Year: 2020

Rental demand has dropped significantly across London and other major UK cities as a result of the pandemic.

When comparing current levels of rental stock to this time last year, there has been a decline of 12 per cent across the UK’s major cities, while in London this drop is more pronounced with 20 per cent fewer rental properties now on the market.

Belfast (down 57 per cent), Cambridge (down 36 per cent) and Newport (a drop of 27 per cent) have seen the largest declines; however, Edinburgh, Swansea, Leicester, Sheffield, Leeds, Southampton and Plymouth have all seen more rental homes hit the market.

In London, all areas but the City of London have seen a decline in property stock hitting the market, with Barnet the worst hit with a drop of 31 per cent.

The figures come from an analysis made for online platform Howsy.

When comparing tenant demand to this time last year, there has been a drop of five per cent across 23 major UK cities and by three per cent across London.

The largest declines were in Oxford and Plymouth, where demand has dropped 11.3 per cent since last year.

In London, the City of London has seen rental demand reduce by 10 per cent year on year, while Southwark and Tower Hamlets are down eight per cent.

“While demand has waned somewhat on an annual basis, it is stock levels that have declined the most and there are still plenty of tenants looking for rental properties for those landlords still striving to provide them” says Howsy founder Calum Brannan.

“For these landlords, remaining visible on the market despite the wider landscape is the sensible approach to ensure any void periods are as short as possible and any financial loss is as limited as can be.”

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One of London’s largest lettings agencies is warning its landlord clients to only use mortgage payment holidays offered by lenders as a last resort.

Chestertons says there’s a risk that taking advantage of the holiday offer could potentially affect their ability to borrow in the future.

As part of its fight against the Coronavirus, the government has asked all mortgage lenders offer their customers payment holidays and has pledged that this will not affect an individual’s credit score.

However, Chestertons and its recommended mortgage broker – Springtide Capital – says that the missing payments will still show on an individual’s credit report and there is no way of knowing how banks will view or interpret that information in the medium to long term.

A statement from the agency says: “Every lender uses their own algorithms and underwriters to work out whether or not they want to take the risk of lending to someone. The algorithm and underwriters will look at an applicant’s whole credit report and use certain information to calculate their own credit score, which could be very different to the public credit score available through Experian etc.”

Chestertons gives the examples of having multiple recent addresses or erratic payment history for a phone bill, which may not have a dramatic effect on a credit score but could still affect the lender’s view of the borrower.

A spokesperson for the agency adds: “Payment holidays are crucial for many people whose incomes have been affected by this pandemic and their introduction came as a big relief, but we are aware of many people who are not in any particular financial difficulties making enquiries about them.

“They often see it as an opportunity to improve their cash liquidity or to get ‘free money’ and have applied to their lenders, unaware of the potential consequences, when in fact switching to interest-only might have been a more appropriate move.“

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Research by the National Residential Landlords Association and the Which? consumer body has revealed that some 53 councils in England alone operate licensing schemes, or are about to introduce them.

This is despite a long-running pledge by government to decide the future of such licences following an independent review which reported last summer.

For the latest analysis, the NRLA submitted freedom of information requests to councils across England between November 2019 and February 2020.

It received more than 200 responses, with 53 councils confirming they operate additional or selective schemes – or both – or are in the process of launching such a scheme. London has 20 boroughs operating a scheme.

Government advice to local authorities has been that they should consider deferring the introduction of new or revised licensing schemes while the Coronavirus outbreak remains a major issue.

However, Waltham Forest borough council has started a new scheme applying to some 6,000 HMOs while the NRLA has written to another authority – Coventry – which says it intends to bring in a licensing scheme from May 4.

The entire licensing debate is highly controversial with many trade bodies within the industry accusing councils of using the schemes merely to raise funds rather than improve rental standards, while poorly enforcing the existing regulations.

On the other hand many local authorities defend the schemes and one – Labour-controlled Liverpool – is seeking a Judicial Review of a decision by the government to deny it the right to extend its existing licensing system which it describes as ”life saving.”

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A short-lets rental platform says it has evidence to show that nights booked in April are down 90 per cent compared to the same month last year.

Lavanda has released case study data illustrating the scale of the market collapse because of Coronavirus.

It uses the example of a short-term rental manager operating a 300 unit portfolio.

The study highlights that, whilst some very small pockets of demand do prevail, new bookings are being won at significantly reduced rates.

Nights booked in April 2020 are down by 90 per cent compared to the same month of 2019, cancellations as a percentage of bookings have increased 118 per cent year on year, and average daily rates – the amount paid by clients – is 30 per cent down year on year.

