Year: 2020

Coming on the day when Britain’s builders started to get back to work – see EYE’s story yesterday – analysis conducted by global property consultancy Knight Frank,  says that Covid-19 and the knock-on impact of the government lockdown will result in 56,000 fewer homes being delivered this year, a 35% drop from 2019.

The firm’s study into private housebuilding has highlighted that national housing delivery will stand at around 104,000 this year.

In London, new housing is set to hit its lowest point since 2014, with 8,000 fewer homes forecasted to be built compared to the five year private housing delivery average, which saw 14,405 completions.

Whilst housebuilding by private developers makes up just one portion of overall housing delivery, the drop will prove a significant setback to the Mayor of London’s yearly target of 55,000 new homes.

Knight Frank’s review of pipeline data suggests that as of mid-April work had been suspended on residential schemes capable of delivering nearly 250,000 new homes across the UK.

Whilst some of these will be on sites at various stages of completion, and on projects due to be delivered over a multi-year timeframe, it is clear that the building hiatus will have a sizable impact on the number of homes built in 2020 and beyond.

Justin Gaze, Head of Residential Development Land at Knight Frank, said:

“Faced with supply chain challenges and a national material shortage, developers are under increasing pressure to adhere to tight social distancing controls, while also coping with an ever dwindling availability of skilled workers.

“This has cast a dark cloud over the capacity for housebuilders to deliver at scale and speed.”

While housebuilders have been setting out their strategies for a phased return to site construction and operating, albeit with strict social distancing protocols, in most cases this will mean a slow and steady return to activity.

Knight Frank noted that; “This is not simply a case of flicking a switch back on.”

The government-imposed lockdown will be reviewed again on 7 May.

Official guidance advises that construction sites can stay open, as long as social distancing protocols are adhered to.

Many housebuilders, however, have opted to shutter sites through the lockdown to protect workers, as well as a result of supply-chain difficulties.

Gaze continued:

“Now is the time for the government to intervene and support the private sector in getting building again.

“There needs to be a pragmatic approach.

“Extending Help to Buy and relaxing planning regulations to give developers greater flexibility on Section 106 and Community Infrastructure Levy (CIL) payments would be greatly welcomed.

“Introducing a Stamp Duty holiday and streamlining the conveyancing process would also be a major stimulus.

“These measures would no doubt act as a real driver for the wider UK economy; helping to create jobs, new housing and ultimately receipts for the treasury via increased liquidation in the market.”

Even under the assumption that housebuilders recommence construction in early to mid-May, getting back up to speed will take time.

There are a myriad of issues related to the supply chain, for example, with question marks over the availability of building materials, as well as delivery, distribution and labour.

Oliver Knight, Research Associate at Knight Frank, said:

“More intangibly, consumer sentiment will also impact recovery, and the fact remains that housebuilders will only build what they can sell.

“In the short-term, this will mean giving priority to restarting and completing sites where there are existing customer orders.

“Of course, the key question which will determine the impact is ‘how long’.

“If Covid-19 disruption is short-lived that could mean the UK can get back on track relatively quickly.

“However, the longer the disruption the greater the pressure on the market and longer the recovery.”

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Latest research from leading lettings agency reveals record number of renters staying put and renegotiating lower rents during March, a trend that is likely to accelerating this month.
Over two thirds of tenants renewed their rental agreements during March and many negotiated lower rents as they stayed put to weather the Coronavirus crisis, a leading lettings index has revealed.

Estate agency Hamptons International says 70% of tenancies that were due to renew last month re-signed their contracts, the second highest proportion to do so since the company’s index began six years ago.

Tenants, aware of the economic problems the Coronavirus crisis was likely to create, have clearly been negotiating with existing and prospective landlords to reduce their outgoings during the year ahead.

Rent renewals

Renewed rents fell across three regions – the South East (-1.4%), the East (-0.4%) and Greater London which recorded the biggest year-on-year fall (-2.2%).

