Year: 2020

A well-known landlord and businessman who appeared in Channel 4’s Secret Millionaire TV series has fallen foul of the government’s Covid evictions ban, with a cost currently running at £60,000 lost rent excluding lawyers’ fees.

Paul Williams, who owns a large house in Esher, Surrey, says he does not expect to regain possession of the property until January 2021 after his tenants stopped paying the rent earlier this year.

To add insult to injury, the tenants involved have begun offering the property on Booking.com and he estimates they have earned £75,000 from the property so far.

Williams says he is frustrated both that the blanket nature of the government’s evictions ban means fraudulent tenants like his are able to take advantage of the stay in possession hearings, and that Booking.com refuses to take the listing off its site.

“Under normal circumstances we would have ejected the tenants by now but the evictions ban gives people like this an open door to rip people off,” he says.

“I am disappointed that Booking.com appear to condone ‘illegal properties’ being listed on their platform – I have made multiple attempts to contact the company but so far, apart from one brief email, I’ve been ignored.”

The saga began after Williams, 62, who operates his 50-property rental portfolio with his son Ben (both pictured, above), completed a six-month trouble-free tenancy at the property last year, which had been rented by Downton Abbey actor Dan Stevens.

After being told in October by agent Knight Frank that the short-lets market was quiet, he instead listed it on Airbnb to a respectable-looking couple.

Two weeks later they then requested a six-month short let and that is when the trouble started.

Referencing error

“Because they paid their Airbnb deposit and fees promptly and seemed nice, I didn’t reference them before the longer tenancy started, and that was a mistake,” says Williams.

The rent then stopped and the tenants refused all access to the property including for vital repair work while offering rooms within the house to holiday makers using Booking.com.

“It’s very frustrating because we refurbished the property just before they moved in and my wife and I had planned to make it our home later this year,” says Williams. “Also, they have received at least 150 bookings since offering it on Booking.com including right through the lockdown.”

Williams claims one of the tenants has been abusive when contacted via phone or in person, and that the property has been damaged.

“Due to Covid laws we cannot even start eviction proceedings until the end of August and like thousands of landlords across the UK, there’s nothing we can do.”

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The Citizens Advice charity is warning it has seen a huge surge in private renters worried about arrears.

And it says many renters will need financial support to pay back these debts or risk losing their homes.

It says views of the Citizens Advice web page on ‘Dealing with rent arrears’ have increased fourfold year on year, and the number of people seeking advice concerning possible homelessness has also risen.

Previous research by Citizens Advice has indicated over a third of private sector renters have seen their income fall by 20 per cent or more.

The charity is also calling for extra funding to be made available to support people to pay back arrears resulting from Coronavirus.

“The dramatic jump in the need for advice on rent arrears should be a warning sign for the government that many people are deeply worried about the possibility of losing their home” says Dame Gillian Guy, chief executive of Citizens Advice.

“Renters have been particularly vulnerable to the economic effects of Covid-19, yet protections for them run out sooner than many of the other measures to help people struggling, including those for mortgage payers” she continues.

“Many renters won’t be in a position to repay arrears built up due to Coronavirus. Without help, they risk losing the roof over their head through no fault of their own.”

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The Local Government Association, which represents almost all councils in England, is calling on the government to scrap section 21.

The call comes in the LGA’s response to the latest Shelter campaign urging the government to delay the proposed end of the eviction ban.

Shelter claims one in six private renting parents – equivalent to 458,000 adults – are increasingly concerned their family will become homeless.

LGA spokesman David Renard says: “Councils have serious concerns about the risk of homelessness many private renters face as a result of the Coronavirus crisis.

“We are clear that building 100,000 social homes a year must form a central part of the national recovery. To give further protection to private tenants, the government should also bring forward its pledge to end ‘no fault evictions’ and commit to maintaining local housing allowance rates at the lowest third of market rents, so that tenants have greater security and households can meet their housing costs.”

This is just the latest in a series of calls on the government to scrap S21 which the Tories pledged to abolish in their manifesto for the December General Election.

Another Labour MP has taken up the same call, linking S21 to the eviction ban, and claiming in a social media video that “thousands” of people across her London constituency risk losing their homes because of the ending of the eviction ban in four weeks time.

Fleur Anderson, who won the Putney constituency in the December poll, says in the video: “I am really worried about the thousands of people across my constituency, and much wider, who face real worry about losing their home” as a result of the eviction ban ending on August 24.

Anderson has written to Housing Secretary Robert Jenrick to urge him to scrap S21 eviction powers, to raise local housing allowances, and to give courts discretion in rent arrears cases so they can take Coronavirus-related issues into consideration “so they are able to stop those evictions.”

She also wants Jenrick to fund what she calls “crisis navigators” in local law centres “so we can have advisers who can stop people even getting to the stage of eviction.”

The demands from Anderson – who is a backbench MP – echo those of Labour’s shadow housing minister, Thangam Debbonaire, who has made similar requests.

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Warnings published on LandlordZONE in April that advised landlords to be wary of taking a mortgage holiday are turning out to be true.

Mortgage broker Daniel Lee, principal of Legacy Financial Consultants, told landlords to ‘think very carefully’ before taking a payment holiday, particularly if they then were to carry on receiving rent from their tenants.

But reports in national newspapers this week now show that landlords who took either mortgage holidays or applied for bounce-back loans are being marked down as a greater lending risk by mortgage lenders such as Paragon and The Mortgage Works.

Vanessa Warwick, the cofounder of Property Tribes, told The Times: “Covid has exposed weak business models, and taking a loan is signalling to lenders that you did not have a robust business.”

Daniel Lee says: “I’ve seen this problem gathering momentum over the past couple of weeks.