“As the world battles COVID-19, the reality on the ground for short-term rental operators makes grim reading, with many great businesses now facing an existential threat” comments Frederik Lerche-Lerchenborg, Lavanda’s chief executive.

“This reality should not be dressed up, however it’s equally important that we remind ourselves that there’s light at the end of this tunnel; as global travel restrictions and social distancing measures are eased, demand to travel will bounce back fast, and it will be stronger than ever before. The problem is that nobody knows exactly when demand will return, or what shape it will take; it is this uncertainty that makes the current context so challenging.”

“In these unprecedented times, business owners and leaders have to act fast and take tough decisions if their businesses are to survive. There will be no second chances; nobody wants to look back wishing they’d done more or acted differently” continues Lerche-Lerchenborg.

He says that what he calls “the smartest business leaders” are planning for the worst, whilst hoping for the best – as evidenced by Airbnb’s $2 billion fundraise over recent weeks.

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Started by a student in Belfast who claims it is unfair to charge tenants rent when campus studying has been suspended, the petition has garnered increasing support after the BBC and Guardian newspaper gave it coverage.
An online petition calling for students to be let off paying rent this term has been signed by more than 70,000 people.

With universities closing their doors, it asks all landlords to suspend rent payments for students who have had to return home.

Queens University student Jamie Finnegan in Belfast started the change.org petition and believes it’s unfair for students to pay hundreds of pounds a month for a room they’re not using, when most already face other bills every month.

“With hundreds of people being told not to come back to work due to the pandemic, students are going to be left financially unstable and unable to pay for their rent, regardless if they are living there or not,” he says.

Finnegan believes that student accommodation providers should realise that their cancellation policies don’t cover scenarios such as the unforeseen pandemic.

He adds: “It’s categorically unfair and greedy to charge students for rent if they are unable to live in their accommodation.”

While some large student accommodation companies and university-run halls of residence are now giving students the option to terminate their contracts early without financial penalty, small private landlords are now being pressured to follow suit.

Early release
The National Union of Students has demanded that every landlord should offer students a no-penalty early release from tenancy contracts for the current and next academic year.

It wants an end to all evictions during the crisis, with rent subsidies, reductions or waivers for six months for those impacted by Coronavirus, and no rent increases for the next 12 months.

Around the country, hundreds of university students have also signed up to a rent strike, including those renting off-campus at the University of Warwick.

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Shelter says its research among renters indicates that a quarter of tenants or 2.3 million people will lose their jobs and be unable to pay their rent over the next three months.
A quarter of renters say they expect to lose their jobs over the next three months as the jobs market contracts during the downturn caused by the Coronavirus, a leading charity has claimed.

The research by Shelter also reveals that these people will be unable to pay their rent if they lose their jobs, indicating just how precarious many low income renters’ personal finances are.

Worryingly for landlords, the research also indicates that up to 2.3 million are likely to join benefits system as they turn to the government to pay their rent, and that the creaking Universal Credits system will not be able cope.

Nearly a million extra people have already begun claiming Universal Credit since the Coronavirus crisis began, a tenfold increase compared to normal times.

Shelter points out that the gap between the housing element of Universal Credit and the rents that tenants pay in many areas of the UK will mean landlords will have little choice but to accept lower rent payments as tenants struggle to pay the shortfall.

Lowest third
The housing element only covers the lowest third of market rents in an area, meaning for families in a two-bedroom home, the shortfall is as high as £400 a month outside of London, and up to £1,227 in the capital.

Shelter is calling on the government to increase housing benefit payments so they cover the average cost of local rents. It says this emergency measure is essential to help tenants and landlords through the financial shock caused by the virus.

Polly Neate, chief executive at Shelter, said: “We’re facing an onslaught of people suddenly unable to afford their rent, at a time when people need to stay put and cannot safely move to a cheaper home.

“To avoid spiralling debt and needless evictions once the ban lifts, the government must increase the housing element of Universal Credit so that it covers the average cost of local rents.”

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Agents and other property professionals have a week to submit their views to an enquiry into the impact of Coronavirus on the private rental sector.

The enquiry has been set ups by the Housing, Communities and Local Government Select Committee in Parliament; its terms of reference include examining how effective UK government support has been in helping individuals in the private rented sector during the crisis.

The Committee invites written evidence and in particular the committee is interesting in finding out:

– how effective has the support provided by MHCLG and other Government departments 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 committee chairman, Labour MP Clive Betts, says: “It is vital that those in precarious living situations are supported by the Government. We must ensure that people without homes and those sleeping rough are protected during this health crisis.

“Equally, people cannot be forced to leave their homes at a time when finding a new place to live simply is not possible.