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Also, although the average rent of a newly let property increased to £980 pcm in March, up 1.2% year-on-year, the rate of rental growth more than halved since February, when rents rose 3.3% year-on-year.

And as lockdown measures were enforced during March the number of new applicants registering to rent a home fell by a third compared with the same period in 2019.

“Once lockdown restrictions ease, we expect activity levels to rise. Renting offers more flexibility than buying a home, so as uncertainty rises, so too does the demand for rental homes,” says Aneisha Beveridge, Head of Research at Hamptons International.

“But although demand for rental accommodation is set to increase, and there are already signs of it picking back up again, the longer-term economic damage to people’s jobs and incomes means that rents on newly let properties are likely to fall between 2% and 5% this year.”

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Christopher Pincher has comprehensively dismissed calls from activists, the Mayor of London, lobbyists and fellow MPs to consider a rent increase ban or cap.
Housing minister Christopher Pincher has confirmed that the government will not be introducing legislation to ban or cap rent increases during the Coronavirus crisis.

The comments were made within a written parliamentary statement from Labour MP Barry Sheerman, who asked if the Ministry of Housing was assessing whether a rent cap was necessary during the pandemic.

Sheerman’s question is believed to have been prompted both by Sadiq Khan’s call for a rent cap in the capital, and the looming introduction of rent caps in Scotland.

Pincher also said that the government believes its measures to protect tenants within the private rented sector are adequate including its move last month to delay all new eviction proceedings until June.

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He also said the decision by the Master of the Rolls to suspend all ongoing housing possession cases for 90 days from 27 March also offered tenants additional protection.

“All tenants remain liable for their rent and those who can afford to should continue to pay it,” he said. “At the end of this period, if arrears have built up, landlords and tenants will be expected to work together to establish an affordable repayment plan, taking into account the tenants’ individual circumstances.”

Pincher also claimed that the government’s measures to boost the welfare safety-net with a £7 billion funding increase to Universal Credit, income tax and VAT deferrals would help tenants pay their rent.

“And we’ve increased Local Housing Allowance (LHA) rates so that they are set at the 30th percentile of market rents in each area,” he said.

“These significant financial measures will help to support tenants to continue to pay their living costs, including rental payments.”

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Private landlords want the government to stop local authorities charging council tax on rented homes left empty because of the Coronavirus.

The National Residential Landlords Association says a significant number of rented homes have been left empty because tenants have been unable to take up tenancies, or have chosen to move out to be closer to family during the lockdown.

During this period landlords will become liable for the council tax on the property and have no realistic prospect of finding new tenants.

The association now wants Westminster to tell councils these properties should be exempt from the tax.

A recent survey by the NRLA found that 41 per cent of landlords are concerned about having to cover the unexpected costs of utility bills and council tax.

Now Ben Beadle, NRLA chief executive, says: “It is manifestly unfair for landlords to be asked to pay council tax on properties which are empty, and likely to remain so, because of the impact of the pandemic. Whilst we remain supportive of the measures taken so far by the government, landlords are being asked to absorb more costs at a time when they are least able.

“Unlike most small businesses and the self-employed, there has been no direct support package announced for landlords. Removing this unnecessary burden would at least help those landlords who are struggling to cope with drastically reduced income.”

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Seven out of 10 tenancies that were due to end in March were renewed according to Hamptons International – the highest level recorded in any March since 2008.

Overall demand for rental accommodation across Britain decreased over the course of the month as lockdown measures were enforced.

The number of new applicants registering to rent a home fell by 31 per cent in March compared with the previous month – a time when applicant numbers tend to rise in normal years. However there are signs that applicant demand is starting to increase again, after bottoming out at the end of March.

Meanwhile the stock of homes available to rent increased in March.

There were 11 per cent more homes available to rent in March than in February, yet the supply of homes available to rent is still down year-on-year.  Wales and the Southern regions, including London, saw the biggest increase in the number of homes available to rent.

