Year: 2020

Housing minister Michelle Donelan has told parliament that landlords should think twice about charging student tenants rent when they can’t attend campus, a change in attitude from previous pronouncements from the government.

The Government has urged landlords to consider whether they’re treating student tenants fairly by continuing to charge them for empty accommodation.

It’s a change to the previous stance adopted back in April, when Housing Minister Chris Pincher reassured landlords it wouldn’t take sides orforce them to waive rents for students, despite a vociferous campaign by the National Union of Students (NUS).

In a written question, Fabian Hamilton, Foreign and Commonwealth Shadow Minister asked the Secretary of State for Education what guidance the Government is giving student landlords about collecting rent on unoccupied accommodation.

Education Minister Michelle Donelan said: “While it is for universities and private accommodation providers to make their own decisions about charging rents to absent students, we encourage them to consider the fairness of doing so and to clearly communicate their policies to students.

Waive rents
“We are aware that a number of universities and large companies have waived rents for the summer term or released students early from their contracts.”

She added that tenants with individual private landlords could discuss the possibility of an early release from their lease and encouraged them to seek support firstly from the landlord.

Donelan reiterated that they should work together to put a rent payment scheme in place.

Students have lobbied both university and private landlords to release them from their tenancies and waive rents for the summer term.

The NUS has previously demanded that every landlord should offer students a no-penalty early release from tenancy contracts for the current and next academic year. Around the country, hundreds of university students have signed up to a rent strike.

The NUS says that while it’s good to see landlords being encouraged to consider fairness, there are still many thousands of students tied into contracts with unreasonable cancellation clauses struggling to pay rents for homes they can’t live in.

Eva Crossan Jory, NUS vice president, tells LandlordZONE: “We’re calling for firmer restrictions on landlords regarding current rental contracts as well as rental contracts for September onwards. We fully support the emergency Covid legislation passed by the Scottish Parliament allowing students to cancel halls of residence contracts with seven days’ notice and  a 28 day notice period for other types of accommodation contracts – this should be extended across all UK nations.”

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The housing sector has come together to support landlords and tenants 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.

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

In a joint statement, the NRLA, the Chartered Institute of Housing, The Property Redress Scheme, My Deposits, the Tenancy Deposit Scheme and ARLA Propertymark said: “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.”

To read the new guide click here.

Written by Sally Walmsley

Blog Post from Residential Landlords Association

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Landlords have welcomed confirmation from a Government Minister that the courts will begin to hear possession cases from 24th August – providing greater certainty for the rental market.

Responding to a series of parliamentary questions, Lord Greenhalgh, a Minister at the Ministry for Housing, Communities and Local Government has said that from the 24th August, “the courts will begin to process possession cases again”.

After what would be a five-month suspension, the Minister argued that this would be “an important step towards ending the lockdown and will protect landlords’ important right to regain their property.”

He reiterated however that work is ongoing to ensure “the most vulnerable tenants can get the help they need when possession cases resume.”

The Minister confirmed that under plans to end Section 21 repossessions in England as part of the Renters’ Reform Bill, Ministers want to ensure that “landlords are able to swiftly and smoothly regain their property through the courts where they have a legitimate reason to do so.”

Ben Beadle, Chief Executive of the NRLA, said: “The Minister’s comments provide greater certainty for the rental market.

“We continue to work hard with landlords and tenants to sustain tenancies wherever possible. In the vast majority of cases this is happening.

“It is vital however that swift action can be taken against those tenants committing anti-social behaviour or domestic violence.  We are calling also for priority to be given to cases where possession orders were granted prior to lockdown or where rent arrears have nothing to do with the COVID pandemic.”

Written by Sally Walmsley

Blog Post from Residential Landlords Association

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Clarity has been welcomed surrounding a case which tested the way Section 21 works with gas safety certificates after the Court of Appeal sided with private landlords.

