Year: 2020

A new ‘How to Rent’ guide has been released by Government – with landlords reminded they MUST serve this version at the start of any new tenancy or renewal.

Rules were brought in five years ago making it mandatory for landlords to provide the latest version of ‘How to rent: a checklist for renting in England‘ to their tenants when the first tenancy starts – and on renewal if there has been an update to the contents.

If they do not, they lose the right to repossess using Section 21.

The Government, which is also updating its  ‘How to Rent a Safe Home‘ and ‘How to Let‘ guides, said the updates will reflect legislation changes made since the booklets were last updated in June 2019.

These include new laws which have come into force as a result of the Tenant Fees Act 2019 and the Electrical Safety Act 2020.

All three guides, put together to help tenants and landlords in the PRS understand their rights and responsibilities, will also signpost readers to additional Covid guidance, which is updated regularly and can be found here.

This includes details of the extra measures the Government has put in place to help renters this winter, including emergency legislation increasing notice periods.

Blog Post from NRLA

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There’s been a further tweak to the eviction controls introduced in England for the duration of the lockdown, lasting until December 2.

There has been substantial publicity for what is effectively a ban on evictions, which followed a letter from government to bailiff authorities asking them not to en force possession cases during the lockdown.

But from today possession cases with severe rent arrears WILL be exempt from the effective ban; this means that bailiffs and High Court Enforcement Officers can move to enforce warrants and complete evictions.

However, this will only apply to cases where the equivalent of nine months’ rent arrears had been built up before March 23 this year, when the UK went into national lockdown.

Paul Shamplina, founder of landlord and tenant solicitors’ firm Landlord Action says: “This is very welcome news for those landlords whose tenants had stopped paying rent months prior to the pandemic and, until now, had been given carte blanche to continue living rent free. However, there are concerns about how long it will take those landlords, whose arrears cases fall short of the government’s definition of ‘substantial’ – ie, nine months, to regain possession.”

The eviction ban started in March and ended in September, only to be reinstated in areas classified as Covid risk Tier 2 or Tier 3.

On November 5 the government said renters would be protected during the second [England] restrictions with no bailiff enforcement action, except for the most egregious cases such as anti-social behaviour.

The statement also said that an exemption would be introduced for extreme pre-Covid rent arrears cases, which has been announced today.

Blog Post from Letting Agent Today

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The gap between typical City rents and Country rents is closing according to an analysis of Countrywide properties by the company’s upmarket Hamptons International brand.

In October the average cost of a newly let property in Great Britain as a whole rose to £1,041 pcm, up 1.4 per cent on the same month last year.

This is the first annual increase since March 2020 but unlike last year, it is properties in the countryside rather than urban areas driving rental growth.

The average cost of a newly let property in the countryside rose to £919 pcm in October, up 5.5 per cent compared with the same period last year and more than triple the average rate of growth across Great Britain.

Meanwhile rents in cities fell 5.3 per cent year-on-year to £1,336 pcm.

Hamptons says this is a complete reversal of October last year when rents in cities were rising 7.2 per cent and falling in the countryside by 0.2 per cent.

October 2020 rents in smaller towns and suburbs rose 2.2 per cent year-on-year.

The Hamptons data appears to back up the popular belief that the  Coronavirus pandemic has changed tenant behaviour, with many moving out of cities to suburbs and rural locations.

There were seven per cent fewer applicants looking to rent in cities last month, but 29 per cent more homes available to rent than at the same time last year. This has put downards pressure on rents.

Meanwhile demand for homes in the countryside rose four per cent in October and stock levels were 48 per cent lower than the same period last year.

This shift in demand has also changed agents’ and landlords’ ability to increase rent.
Nearly half of those letting a home in the countryside were able to increase rent when re-letting their buy-to-let last month. This figure dropped to 35 per cent for landlords in city locations.

On a regional basis, rents outside London continued to accelerate, with prices in the North of England reaching a record high of £689 pcm in October, up 5.9 per cent on the same period last year.

This set a new record for average rents in the three Northern regions (North West, North East and Yorkshire and Humber), as well as the highest rate of annual growth since the Hamptons index began.

Rents in the South West also increased 5.9 per cent year-on-year, marking the strongest growth since October 2015.

Meanwhile London and Wales remained the only regions where rents fell – down 0.6 per cent in the capital.

“The flexibility of the rental market has meant that while some renters have decided to make a permanent move out of cities in search of more space, others have moved out temporarily.  The opportunity to work from home means tenants can save while paying less rent in more rural areas.  As a result, the gap between rents in cities and the countryside is closing” explains Aneisha Beveridge, head of research at Hamptons International.