Some landlords who typically let their properties as short-lets decided to let their properties on a longer-term basis, and this has partly driven the increase in the number of homes available to rent.

An overall increase in supply combined with a reduction in demand suppressed rental growth on new lets in March.

“Once lockdown restrictions ease, we expect activity levels to rise. Renting offers more flexibility than buying a home, so as uncertainty rises, so too does the demand for rental homes” explains Aneisha Beveridge, head of research at Hamptons International.

She continues: “But although demand for rental accommodation is set to increase, and there are already signs of it picking back up again, the longer-term economic damage to people’s jobs and incomes means that rents on newly let properties are likely to fall between two and five per cent this year.”

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The government has won its appeal against a ruling that its Right to Rent scheme breaches human rights laws, it was revealed today.

Under Right to Rent, private landlords face potential imprisonment of up to five years if they know or have “reasonable cause to believe” that the property they are letting is occupied by someone who does not have the right to rent in the UK. They also face heavy fines.

The NRLA objected to the scheme on the basis it is turning landlords into untrained and unwilling border police and is encouraging them to discriminate. It went on to call for the government to scrap it altogether.

Judicial review

Following a Judicial Review of the policy secured by the Joint Council for the Welfare of Immigrants (JCWI) and supported by the RLA and Liberty last March, the presiding judge concluded discrimination by landlords was taking place “because of the scheme.”

In his judgment he said this was “logical and wholly predictable” when faced with potential sanctions and penalties for getting things wrong.

However that decision has now been overruled, following an appeal by the government, heard at the Court of Appeal in January.

Disappointing

John Stewart, NRLA policy manager said: “This is disappointing news as judges agree the scheme is having little impact in meeting its objectives, yet its putting a huge amount of pressure on landlords who are torn between meeting their right to rent obligations on the one hand and being accused of discrimination on the other.”

The JCWI said it plans to appeal the decision at the Supreme Court.

Written by Sally Walmsley

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An inquiry into impact of the coronavirus crisis on homelessness, rough sleeping and the private rented sector has been launched by the Housing, Communities and Local Government Committee.

It will examine how effective government support has been in supporting individuals in the private rented sector or who are homeless.

It will also look at what strategies will need to be put in place to support both groups in the long-term, once current measures expire.

In particular, the Committee is interesting in finding out:

• How effective has the support provided by MHCLG and other Government departments been in addressing the impact of coronavirus on those in the private rented sector, rough sleepers, and the homeless?
• What problems remain a current and immediate concern for these groups?
• What might be the immediate post-lockdown impacts for these groups, and what action is needed to help with these?

The NRLA has already lobbied the government on a range of measures that would help landlords to support tenants during the pandemic.

It has called for the extension of safety certificate deadlines, a freeze on additional council tax charged on empty properties and a loan scheme to help landlords who need it.

The association is now preparing a written submission outlining the impact of coronavirus on PRS landlords, which will be published on the news site and social media channels.

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Landlords have supported calls from the Mayor of London to ensure the benefits system covers the cost of private rents for those tenants adversely affected by coronavirus.

Sadiq Khan is calling on the government to introduce a new ‘triple lock’ of measures aimed at protecting private renters.

He has urged the government to increase welfare support for renters by restoring local housing allowance rates to median market levels and completely scrapping housing allowance caps for those that suffer financial hardship as a result of the pandemic.

In a statement Ben Beadle, Chief Executive of the National Residential Landlords Association said: “Recent polling has indicated that just two per cent of private tenants have had to stop paying rent due to the pandemic whilst 78 per cent have not had to make any changes to their living situation.

“This shows that the vast majority of tenancies are continuing as normal which we welcome.

“For those tenants who are struggling, by far the best solution is to ensure they are supported to prevent arrears building.

“We therefore welcome the Mayor’s calls to increase the Local Housing Allowance.

“In addition, we repeat our call on the government to scrap the five week wait for the first payment of Universal Credit immediately and ensure tenants can have the housing element of the Credit paid directly to their landlord if they wish.