The case of Trecarrell v Rouncefield:

The landlord, Trecarrell House Limited, was initially granted an order to repossess the property using Section 21 powers, however, the tenant successfully appealed on the grounds that they were not provided with a gas safety certificate prior to moving in.

Despite the landlord making the certificate available after the tenancy had begun, the Courts initially ruled that the Section 21 notice was invalid, referring to a previous similar case in which the certificate was made available less than two weeks after the tenant moved in.

The Court of Appeal, however, has ruled that Section 21 notices are valid provided a Gas Safety Certificate is issued before the notice is given to the tenant, not before a tenant moves into a property.

Prior to the NRLA being formed the Residential Landlords Association supported the landlord, arguing the situation could have breached a landlord’s rights under the European Convention on Human Rights on the basis that it deprives them of their possession. A crowdfunding campaign set up by the RLA to raise money for the appeal raised more than £7,000.

John Stewart, Deputy Policy Director for the NRLA said: “We welcome the clarity that today’s ruling brings for the sector.

“Going forward, however, ministers remain committed to eventually getting rid of Section 21 altogether. We have been campaigning to ensure that such moves are only made within the context of improvements to the way courts handle cases and clear, comprehensive and timely routes for landlords to repossess properties in legitimate circumstances.

“We are heartened therefore that the Housing Minister has made clear that such changes will only be made “in a considered manner” and not as an immediate response to the coronavirus pandemic.”

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The latest figures released by HMRC have revealed that there has been a notable rebound in residential property transactions during May against April’s numbers.

According to this morning’s data, 48,450 residential transactions were completed in May, down 49.6% year-on-year, but up 16% against the previous month.

Anna Clare Harper, co-founder of property fund Anglo Residential, said: “Recent events and practical restrictions such as physical valuations and obtaining finance mean it is hardly a surprise that property transactions have fallen dramatically year-on-year.

“However, what we can see from the HMRC data and from what we are hearing from investors, appetite is responding quickly. We are seeing the signs of strong appetite to move forward with investments in the UK residential market in particular.”

Andrea Olivari, Co-Founder at digital lender Selina Finance, had this say: “On the whole, there are gradual signs that the property market is moving, with the latest industry figures revealing an average house price increase of 1.9%. So the rise in property transactions is reassuring, particularly given the figures are taken from May and the market wasn’t officially re-opened until mid-way through the month.

“It will be interesting to see if this trend continues throughout June or whether these figures are down to a release of pent up demand from the lockdown period.

“Whether the increase continues in the long term is dependent on an array of factors, particularly the “new normal” of homeworking post-COVID and how this influences homebuying decisions”

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Navigating the UK property market from an investment point of view can be a task in itself, but in the midst of a pandemic and market instability it can seem overwhelming. So where do you start?

The latest research by the peer to peer lending platform, Sourced Capital, has taken a look at the average annual return available on a £500k investment across both the commercial and residential buy-to-let markets, to see which makes the most financial sense despite current market instability.

As a whole, residential buy-to-let offers a better investment option to commercial property with the average UK yield currently at 5%, returning £138k over five years based on annually compounded interest.

The average return across the commercial sector is currently 2.2%, meaning your £500k would return just under £60,000 over the course of five years. However, as with all property investment, this depends on where you invest it.

The best residential buy-to-let option is currently the North West, where yields climb as high as 5.5% on average, returning £153,480 over five years.

The North East and Yorkshire and the Humber are also some of the most profitable pockets for a residential buy-to-let, however, the East of England sits at the other end of the table. The region is home to an average yield of just 3.8%, returning £102,500 over five years. The high cost of buying in the South East and London means they’re also amongst the worst regions for a residential buy-to-let return.

When it comes to investing in a commercial property, the average yield might come in lower than that of the average residential buy-to-let, but depending on which sector you opt for, the returns can be far higher.

