced earlier this month, state landlords need to confirm they wish to ‘make or continue’ with a claim by filling in a reactivation notice and sending it to the court and the tenants.

They also have a duty to be aware of the way in which tenants circumstances have been affected by coronavirus. You can read more detail here.

It is vital you abide by these rules if you want your claim to progress.

What the government also said when making the changes was that landlords – wherever possible – should NOT pursue non-priority cases through the courts.

Even with the extra capacity, court waiting times are expected to experience delays.

That is why we have developed our own Covid-19 and arrears guide – to support landlords hoping to set up a mutually beneficial arrangement with their tenants.

You can read more about the guide – and watch a video on it – elsewhere in the mailing or by clicking here.

In addition to the guide – which has been endorsed industry-wide – we are also supporting the government’s calls for landlords and tenants who cannot come to an agreement to consider mediation, in which an independent third-party helps both parties resolve their dispute, without the matter needing to go to court.

As landlords it is in our interests to keep good tenants in their homes and eviction is not, and should not be seen as the inevitable outcome of getting behind with rent payments.

Blog Post from NRLA

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The number of new prospective tenants has risen markedly according to figures from ARLA Propertymark.

In June – the latest data available – the average branch registered 79 new tenants compared to 70 in May.

Year-on-year, this figure is the highest recorded by ARLA for the month of June; in 2019 the June figure was itself the previous record, of 71.

However, the latest surge is still down on pre-lockdown levels when there was an average of 82 prospective tenants registered per branch in February.

Similarly, the number of rental properties on the market in June continued to pick up – and it’s another high for June with an average of 200 properties managed per letting agent branch.

This is down slightly from 208 in May, but ARLA believes it still sets the market up for an active summer compared to the usual seasonal lull.

Regionally, Yorkshire & Humberside saw the highest number of properties managed, with an average of 264 per branch; Wales had the lowest number of properties on its books, with an average of just 104 per branch.

The number of tenants experiencing rent rises also increased in June.

Some 29 per cent of agents witnessed landlords increasing rent compared to just 14 per cent in May. However, this is still the lowest number of rent increases for the month of June since 2016.

The average time properties were empty between tenancies decreased to four weeks in June from five weeks during May.

Blog Post from Letting Agent Today

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A survey of 34 world cities suggests that London ranks sixth when it comes to the cost of renting.

The study, by jeweller service Purely Diamonds, produces this league table of average monthly rents:

1. New York City – £4,817.72;

2. Los Angeles – £3,840.07;

3. Venice – £3,386.36;

4. Las Vegas – £3,066.51;

5. Miami – £3,005.11;

6. Singapore – £2,827.36;

7. London – £2,751.90;

8. Amsterdam – £2,679.14;

9. Orlando – £2,674.13;

10. Dubai – £2,635.12.

The three cheapest were Ho Chi Minh City at £347.36 per month; Delhi on £357.92; and Chennai with a rate of £384.01.

The survey looked at the 34 cities most visited in the world and analysed them according to average rent, utility availability including broadband, safety, climate, pollution, the availability and cost of essential foodstuffs, transport costs, green space, culture and job opportunities.

Using a weighted ranking system, the survey assigned a score to each city.

The 34 were: Prague, Athens, Venice, Rome, Chennai, Delhi, Kuala Lumpur, Taipei, Vienna, Barcelona, Milan, Dublin, Istanbul, Las Vegas, Mumbai, Dubai, Orlando, Miami, Amsterdam, Berlin, Ho Chi Minh City, Singapore, Hong Kong, Bangkok, Los Angeles, Paris, Seoul, London, New York City, Shenzhen, Osaka, Guangzhou, Shanghai, and Tokyo.

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Latest year-on-year figures from Homelet reveal weakening demand in London but rising activity outside the capital and South East.

The economic challenges of the Covid crisis have yet to force down rents outside London, latest figures from the Homelet Rental Index covering July show.

The average rent for a new or renewed tenancy has increased by 1.4% to £808 when London’s sky-high rents are excluded, which are down by 3.2% year-on-year.

This drop is not surprising – many London landlords saw their younger tenants quit tenancies when they came up for renewal during lockdown as employers encouraged them to work from home and many consequently returned to their parents’ houses rather than carrying on paying rent.

But rents in some other parts of the UK have been increasing dramatically year-on-year including in the North West (+6.5%), Yorkshire & Humberside (+4.5%) and the South West (+2.5%).

“Demand for new tenancies is still strong, HomeLet received the same volume of property applications for tenant reference checks this month as the same month last year,” says Martin Totty, Chief Executive of Homelet.

“That coupled with the steadily increasing rents is positive for the sector, but there’s naturally caution around what could happen over the coming months.

“HomeLet’s tenant reference data is one of the few sources with access to large data sets underpinning robust regional trend data. It’ll be interesting to see what trends emerge, especially on the regional level and how these variations will affect both landlords and tenants across the country over the coming months.”

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