“This would provide tenants and landlords with the confidence that rents are covered and debts will not arise.”

Looking to the future, he added: “Whilst the current situation is challenging for everyone, we need to avoid frightening households needlessly about the security of their homes.

‘The vast majority of landlords are doing everything possible to support their tenants and sustain their tenancies at this difficult time. We will continue to ensure they have all the guidance and support they need to continue to do so both now and into the future.”

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Landlords are calling for a six-month extension to the validity of all gas and electrical safety certificates to cover for the impact of the coronavirus.

This comes in response to a survey showing that 38 per cent of landlords are struggling to source maintenance contractors to undertake required work and just over a third are having difficulties undertaking work in their properties because of either themselves, or their tenants, self-isolating.

Tenant concerns
With tenants also concerned about letting people into their rental properties, the National Residential Landlords Association (NRLA) is calling for gas and electrical safety certificates expiring over the six months period from 1st April to be extended for six months.

This would be in line with the government’s approach to MOT certificates.

This would provide the time that landlords need to ensure routine, but legally binding checks, can take place at a point when the danger of spreading the virus in rental properties is at least reduced.

The NRLA is also calling on the government to delay until next year the introduction of new routine Electrical Installation Condition Reports which are due to come into force from 1st July.

These will involve inspectors checking the wiring in all rooms of a property, possibly taking a number of hours, making it impossible for tenants to properly isolate.

Ben Beadle, Chief Executive of the NRLA, said: “Whilst landlords should ensure that urgent work to ensure properties are safe for tenants is carried out, routine maintenance and checks need to be delayed to prevent the spread of coronavirus.

“Extending the life of gas and electrical safety certificates will protect landlords and tenants from unnecessary contact and provide landlords with legal protection from enforcement action where they are simply unable to get such work undertaken through no fault of their own.”

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The new National Residential Landlords Association has backed calls from the Labour Mayor of London to ensure the benefits system covers the cost of private rents for those tenants adversely affected by Coronavirus.

The NRLA’s chief executive, Ben Beadle, says: “Recent polling has indicated that just two per cent of private tenants have had to stop paying rent due to the pandemic whilst 78 per cent have not had to make any changes to their living situation. This shows that the vast majority of tenancies are continuing as normal which we welcome.”

But he says that for those tenants who are struggling, by far the best solution is to ensure they are supported to prevent arrears building.

“We therefore welcome the Mayor’s calls to increase the Local Housing Allowance. In addition, we repeat our call on the government to scrap the five week wait for the first payment of Universal Credit immediately and ensure tenants can have the housing element of the credit paid directly to their landlord if they wish.

“This would provide tenants and landlords with the confidence that rents are covered and debts will not arise.”

London’s Mayor, Sadiq Khan, has called on the government to introduce three specific measures during the pandemic to ‘protect’ private renters.

The first is to increase welfare support for renters, suspend the Benefit Cap, restore Local Housing Allowance rates to median market rents, and cover any shortfall in rental payments of private tenants unable to pay them due to COVID-19.

Secondly, Khan wants section 8 to be made discretionary, which would mean that once the temporary suspension of court proceedings for evictions is lifted in June, agents or landlords could not evict tenants with arrears built up during the pandemic.

Thirdly, Khan has repeated his demand for an end to what he refers to as “no fault” section 21 evictions.

“The government has failed to propose measures to ensure that the full rental costs of those affected by COVID-19 are covered. Instead, they are asking landlords and tenants to agree an ‘affordable repayment plan’ for any rental arrears that build up during the crisis. It is unrealistic to expect landlords and tenants to simply sort this out between themselves” says Khan.

“This could mean many tenants facing high rental debts which they cannot repay, leading to a spike in evictions once the temporary suspension of court processes is lifted.

“This will particularly impact Londoners on low incomes, who are already at a significant disadvantage in London’s rental market and are a greater risk of being exploited by rogue landlords and letting agents.”

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