“However, we must also look at what will happen a month from now and beyond. Where will those currently housed in hotels go when the [current] scheme expires? What happens in three months’ time when the eviction ban lapses for people who have no job and now owe three months’ rent?”

Evidence must be submitted by next Friday, May 1 2020.

The committee expects to hold an evidence session in early May onwards to hear directly from some of those submitting evidence about what is being done and what further support is needed.

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Landlords who want to claim possession of a property must now provide copies of their gas safety certificates, EPC and how t

o rent booklet as part of their application.

The government has introduced the new requirements in its updated N5B form for England.

The N5B is the form landlords must fill in after the use of a Section 21 Notice for so called ‘no fault’ possession if they are making a claim in the County Court

In addition to the changes above the revised form also asks the landlord to fill in the date of the last three gas safety certificates and confirm a certificate was served to the tenant before they occupied the property.

It has also brought in an updated statement of truth, in line with changes to the civil procedure rules being brought in on Monday.

Landlords will also need to answer questions around prohibited fees in the tenant fees act.

Supplying EPCs and other documents has always been good practice, but the new form makes it mandatory.

The new form can be found here.

Written by Sally Walmsley

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A London council has pressed ahead with the launch of a borough-wide additional licensing scheme despite the lockdown and uncertainty created by the Coronavirus outbreak.

The London Property Licensing service reports that Waltham Forest borough council has started the scheme, which applies to some 6,000 HMOs.

It was thought that many authorities launching licensing schemes or extensions to existing schemes would hold fire until the pandemic was under control; the government, the trade group safeagent and London Property Licensing itself, have called on councils too defer new schemes as appropriate.

However, Waltham Forest – which originally approved its new licensing system last July – has pressed ahead anyway.

Its new additional scheme extends HMO licensing to all house and flat shares occupied by three or more people who are not all related. So-called section 257 HMOs – certain buildings converted into self-contained flats – have been excluded from the scheme.

The council has introduced a new online application system with the standard licence application fee of £1,000 per property, payable in two instalments; there are also early-bird discounts.

London Property Licensing reports that landlords and agents who have not yet applied will find themselves in breach of the licensing scheme unless they can prove a defence of reasonable excuse.

You can see the London Property Licensing report here.

And another council has done the same thing – Coventry intends to bring in a licensing scheme from May 4.

The National Residential Landlords Association has written to the Council asking it to defer.

The NRLA’s policy director Chris Norris says: “The guidelines are there to protect tenants and landlords from unnecessary contact. Where a licensing scheme is introduced, landlords have to go into their properties to check that they meet the licensing obligation and maybe need to carry out non-essential works. This exposes them and the tenants to an enhanced risk of contagion.

“Several local authorities have done the right thing and paused the introduction of new licensing schemes in response to the crisis including Luton and Newcastle and we are asking Coventry to do the same. It would be thoroughly irresponsible of the Council to ignore the guidelines and go ahead with their plans.”

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The Court of Appeal has ruled in favour of the government’s controversial Right To Rent scheme, overturning a decision reached last year by the High Court.

In early 2019 the High Court found that the Right To Rent legislation was unlawful and racially discriminatory because it caused agents and landlords to discriminate against British citizens with ethnic minorities and against foreign nationals.

The scheme was introduced in 2015 following a six-month trial in the Midlands.

Under the legislation, agents and landlords must check the immigration status of prospective tenants. An agent or landlord found to have rented to someone without the appropriate immigration status could be fined up to £3,000 and would receive a criminal prosecution.

However, yesterday the government has won an appeal and Right To Rent remains in place.

Appeal Court justices Davis, Henderson and Hickinbottom agreed that the scheme was discriminatory, but found that it did not violate human rights legislation. Now it will be for MPs and the government to decide whether the racial discrimination is ‘greater than envisaged’.

The Joint Council for the Welfare of Immigrants was the main organisation behind the original High Court case, and Chai Patel, legal policy director for the JCWI, says: “At a time when our lives depend on our ability to stay home at home safely, ethnic minorities and foreign nationals are being forced by the government to face discrimination in finding a safety place for them and their families to live.”

He continues: “The Home Office has always maintained that this racial discrimination wasn’t caused by the scheme. Now we have two court rulings confirming that the government is causing racial discrimination in the housing market against ethnic minority British people, like the Windrush generation.”

However, immigration minister Chris Philp welcomes the decision and says: “As we have made clear throughout, the scheme ensures that only those with a legal right to be in the UK are able to access benefits and services, and discourages people from entering the country unlawfully. This is also a question of fairness to UK citizens and the many people who come to the UK legally who all need to access housing.”

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