Investing in an industrial commercial property would see the average return of 2.2% per year increase to 7.6% or £221,160 over five years. Surprisingly office space as a whole is the next most profitable with a 6.9% annual return bringing a profit of £198,005 over five years. However, narrow your investment to central London and this return drops marginally to 5.8% per year.

The only bricks and mortar investment in the list that would lose you money is currently commercial retail space. Annually, this investment would lose you -6.2% a year, or £136,935 over five years.

Alternatively, investing via a peer to peer platform like Sourced Capital could see a return of 10% a year, climbing to as much as 12% depending on the project you invest in. Over five years, this hands-off approach could return a healthy £305,225, making it the most profitable as well as the least strenuous.

Of course, as with all investments, capital is at risk and the return you receive on any investment can differ both ways to the UK average.

Stephen Moss, Managing director of Sourced Capital, commented: “It can be hard to know where your money is best invested in times like these, but on the whole, residential bricks and mortar certainly makes for the most consistent option both in the long-term and regardless of geography.

“Of course, commercial property carries a greater risk, but depending on which sector you opt for, these risks can be greatly rewarded.

“However, with so much uncertainty surrounding much of the commercial space and to a degree, the residential market as well, it can be hard to decide where to place your bets. This has been the driving factor behind many opting for a more hands-off approach, with platforms like Sourced Capital seeing an increase in popularity from more traditional bricks and mortar investors.

“As a result, you get the option of keeping your investment strategy moving while letting trained experts decide which developments are likely to bring a good return on your behalf.”

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Today looks like it is set to be the hottest day of the year and, with millions of us still in lockdown, homeowners are being urged to take extra care at home following a recent rise in house fires.

Life under lockdown has seen Lloyds Bank Home insurance record a 91% increase in fire claims between March and May alone. On top of this, there has also been a 10% increase in fire claims between spring 2019 and spring 2020.

Top tips to prevent against house fires:

1: Be careful when cooking outside: there’s nothing better than a barbeque on a sunny day, but cooking outside can increase the risk of fires. Make sure there are no overhanging branches or nearby fences before you start your barbeque and that it’s placed securely on a flat surface.

2: Take care with outdoor flames: fire pits and outdoor candles can create an inviting ambience when spending time outside but can also be a fire risk. Make sure fire pits are set up on stable surfaces and avoid using during windy conditions. Safety screens should be used when using fire pits and outdoor candles properly extinguished once you go back indoors.

3: Store barbeques away carefully: embers can remain hot hours after use if not properly extinguished and lead to a potential fire so keep a close eye on barbeques for a few hours after you have finished cooking. Make sure barbeques are properly extinguished before storing away.

4: Do not charge phones, laptops and other electronic devices near soft furnishings: devices and switches may overheat in the warmer months, especially if being charged under pillows or cushions, so take care when charging phones.

5: Beware of mirrors: sunlight shining onto mirrors or glass ornaments on sunny days can be reflected onto soft furnishings increasing the risk of a fire. Keep mirrors and glass ornaments away from windows and windowsills.

6: Take care of tumble dryers: remove lint from the tumble dryer after every load of clothes that you dry and do not cover any vent or openings on the machine. It’s also important to regularly clean the machine and don’t use them while you are sleeping or away from your home.

7: Have your air conditioner inspected: dirty coils, clogged filters, and worn wiring can all lead to fires as dust builds up in air conditioning systems. Regular maintenance of cooling systems can help prevent fires. When you are out of the house, keep air conditioners switched off.

8: Insurance details: Make sure you have the details of your insurer to hand should the worst happen.

Tim Downes, Senior Claims Manager, Lloyds Bank Home Insurance, said: “With the nation spending more time at home, there’s an increased risk of accidents, including house fires.

“Many of us already know it’s important to take care around things like barbecues and candles, but homeowners also need to take care around the less obvious things – phones left charging in warm rooms, mirrors next to sunny windows and even appliances like air conditioners and tumble dryers can all be unexpected sources of fires.