Blog Post from Letting Agent Today

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Today is the start of the official Christmas eviction ban ‘truce’ in the private rental sector – and it continues until January 11, with no enforcement action allowed in England until January 25.

In practice this truce period is simply a further extension of the enforcement halt that has existed for some weeks, and which followed the formal ban on serving possession notices since March this year.

In response to this unprecedented year and the latest truce period, PropTech entrepreneur Neil Cobbold is advising agents to “sharpen up their arrears management processes” over the festive period.

Cobbold, chief sales officer at automated payment supplier PayProp, says: “Rent arrears tend to build up during the festive period, pushing many landlords to pursue eviction through the courts. However, with their options more limited than usual, alternatives to eviction should be investigated first, and the role of letting agents as mediators will be crucial.”

He suggests agencies can help by promoting more communication between landlord and tenants, either preventing or reducing arrears through effective reminders or organising affordable repayment plans.

“By digitally recording all payments and automating arrears chasing and employing the services of a dedicated eviction expert, agents can better navigate the changing rules during this trying period” he advises.

While there is substantial hope the roll-out of a vaccine may lead to a gradual return to normal practices in the private rental sector in 2021, Cobbold cautions that many challenges remain.

“The minimum notice period for evictions (except for the most serious cases) remains at six months until March at the earliest. Meanwhile, there will also be the renewed prospect of Section 21 being scrapped as part of the Renters’ Reform Bill, further curtailing options.”

Blog Post from Letting Agent Today

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The charity Citizens Advice – which claims a “unique, real-time insight into the challenges people are facing as a result of Coronavirus” – says some arrears by tenants will take seven years to be repaid.

It says three signs have emerged of an imminent rental crisis.

Firstly it claims to be helping someone with a private rented sector issue every two minutes.

“In October, we helped 7,700 people facing issues with their private rented homes — that’s 34 per cent more people than the same time last year” says the charity on a blog.

Secondly it says it’s seen a 45 per cent increase in views of its webpage on rent arrears.

“As people have struggled to pay their rent throughout the pandemic, we’ve seen more and more people turn to our website for advice. In October, there were 45 per cent more views of our webpage ‘dealing with rent arrears’ than the same time last year. There were also 16 per cent more views of our section 8 evictions webpage in October than [the previous] month” it states.

Third, Citizens Advice claims that based on previous research it will take tenants, on average, seven years to pay back their rent arrears

“For many people who’ve faced a loss of income during the pandemic, their rent arrears leave them with unmanageable debt and at risk of eviction” adds the charity’s blog.

CA goes on to criticise possession actions going through court – even though it admits there is a ban on most bailiff-enforced evictions until January 11.

“Urgent action is needed to avoid leaving millions of renters with spiralling debt and at risk of eviction” it says, before demanding  in England a programme of loans and grants to help people who have fallen behind on rent due to the pandemic.

“Grants should be directed at people in the most financial difficulty, like those who are eligible for benefits or who wouldn’t be able to repay a loan in five years. The loans should be government-backed and interest-free” it urges.

Blog Post from Letting Agent Today

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ARLA Propertymark has issued a warning to government not to use Capital Gains Tax reform to further punish the private rental sector.

Last week a report commissioned by Chancellor Rishi Sunak advocated a doubling of Capital Gains Tax on, amongst other things, profits from the sale of buy to let and holiday homes.

In addition it called for future CGT reforms to link more closely with income tax.

Although the government has stressed it is concentrating currently on the Coronavirus crisis, not tax reform, there has been no denial that the proposal will be taken on board at a later date.

Now ARLA Propertymark’s policy and campaigns manager – Timothy Douglas – says: “Letting agents and their landlords play a key role in maintaining a strong and thriving private rented sector. To this end, the current system of Capital Gains Tax does not paint the full picture of costs and responsibilities.

“Given recent changes to mortgage interest relief, the wear and tear allowance, and the ongoing impact of Covid-19, the UK government must tread carefully with any plans to change Capital Gains Tax as this could dramatically reduce the supply of rental properties.”

A number of groups, law firms and individual property professionals have criticised the CGT proposal, suggesting it may lead to a flood of sales by landlords and thus a shortage of letting stock.

Blog Post from Letting Agent Today

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Size matters when it comes to tenant satisfaction, with renters rating small-scale, amateur landlords more highly than portfolio landlords and agents.

Research programme RentBetter’s report on the impact of PRS tenancy reform in Scotland found more contentment than generally thought, following the introduction of private residential tenancies three years ago.

It says this is linked to the fact tenancies generally don’t turn over quickly.

“This finding might suggest a higher degree of consumer satisfaction in private renting than is often supposed,” says author, Professor Douglas Robertson.

