Year: 2020

In another sign of concern at the speed and volume of eviction cases once the ban is lifted at the end of next month, ARLA Propertymark has written to the Secretary of State for Justice expressing its worries.

In the letter, the association says that when the stay on possession claims expires on August 24 there will be a potential backlog of over  62,000 “business as usual” landlord possession claims to be processed across England and Wales, without even considering any claims for possession that may have arisen directly as a result of COVID-19.

It also suggests that – using average rent data from the government itself – if a landlord had issued a claim for possession on the day the stay on possessions came into force, by the time cases re-start, they would have incurred a loss of £4,149 purely due to the suspension.

“The average time from claim to possession by a County Court Bailiff is already 22.8 weeks for private landlords. This means the landlord who submitted a claim immediately before the stay on possessions will incur an average rental income loss of £8,549 due to these restrictions” the letter continues.

ARLA Propertymark urges the government to create what it calls “a robust strategy to manage the re-opening of the courts for landlord possession claims and to work with us and our members on an effective strategy to put in place.”

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Confusion over Electrical Inspection Condition Reports, created by inaccurate statements from the government, has been slammed by a housing law expert.

Last week many agents and landlords were led to believe, mistakenly, that they did not need to concern themselves with tenancies that started between June 1 and July 1.

Government guidance on the Electrical Safety Standards in the Private Rental Sector (England) Regulations 2020 was issued, only to be amended and then reversed.

David Smith, partner in the commercial litigation team at JMW Solicitors, says: “The current situation is hugely unsatisfactory. The regulations were rushed in and the confusion over the guidance illustrates that even the Ministry of Housing, Communities and Local Government does not properly understand them.”

And he adds: “They really must get the guidance right quickly (and it should have been right before) and should probably consider whether this is the right time to be making this change. Naturally, there is a genuine improvement in tenant safety which should be moved forward but leaving it a few months would not really reduce the safety of tenants appreciably and would allow for a more orderly introduction.”

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The council at the centre of one of the planning controversies involving Housing Secretary Robert Jenrick has issued a warning to the buy to let sector.

Tower Hamlets council – which recently won its case to have Jenrick’s planning ruling about a huge £2 billion luxury homes development declared illegal – has this week revealed that other legal actions have helped tenants claim back more than £100,000 from rogue landlords in the past year.

The money was recovered using rent repayment orders that allow the council and tenants to get back up to 12 months’ rent from landlords who fail to license properties when they are required to do so.

John Biggs, Mayor of Tower Hamlets, says: “Our licensing schemes don’t only protect tenants, they also benefit legitimate landlords by raising standards across the industry. This is just one example of how we’re working to improve the housing landscape for landlords and renters across Tower Hamlets.”

And councillor Sirajul Islam, Cabinet Member for Housing, adds: “We know that the majority of landlords play by the rules, but sadly there will always be some who put profit ahead of the people who live in their properties.

“We want to work with landlords to ensure that the licensing process is safe, regulated and improves the lives of managing agents and tenants. Given the penalties that can be incurred by falling foul of our regulations, it really isn’t worth the risk of letting an unlicensed property.”

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Official figures from letting agents show landlords are ‘taking the brunt’ of the economic downturn, it is claimed, as rents stall and void periods increase.

Rent increases have reduced to record lows during the pandemic with just 14% of tenants experiencing a rent rise last month, latest industry figures show, while 2.5% achieved a rent reduction.

Conducted by the Association of Residential Letting Agents (ARLA), the research also shows that although voids are increasing in length, this is likely to be short-lived as the number of prospective tenants registering for rental properties has surged to record levels, its agent members report.

As a result of the housing market pause, landlords were unable to show prospective tenants’ new properties and therefore, the average time properties were empty between tenancies increased to five weeks in May.

This is the longest time properties have remained void between tenancies since records began after agents and landlords were unable to operate as normal between 23rd March and 13th May.

ARLA says the near standstill in rent increases has been caused by landlords recognising the financial difficulties of many tenants during the lockdown.

Brunt of the pandemic

“Our latest figures show that landlords and agents have been taking the brunt of the pandemic,” says David Cox, Chief Executive of ARLA Propertymark.

“They are aware of the financial difficulties facing tenants and have shown empathy with many landlords not increasing rents where they otherwise might have needed to.

“As we continue to move forward, it’s important that everyone aims to keep the rent flowing in order to sustain the market and help boost the economy following several months of uncertainty.”

According to John Goodall, CEO of mortgage marketplace Landbay, says that difficulties for many first time buyers accessing mortgages at the moment means demand for private rented property is likely to increase in the short to medium term.

“Those who would ordinarily have bought a property may well be struggling to do so and we have already seen demand from landlords increase sharply in the last month,” he says.

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The Institute for Fiscal Studies says poorest fifth of households have been hit hardest and seen job losses and income reduction, but that benefits have been crucial in preventing more widespread deterioration in finances.

The impact of the lockdown on household finances including rent payments has been revealed by a new report published this morning by the Institute for Fiscal Studies (IFS).

It says there was an 11% drop in rent paid during May as fewer jobs and lower incomes hit household finances hard.

The ratio of people out of work increased by 4% and median household income dropped by £160 a month.

But the figures also reveal some surprising aspects of the economic downturn created by Covid. This includes the huge role that Universal Credit (UC) is playing in supporting poorer households.Because of the extra UC money, they saw their income drop slower than other households.

Consequently, there have been more home owners who have stopped paying their mortgage than tenants no longer paying their rent.

