Year: 2020

Room rents in the capital have dropped seven per cent in the past three months as the Coronavirus crisis saps demand for lettings properties.

Data from rental platform SpareRoom shows that when the capital is taken out of the equation, rents across the rest of the UK have actually increased by two per cent on average during the last quarter.

In the ‘lockdown quarter’ of April to June the average national room rent per month was £590, down from £603. In London, however, the decline was even more steep, with room rents now at £725, down from £777 last year.

This puts London rents back at 2017 levels.

When one takes London out of the mix, average UK rents actually increase from £478 in 2019 to £489 now.

Northern Ireland (up eight pr cent) and East Anglia (up four per cent) are the regions of the UK that have experienced the largest growth in monthly room rents during the most intense period of lockdown. Despite its gains, Northern Ireland remains the cheapest place in the UK to rent.

Out of the 50 largest towns and cities across the UK, positive monthly rent changes can be seen most strongly in Belfast and Portsmouth, up nine and seven per cent respectively.

At the other end of the scale, Edinburgh has seen the steepest fall in rents outside London, with the Scottish capital’s rents dropping by four per cent – possibly because of a glut of Airbnb and other short let rental properties coming on to the market.

“Restrictions on moving home, the fact that people’s incomes have been negatively affected and a ‘flight from London’ to other areas of the UK are all likely to be factors” says SpareRoom director Matt Hutchinson.

“Another possible trend that could be putting downward pressure on London rents is a move away from areas with London Underground connections, which traditionally command a premium. With ongoing working from home and coronavirus fears putting people off getting on the tube, people may be looking instead at areas on the overground. That would explain why rents are faring better in some areas of south east London.”

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Swathes of planning ‘red tape’ are to be swept aside to help builders construct on brownfield sites more easily as Bojo declares war on ‘newt counting’.

Boris Johnson yesterday announced once-in-a-lifetime changes to the planning rules while also baiting green activists as he vented his frustration at the UK’s house-building record.

“Why are we so slow at building homes by comparison with other European countries,” he asked.

“I tell you why – because time is money, and the newt-counting delays in our system are a massive drag on the productivity and the prosperity of this country.”

Consequently, buildings are to be allowed to change use from commercial usage to residential without the need for planning permission, and house builders will be able to demolish existing vacant residential and commercial buildings and build new homes in their place, also without planning consent.

Rules on brownfield development are also to be significantly relaxed to get enable Johnson to deliver on his ‘Build, Build, Build’ programme.

And home owners will be able to add extension and stories above existing floors via a fast-track process, assuming their neighbours agree.

The changes to the planning system will go live in September.

But the strategy, which is to be set out in a more detailed policy paper later this month, will face considerable opposition both from the planning profession and the public.

Too often it is their protests against new housing developments in their area that are the key stumbling block to progress, rather than Johnson’s ‘red tape’.

Nevertheless most estate agents and developers have welcomed the measures, including the NAEA.

“Propertymark welcomes the Prime Minister’s ambition to bounce back as we enter the new phase of this pandemic,” says its Chief Executive Mark Hayward (left).

“It is important that as we try to reboot the economy we build a greater supply of affordable houses that can rejuvenate urban areas most affected by this crisis.

“Simplification of the planning process will ease the pressures caused on the supply of homes and ensure the property market drives the UK’s economic recovery.

“We look forward to working with government during its White Paper process later this month to ensure the system has less red tape and is easier to navigate.”

Developer Adam Lawrence, Chief Executive of London Square, (left) says: “Removing red tape from the planning process is essential. The situation has got worse in recent years as a result of austerity hitting local authorities, who need to leverage as much as possible from every development, which means longer delays and more process. This time we have to see action.”

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ARLA Propertymark and other organisations from across the housing sector have joined forces to support tenants and landlords facing rent arrears as a result of the COVID-19 outbreak.

Amidst concerns about the impact that the virus has had on tenant finances, the organisations are launching guidance offering practical ways in which landlords and tenants can work to address arrears that might be building as a result of the pandemic.

The guidance includes the need for both parties to flag up any problems that might be arising early on, along with advice about measures that can be taken such as agreeing rent deferrals, reductions and suspensions.

It provides support also for tenants applying for benefits where need be and points to resources available to help develop budgeting plans to ensure that tenants can cover the cost of essential items.

A joint statement – from the National Residential Landlords Association, the Chartered Institute of Housing, The Property Redress Scheme, My Deposits, the Tenancy Deposit Scheme and ARLA Propertymark – says:

“COVID-19 has posed significant challenges for both tenants and landlords. As a group we are committed to doing everything possible to sustain tenancies both through and beyond this period of crisis.

“The guidance being launched today has an important role to play in achieving this and we encourage all tenants and landlords to work through it together in a spirit of positive co-operation.”