“This was also found to be linked to the landlord type, with what many considered the small-scale, more amateur, so-called ‘cottage industry’ providers.

The finding jars somewhat with another policy ambition, that of encouraging a higher degree of professionalism across the sector.”

His research finds that the importance of maintaining positive, trusting relationships with the landlord was a strong theme from tenants, who emphasised the benefit of proactive, person-centred landlord approaches – most often provided by one property or small portfolio landlords.

But RentBetter reports that up to a quarter of landlords are questioning whether to continue operating as a business due to changes in taxes and tenancies.

Says Robertson: “One worry that arises out from this is who exactly is thinking of getting out. If it is the small amateur landlords, then policy will have delivered on professionalising the sector, but for many tenants it is these very same landlords who they have invested so much faith in.”

Blog Post from Landlord Zone

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Pushing Capital Gains Tax (CGT) rates up to the levels of income tax could spark a mass exodus of landlords from the market, property experts warn.

This follows a report from the Government’s tax advisers suggesting that Chancellor Rishi Sunak could bring CGT – currently 28% on residential property and 20% on other assets – into line with income tax so that higher rate taxpayers face a flat rate of 40 or 45%.

It also suggests reducing the annual CGT allowance threshold from £12,300 to £5,000 or less.

David Alexander, joint CEO of apropos, says this potential increase in tax payments is extremely risky and would have an enormously detrimental impact on the housing market, stifle growth and discourage investment.

“Any large-scale exit would flood the market with homes, depressing prices at a time when the property sector is in desperate need of support,” he says.

Paul Shamplina of Landlord Action, says: An increase in CGT is likely to prompt a flood of landlords selling up before the deadline, further reducing the supply of rental properties available to tenants.”

Income vs gain

Currently, doing up properties to sell them on is considered an income while holding onto property and then selling it for a profit is counted as CGT.

The Office of Tax Simplification’s (OTS) defends its recommendations, as it says not understanding the difference between these investing and trading activities can lead to non-compliance, where someone can incorrectly declare a capital gain rather than a trading profit.

“A greater alignment of rates would create a more neutral tax system, in which people were left free to make the right decisions for their business or family without the complexity of having to worry about unwittingly stumbling across the wrong side of a boundary,” it says.

It also acknowledges that landlords find it difficult not knowing their final CGT liability until they know their annual income tax liability, particularly when completing a 30-day tax return for residential property.

About £8.3bn of CGT was paid in 2017-18, compared with £180bn of income tax by 31.2 million individual taxpayers.

Blog Post from Landlord Zone

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The government has issued a new How To Rent Guide – the critical document that both letting agents and landlords have to issue to tenants.

This is more than just a bureaucratic nicety, as failure to serve the most up to date guide invalidates any future Section 21 action.

The Ministry of Housing, Communities and Local Government, which has issued the update today, says the most recent previous version was dated August 7 2019 – this is now out of date.

Today’s new version is here.

In the light of the importance of serving the correct version on tenants, the Guild of Letting and Management is advising agents and landlords not to save the document as a PDF but instead save the website address so there will be access to the most up to date version.

In the event of further action, agents and landlords must also prove the document has been saved on the tenant. The guide can be served in hard copy format or – with the consent of the tenant – via email in PDF form.

Failure to serve the document correctly, and to have proof of it being served, will invalidate any Section 21 (form 6a) served.

Blog Post from Letting Agent Today

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The National Union of Students (NUS) has called for more support for students who test positive for Covid in private accommodation before the Christmas break.

New Government guidance on plans for the mass testing of students so they can travel home once national restrictions end on 2nd December, means if someone tests positive before they leave they’ll need to self-isolate for ten days.

It says that moving all learning online by 9th December gives these students enough time to isolate and still get home for Christmas.

Under current guidelines, their housemates will have to isolate too, however, if they’re living alone – particularly in an HMO – it could be a challenge to shop and feed themselves.

The Government advises that isolating students living in HMOs should discuss their circumstances with both their landlord and their college, who should, “work in tandem to ensure that necessary support is in place”.

However, the NUS says following massive lockdowns in student halls, students are unsure as to who counts as their household in cases of isolation. It wants clear and supportive guidance alongside the mass testing programme.

NUS President Larissa Kennedy (pictured) says: “We have seen universities try and get away with some shocking behaviour, including charging over £200 for a fortnight’s food for students.

Students deserve better than being extorted while they are vulnerable; it’s vital that they get wellbeing support and free food if they are unable to leave their accommodation – this includes those in private housing.”

Despite universities’ best efforts, many students contracted the virus within days of arriving on campus earlier this term. An estimated 40,000 students have become infected while in their university towns, leading to thousands having to isolate.

Blog Post Landlord Zone

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