“The positive side of more of us being at home means that should a fire occur, it’s more likely to be put out quickly. Following a few of our top tips should hopefully help homeowners stay safe at home while the sun shines.”

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Two thirds of letting agents will still have staff on furlough next month according to a survey of 231 agencies – and 40 per cent of agents are not even fully open.

The findings of a study conducted by the Property Redress Scheme show that 26 per cent of letting agents anticipate they will not have every employee return to work before September.

This includes 13 per cent who feel they will still have employees on furlough in October.

It is therefore no surprise that the survey shows over 40 per cent of agents are still to open their doors to the public, over a month after the government go-ahead.

“It is not a question of safety” says Sean Hooker, head of redress at the Property Redress Scheme.

“Over 70 per cent of people we surveyed said they did feel safe to return to work and that their employers would provide PPE. This therefore suggests agents are worried about the market’s ability to bounce back post-COVID-19. Whilst we have seen some encouraging signs of a market recovery, agents clearly feel we are far from out of the woods yet. Many feel the biggest impact will be felt in the medium to long term as companies announced redundancies and unemployment rises.”

He continues: “Perhaps agents are also worried about how they will cope with adjusting to the ‘new normal’. Our survey showed that 75 per cent of agents will be conducting either virtual or a mixture of virtual and physical viewings going forward, but only 20 per cent of agents said they offered virtual viewings pre-COVID-19.“

Hooker says the extension of the evictions ban and the uncertainty of the student market is also weighing heavily on letting agents’ minds.

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The BBC has shone a spotlight on lockdown parties being held in contravention of social distancing rules at properties advertised on Airbnb and other short let online websites.

The corporation quotes the Bed and Breakfast Association as saying the parties are putting “communities at risk” as gatherings of up to 30 people have been the subject of complaints from neighbours.

“BBC News has been told of several such parties in the past month” it says in a story on BBC Online.

Following a previous BBC News investigation into “Coronavirus retreats”, Airbnb had told users they could make bookings only if they were key workers or required “essential stays”.

But that restriction is being lifted over the next three weeks in different parts of the UK.

“While B&Bs and guest houses have been closed since 23 March, it seems these giant platforms have allowed bookings to be made and enabled the so-called ‘lockdown parties’, which have put guests, hosts, neighbours and communities at risk” Bed and Breakfast Association chairman David Weston tells the BBC.

“It is about time these global platforms took some responsibility for the safety of their guests, their accommodation and showed some respect for local communities.”

A statement to the BBC from Airbnb says: “We have zero tolerance for illegal activity and Airbnb is the only platform to limit all UK bookings to essential travel for key workers until restrictions are lifted.

“We also explicitly ban party houses and our neighbourhood support tool enables anyone to contact us with concerns about a listing in their community, and we take action on issues brought to our attention.”

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Figures unearthed by the Daily Telegraph show the scale of the arrears and eviction court case backlog likely to face the industry later this year.

Quoting information from The Lettings Industry Council, which represents 100 companies across the rental market, the paper claims some £3m is now owed in arrears by private rental sector tenants.

The average owed is around £1,250.

There are now 2,444 pending court cases, over 600 of which were instigated before the lockdown.

Earlier this week Letting Agent Today carried a warning from legal practice Irwin Mitchell of possible backlog delays, especially as even pre-Covid the average time between claims and repossessions taking place was 23.6 weeks.

In response to the latest figures Franz Doerr – founder and chief executive of deposit alternative service flatfair – says: “[The] figures from The Lettings Industry Council do not come as a great surprise but underline the threat that coronavirus poses to the rental market. Renters do not have as much breathing room to cut back on spending, leaving them vulnerable to economic shocks.

“Many tenants have been hit hard financially, either through being furloughed or losing their job altogether and this adds to the financial pressure that they may already be under.

“More action needs to be taken to support tenants and landlords alike to communicate, and ensure that a fair equitable solution is found in the unfortunate cases where a tenant cannot pay their rent.”

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