But while non-payment of rent is more concentrated among poorer families, the non-payment of mortgages is more evenly spread across the population.

Nevertheless, the IFS research shows that the poorest fifth of households, based on pre-crisis income, have been hit harder than other groups in the labour market.

“We see rises in non-payment of bills – especially among poorer households – and this worsened further in May,” says Isaac Delestre, the author of the IFS report, which was funded by the Standard Life Foundation.

“These represent substantial additional debts being carried forward.”

The research also shows that of those who paid a bill in January but did not pay it in May, the average January payment was £1,660 for mortgages, £650 for rent, £170 for council tax and £139 for utilities.

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A stamp duty cut could reinvigorate the buy to let market and the wider economy as the country comes out of lockdown.

That’s the view of David Alexander, joint managing director of lettings platform Apropos.

He says recent data produced by HM Revenue and Customs shows half the number of residential properties were sold in May compared with a year ago amid the lockdown.

Although demand is increasing post lockdown, Alexander insists there is an urgent need to kick-start the UK economy with a review of Stamp Duty Land Tax as it applies to England and Northern Ireland, and Land and Building Transaction Tax in Scotland.

“Now is an opportune time for the government to make necessary changes and a reduction in tax on certain transactions could directly increase the volume of properties being sold, subsequently benefitting the government and what can be obtained” insists Alexander.

“As it stands, the rate of tax on a second property prevents many individuals from buying an additional dwelling, either as a second home or a property to let” he continues.

“This tax varies from three to four per cent depending on which part of the country you are in. It is important to remember that not everybody who purchases a property is a multi-millionaire – for example there are many people who have worked extremely hard and have an aspiration to buy a second property to supplement their pension. The additional tax can be very restrictive and is often a real deterrent” Alexander believes.

He says any increase in tax to recoup Coronavirus public spending increases could backfire and produce fewer transactions.

And he adds: “There is also a pressing need for the government to assist those who are making their last move by reducing associated taxes on their final property transaction. Many retirees would like to downsize and move into a property that is more suited to their lifestyle, however, in many circumstances they decide not to pursue this move due the associated costs, as it would impact the inheritance of their families. By implementing a tax-free final property purchase, the volume of transactions at the top end would also increase and subsequently bolster the economy.”

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Rental collection platform Re-Leased reveals shocking impact of Covid on many tenants, although its March Quarter Day figures show 67% of that rent has now been collected.

Commercial landlords are even worse off this quarter as swathes of retail chains across the UK are either withholding payment or only paying part of their rent.

New figures from Re-Leased show that landlords collected just 18.2% of commercial rents on 24th June – the most recent quarter rent date – compared with the 25.3% on March quarter rent day.

Its analysis of more than 10,000 commercial properties revealed that retail properties were the worst performing group, collecting just 13.8% of rent owed compared to 19.8% in the previous quarter.

Big high street chains including William Hill, JD Sports, Primark, Boots and Stonegate Pubs are all withholding their quarterly rental payments. Betting chain William Hill has written to landlords saying it won’t pay rent in June and is “unable to confirm when payments will recommence”.

Landlords have been trying to reach agreements with tenants after the Government extended a ban on statutory demands or evictions until the end of September.

Tom Wallace, Re-Leased’s CEO, says these figures illustrate the pressure both landlords and tenants are under.

He says: “Across all sectors, we have already seen landlords offering rent holidays, deferrals, and reductions where possible which is encouraging, but transparency is key. It’s crucial to remember that like tenants, landlords will be experiencing significant cash flow problems and have their own financial obligations to meet.”

Re-Leased’s analysis for the March quarter revealed that 67% of commercial rent had been paid 60 days after the deadline compared with 84% for the December 2019 quarter. Wallace believes rent collection will steadily increase over the coming weeks, but that it’s unlikely to reach the level seen in March.

Office assets have been the most resilient in the sector, collecting 22.8% of rent due. However, compared to March quarter when 31.2% was collected, it has seen the greatest decline with rent collection down 8.4%.

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Alicia Kennedy has resigned the Labour whip and will serve as a non-aligned member of the House of Lords so that she can focus on the pro-tenant campaigning group.

Pro-tenant group Generation Rent has appointed a campaigning Labour peer as its new director who’s promising to give tenants a stronger voice.

Serving life peer Alicia Kennedy has resigned the Labour whip and will serve as a non-aligned member of the House of Lords so that she can focus on giving Generation Rent more political clout.

A party stalwart, Baroness Kennedy was the party’s head of field operations for two general elections. She first worked as a regional organiser for Labour 25 years ago, ending up as an advisor to party leader Ed Miliband before joining the Lords in 2013.

Having previously worked on the Draft Modern Slavery Bill and on the Affordable Childcare Committee, Kennedy is a prolific poser of written questions to the House and a keen Lords debater.

She recently quizzed the Government about housing safety following the Grenfell disaster as well as asking them about the number of home owners at risk of negative equity or home repossession as a result of Covid-19.

Section 21

Generation Rent says she’ll be tasked with strengthening its team so it can focus on securing the abolition of Section 21 evictions, helping to enforce recent successes such as the letting fees ban and rights over safe homes, and ensuring everyone can afford a decent home.

Kennedy says the Coronavirus pandemic, and the particular challenges it has posed for tenants, has shown the need for a strong national voice to campaign for the interests of private renters.

“It’s our job to give private renters a platform to share their experiences and to unite to tackle the common problems so many face,” she says. “Working together we can achieve positive change in policy and practice and deliver stronger rights for tenants. I can’t wait to get stuck in.”

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