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A council in London, where landlords yields and margins are already tight, says it wants to charge £550 for a renewed selective licence operating for five years.

Harrow council is now consulting for the proposal, which would extend over one ward in its entirety.

The council says: “The scheme will allow us to take tougher action and ensure the safety and wellbeing of residents.”

It adds that the scheme will “enable the council to ensure fire safety standards, basic amenities and general management of rented properties are being met.”

Agents, residents, tenants, landlords and resident associations are being invited to comment on the consultation exercise, which lasts until August 14.

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A new league table has been produced listing locations where a mix of rental yield and capital growth have given buy to let investors their best returns.

Lettings management platform Howsy has compiled the list which shows that while UK-wide house prices are up just two per cent annually and yields currently sit at five per cent, London outperforms the combined total.

London is the region home to the most favourable combination with an increase of five per cent in property values, while the average buy-to-let returns a four per cent yield.

The North West offers three per cent growth and four per cent yields, while the South West is slightly better at four per cent annually for both yields and capital appreciation.

“As a landlord, it can be easy to get bogged down in the almost immediate financial viability of a buy to let investment. Understandable given the unpredictability of house price growth in the long-term and so the rental yield available is often the only current data available during the decision-making process” explains Howsy chief executive Calum Brannan.

“However, there are plenty of areas across the UK that might not present the best yields nationally but have delivered a substantially larger return where house price growth is concerned.

“As the figures show, this isn’t restricted to one area of the market, and this is certainly something to be considered when investing. For the majority of landlords, their portfolio is their pension pot and so while ongoing rental income is essential, keeping an eye on cashing out and the overall value of your portfolio when you do is also advised.”

The platform uses data from the Office for National Statistics and the Ministry of Housing, Communities and Local Government as the basis for its analysis.

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New tenancies recorded by The Deposit Protection Service suggests the market is back almost to its pre-pandemic levels of activity.

Data in the service’s latest index show that restrictions on moving home during the second quarter of this year – including only moving in exceptional circumstances and a ban on evictions – correlated with a 32 per cent reduction in new tenancies.

New tenancies registered with The DPS fell from just under 60,000 in March to just over 32,000 in April but June saw a swift recovery of just under 56,000 registrations as lockdown measures eased.

The DPS report shows that tenants paid on average £782 per month during Q2, an increase of £7 or 0.9 per cent on the first quarter of the year, and £12 or  1.56 per cent more than a year earlier.

London remains the most expensive place in the UK to rent with monthly average rents in the city static at £1,345 for the past three consecutive quarters.

Excluding London, average monthly rents across the UK during Q2 were £99 lower than the average, at £683.

Most regions experienced average rent increases during Q2 except for the South East, Scotland and the West Midlands. Rents in the North East, the cheapest place in the UK to rent, rose by £7 (1.35 per cent) during Q2, to £524.

The DPS said its second quarter rent affordability calculations do not reflect the fact that many tenants receiving income under the government’s furlough scheme will be paying a comparatively higher percentage of a reduced salary on rent.

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London Fire Brigade’s deputy assistant commissioner for fire safety has praised the new safety regulations which have now come in to effect in the private rental sector.

Charlie Pugsley says: “These new regulations … should be seen as a huge win for tenants who often have to battle with landlords to ensure their homes are safe. Most landlords provide well-maintained and safe accommodation for their tenants, but there are those that don’t and put people’s lives at risk. So it’s a positive step that tenants now have protection and the support of local authorities if landlords don’t comply.

“Sadly, we are all too aware of what the devastating consequences of faulty electrics can be and provided detailed data to the working group to shape the guidance.

“As these regulations do not cover electrical appliances, only fixed electrical installations, we would urge people to ensure their appliances are safe and always register them so you can be informed if there is a fault identified.”

The regulations mean:

– Electrical wiring, sockets, consumer units (fuse boxes) and other fixed electrical parts in rented homes must be inspected and tested every five years, or more often if the inspector thinks it necessary.

– Throughout the whole time a tenant is living at the property, national electrical safety standards must be met.

– Landlords must give the tenant a report that shows the condition of the property’s electrical installations. They also have to give this to the local council if they ask for it.

Inspections will find out if any electrical installations are overloaded, if there are any potential electric shock risks or fire hazards, if there is any defective electrical work and if there is a lack of earthing or bonding.

If the report identifies any issues, landlords will have 28 days to carry out necessary works, or less if the inspector deems the work more urgent.

The new regulations are in place for those who sign tenancy agreements from now onwards. If a tenancy was signed before July 1 the home will be covered from April 1 2021.

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ARLA Propertymark is worried that the government doesn’t have a plan to cope with the huge backlog of possession hearings that will deluge courts once the ban ends in August, as costs for landlords mount up.

The UK’s leading letting agents’ industry body has written to the Department of Justice to express its worries over the huge backlog of possession cases built up since the evictions ban began, which its figures suggest have cost landlords £530 million in lost rent so far.