“Interestingly enough, it’s the bigger portfolio landlords who have been rejected by lenders after taking a mortgage holiday – I think some saw this as a way to build up a buffer zone to hedge against their tenants not being able to pay their rent in the future.

“But this was a dangerous approach – I’ve had a portfolio landlords get into this kind of trouble and interestingly it’s the ones who took the payment holidays but continued to collect the rent who have had the most difficulties.

“We’ve got to look at this from a lenders’ point of view – if a landlord doesn’t have the spare funds to cover a void period for a few months and has to go to the government for help, should they really be in this market in the first place?”.

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Average rents in most regions of the UK have fallen slightly in the past month according to the latest HomeLet market snapshot.

It says the average rent in the UK is now £951, up by 1.1 per cent on the same time last year – if you take London out of the equation, the average rent in the UK is now £797, this is up by 2.0 per cent annually.

In the capital the typical rent is now £1,583, down by 1.7 per cent on summer 2019; however, London rents remain on average some 60 per cent higher than the rest of the UK.

Meanwhile on a monthly basis, eight of the 12 regions monitored also showed a decrease in rental values between May and June with Wales seeing the largest drop of 1.9 per cent.

The region with the largest year-on-year rent value increase was found to be the North West, showing a 6.6 per cent increase between June 2019 and June 2020.

“June appeared to be an encouraging month for lettings – HomeLet received more applications for tenant reference checks this month than in the same month last year – but it`s perhaps unsurprising to see average rents achieved on tenancies fell slightly compared to May, albeit still ahead over the year” according to HomeLet chief executive Martin Totty.

“With the current uncertainty affecting different areas of the country in varying ways, looking at trends by region offers the greatest insight into how these variations will affect both landlords and tenants across the country over the coming months” he continues.

“With demand for new tenancies still strong, rents overall may well hold up at the national level, whilst regional variations could continue to fluctuate, reflecting how any potential economic downturn will likely not fall evenly across the UK.”

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The Association of Residential Lettings Agents has given a warm welcome to this week’s news that buy to let investors as well as owner occupiers will be entitled to £5,000 grants per household to improve energy efficiency.

The government says the measure will help the UK meet its target of net-zero greenhouse emissions by 2050, and could support no fewer than 100,000 jobs in manufacturing and fitting.

A statement from Propertymark says it has long called for the reintroduction of the Landlord’s Energy Saving Allowance, and last year – ahead of the General Election – the agents’ body called for help for the private rented sector with energy efficiency and combatting climate change.

ARLA Propertymark chief executive David Cox says: “Since the withdrawal of LESA we’ve been calling for a simple grant scheme to help private homeowners and landlords make their properties more energy efficient. This announcement is a big step forward to ensure that they can take the necessary steps to do this and ultimately create a greener property sector in the UK.”

Propertymark says it is engaging with the government officials to find out further details about how the scheme will operate.

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The research department of Countrywide’s Hamptons International brand says the stamp duty holiday introduced yesterday on homes selling for £500,000 or less is likely to save the typical BTL investor approaching £2,000.

It says only one three per cent of investors buy about the £500,000 threshold, so most will benefit; and investors in London and the South East stand to gain the most in terms of hard cash.

In the capital, where one in five landlords pay over £500,000 for an investment apartment or house, the average stamp duty bill for each of them will fall by £7,240, or 26 per cent.

A landlord buying in the North East will see their average stamp duty bill fall to just £280.

“While these measures go some way to aid landlords in the amount of cash they need to find upfront to purchase a buy-to-let property, other tax changes and regulations introduced over the last few years will continue to weigh on the profitability of the sector” says Hamptons research chief Aneisha Beveridge.

“However it might be enough to lure those investors teetering on the edge of whether to invest, particularly in London and the South.  In May, landlords purchased just four per cent of homes in Great Britain, a record low” she continues.

Chancellor Rishi Sunak’s stamp duty holiday, which continues until the end of March, retains the three per cent additional homes SDLT surcharge.

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There’s a warning this morning that the consequences of the Coronavirus crisis mean that rents will fall at least five per cent between now and 2024.

PropTech start-up Home Made has made the claim after analysing rental value trends after the Global Financial Crisis just over a decade ago.

It’s then applied these figures to 2020 to predict the size of the upcoming hit to the rental economy. It projects that rental income won’t be back to pre-Covid levels until early 2024.

London is expected to be the most impacted region, with a rental income decline of at least nine per cent or £3.9bn in losses for the capital’s landlords by the time pre-Covid prices return – with Westminster, Tower Hamlets and Wandsworth hit the worst.

“Landlords across the UK need to brace themselves for reduced returns. In a recession, renters with tighter budgets are less inclined to take a risk and move homes due to reduced disposable income and increased job market uncertainty which drives rents down – and the Covid-19 recession looks likely to hit harder than any in living memory” according to Asaf Navot, founder of Home Made.

“Landlords can protect themselves by acting fast and securing longer term tenancies with their current renters, or alternatively by reacting quickly to the pent-up demand on the new rental market following lockdown.”

“Landlords can also choose to prioritise long term income over short term gain by offering rent reductions for lengthier contracts, guaranteeing greater financial certainty.”

“Also, consider what else can be done to make properties more attractive to renters in the ‘new normal’. Highlight any outdoor spaces, consider allowing pets in the property – pet owners stay around 80 per cent longer in a rental property – and adjust the space for home working. This will all help you stand out and let your property in a slower market.

“We’re yet to see the full extent of the recession and it’s likely to be a renters’ market for the foreseeable future, but this is far from doomsday. The good news is rental property is a more robust investment than others in a recession, protected from the extreme peaks and troughs of the sales market  as people still need to rent homes, even if they’re cutting on other costs such as travel and leisure.”

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