ARLA Propertymark, which represents 9,500 UK lettings agencies, is also worried that the government doesn’t have a ‘robust’ plan.

It says 62,000 ‘business as usual’ evictions have been backed up as landlords wait for the courts system to reopen for possession hearings, and that’s assuming evictions haven’t increased during the Covid pandemic.

ARLA is calling on the Secretary of State for Justice, Robert Buckland, to develop a ‘robust and co-ordinated strategy as a matter of urgency’ in response to the backlog, highlighting letting agents’ and landlords’ worries that the judiciary hasn’t grasped the enormity of the post-evictions ban deluge facing the court system.

The association says its estimate is based on the government’s own mortgage and landlord statistics for 2019. It also says that calculations show that, on average, landlords who issued a claim on the day the evictions started face a loss in rental income of £8,549 or in total £530 million.

“Every week a landlord must wait to regain possession of their property is a week of lost income; particularly affecting private landlords and agents who may be relying on rental income to pay their own mortgages and bills,” says David Cox, the Chief Executive of ARLA Propertymark.

“Within the backlog of possession claims accumulating during the stay on proceedings, private landlords would have needed to wait for possession to be achieved by using a bailiff on over 3,300 occasions.”

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One of the rental sector’s highest-profile trade bodies has accused pro-tenant group Generation Rent of needlessly scaring renters with the spectre of homelessness.

As we report elsewhere on Letting Agent Today, Generation Rent today claims that homelessness will treble due to rent arrears built as a result of the COVID-19 pandemic.

Now the National Residential Landlords Association says this analysis wrongly assumes that landlords are doing nothing to support tenants to stay in their homes where rent arrears are building.

Independent polling for the NRLA of over 2,000 tenants across England and Wales found that 90 per cent have been able to pay their rent as usual since the Coronavirus crisis began.

Most – 82 per cent – had no need to ask their landlord for any support. Of those that did ask, three quarters received a positive response.

The NRLA argues that this shows that concerns over a spike in evictions once the current ban is lifted are unfounded.

The same polling, conducted by Dynata, shows that three per cent of tenants said that whilst they previously had no rent arrears, they have had to reduce the amount they pay in rent since the COVID-19 outbreak began.

One per cent of such tenants with no rent arrears prior to the pandemic said they had stopped paying their rent altogether. A further one per cent said that they had rent arrears building prior to lockdown, which have continued to increase.

“Our survey reflects what we know from our members, which is that nearly all are seeking to support tenants to stay in their homes. Given that some 30 per cent of landlords have reported facing some level of financial hardship, they will do all they can to sustain tenancies” explains Chris Norris, policy director for the NRLA.

“That said we do support calls to boost the finances available to tenants who are struggling to pay their rent, especially as the furlough scheme begins to wind down. This should include ensuring that benefits cover the cost of rents.”

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A pro-tenant campaign group has this morning kicked off its campaign to have the eviction ban – already extended until late August – extended further or even made permanent.

Generation Rent, with a new leader in the form of ex-Labour peer Baroness Alicia Kennedy, today claims that homelessness will treble this year “unless the government acts to end the rent debt crisis faced by private renters.”

The group says that there is no protection beyond late August for renters who are in arrears, which it claims have risen from four per cent of tenants before the Coronavirus pandemic to 13 per cent now.

The increase in arrears is despite the government’s increase to Local Housing Allowance to cover 30 per cent of homes.

The group claims evictions of those now in arrears “could make 45,000 households homeless, costing councils an extra £117m in temporary accommodation and other support.”

Although it gives no indication as to how it has reached this figure, it suggests that 592,000 renters are behind on rent payments in England alone and include students, non-UK nationals with no recourse to public funds, and people with savings exceeding £16,000 but who can’t access it, as well as those whose rent is higher than the LHA.

Generation Rent is therefore demanding:

– a new Coronavirus Home Retention Scheme, which would clear rent arrears not covered by the welfare system by guaranteeing landlords’ income up to 80 per cent of the rent;

– the suspension of evictions for rent arrears arising due to the pandemic;

– higher Local Housing Allowances “so that people aren’t left destitute or forced to borrow or run down savings to keep a roof over their head.”

Baroness Kennedy says: “There is a rent debt crisis and renters are at risk of losing their homes. The government has already intervened to stop businesses from going under, and mortgage holders from losing their homes. They need to give the same protections to renters who still face losing their home or going bankrupt as a result of rent arrears.

She continues: “There are too many holes in the welfare system and our package of measures would ensure no renter faces destitution or becomes homeless due to Covid-19.

“But with the economy contracting, the government should not be expected to sustain rent levels set when the economy was strong. That’s why we propose that landlords would only be guaranteed up to 80 per cent of their rent.”

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