Year: 2020

The Royal Institution of Chartered Surveyors warns that rents are likely to stagnate for the rest of the year – although they are not expected to fall despite the market standstill.

In its latest residential market survey it says: “In the lettings market, tenant demand was more or less stable in the three months to March (non-seasonally adjusted series). Alongside this, landlord instructions fell once more, with a net balance of minus 32 per cent of contributors noting a decline.

“The virus outbreak has had a significant negative influence on near term rental growth projections, which slipped into negative territory during March.

“While rents are now seen stagnating over the next 12 months, medium term projections have only been downgraded slightly compared to the February figures, with average annual growth of 2.5 per cent anticipated through to 2025.”

As we reported on Estate Agent Today just before the Easter weekend, RICS has called for a stamp duty holiday as “one of the ways to reactivate the housing market quickly as a short-term measure.”

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The proportion of homes bought last month by buy to let investors plummeted to a record low of just eight per cent.

The figure – produced by the research department of Countrywide’s high-end brand Hamptons International – contrasts sharply with 14 per cent recorded for the same month last year.

In December 2019, landlords bought 20 per cent of the residential properties transacted in London – last month, it was merely four per cent.

Not only did March see the rapid spread of the Coronavirus throughout the UK in the second half of the month, but it was also the final weeks before the tax changes which mean landlords can no longer deduct mortgage expenses from income made from rent.

The National Residential Landlords Association’s policy director Chris Norris says: “The fall in landlord purchases is not surprising. Tax increases, proposed changes to possession rules and other regulatory changes had already led to a fall-off in investment. The coronavirus has just added to this.

“This is all leading to a serious housing crisis in the private rented sector unless the government changes tack and starts supporting landlords, giving them the confidence to start investing again so that supply is able to meet the rising demand.”

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Families living in private rented accommodation are more exposed to the economic shock of the Coronavirus than homeowners, which could mean big rent arrears for the lettings industry.

That’s the warning today from the Resolution Foundation’s latest Housing Outlook report.

It claims that homeowners are relatively well protected against big income shocks compared to previous recessions. They can request a three-month mortgage holiday, and are already benefitting from record low interest rates.

While many households may be fearful of falling house prices, the foundation suggests they are less likely to find themselves in negative equity than in previous recessions as a result of mortgages being issued with lower average loan-to-value ratios in recent years.

However it accepts that owners with high LTVs however could still find themselves in big trouble should they lose their jobs.

But in contrast, private renters are far more exposed to housing stress if their incomes fall.

They already face the highest housing costs as a share of their income –  31 per cent, compared to 13 per cent for owners – and the foundation claims that letting agents private landlords have no obligation to offer rent holidays.

But it warns that even with additional government help through higher Housing Benefit, many private renters in particular will still face significant shortfall in their housing costs should they lose their jobs.

“Private renters could rapidly build up considerable rent arrears in this situation, at which point they are entitled to just three months’ notice from their landlord to vacate in England and Wales, or six months in Scotland” says the foundation.

Lindsay Judge, principal research and policy analyst at the Resolution Foundation, says: “The current economic crisis is having a profound effect on family incomes, particularly when people lose their jobs. With housing costs often being the single biggest fixed expenditure for families, the ongoing crisis will cause housing pressures to mount as people struggle to pay their bills.

“The government has announced welcome support to renters with a £1 billion boost to Housing Benefit. But this help risks being undermined by the benefit cap, which will leave many families with a shortfall in support.

“The government can help address private renters’ housing pressures by suspending the benefit cap, and extending the grace period landlords must give tenants building up arrears before they can be given notice to leave.”

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Hard campaigning by tenants’ organisations and a lack of clarity from government had led many renters to mistakenly believe they off the hook during the crisis, it has been claimed.

The campaigning efforts of tenants’ organisations and a lack of guidance from the government have led many renters to believe that they no longer have to pay their rent, the National Residential Landlords Association (NRLA) has warned.

It says large numbers of members are contacting the organisation to report how tenants are claiming that they are no longer required to pay their rent during the Coronavirus pandemic.

As LandlordZONE has reported recently, this includes the London Renters’ Union, which on Friday issued a ‘rent stop’ template letter for renters to send their landlords and raised 102,000 signatures for a petition, while the National Union of Students has also called for rent payments to be suspended.

In response, the NRLA has called on government to provide strong guidance to the public that they should carry on paying their rent where possible, and that landlords are not being given the automatic right to have a three-month mortgage holiday

“THIS IS NOT A GREEN LIGHT TO TENANTS EVERYWHERE TO STOP PAYING THEIR RENT.”

Ben Beadle, NRLA

“The mortgage repayment holiday is only available for landlords who are struggling to make their payments because their tenants are unable to pay part or all of their rent as a direct result of the coronavirus [pandemic] and through no fault of their own,” says the NRLA’s its Chief Executive

“What it does allow is that where a tenant is having genuine difficulty in meeting their rent payment because of a loss of income, landlords have much greater flexibility to agree a mutually acceptable plan with the tenant to defer the rent due.

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London Renters Union ignores government advice that both sides should agree a payment plan and instead the letter urges landlords to allow their tenants to stop paying their rent.
Housing campaign group the London Renters Union has published a letter that the organisation urges renters to use in order to negotiate a rent suspension with their landlord.

Written in a somewhat breezy style given the ramifications for landlords if they were to let their tenant stop paying their rent, it also ignores the government’s advice, which is that tenants who are struggling should agree a payment plan with their landlord.

The guidance says: “An early conversation between landlord and tenant can help both parties to agree a plan if tenants are struggling to pay their rent.

“This can include reaching a temporary agreement not to seek possession action for a period of time and instead accept a lower level of rent or agree a plan to pay off arrears at a later date.”

The letter also assumes a somewhat bleak financial for the renter sending the letter, accepting that they are living ‘from paycheck to paycheck’.

This is the missive that the London Renters Union is urging tenants to download and send to their landlords.

The Letter

“Dear X

We hope you’re keeping well in these really strange and fast-changing circumstances!

We’re watching developments about COVID-19 very closely and are, as you might imagine, really concerned.

We work in ________ and live paycheck to paycheck each month. We’re going to be earning much less over the coming months.

We rarely have more than one month’s rent available at any one moment.

[Add more details about your situation – make it as personal as you feel comfortable to]

For these reasons, we kindly request a suspension of payments until the situation improves.

Many renters across the country are in a similar situation. As you might have heard, the government has announced a three month mortgage holiday for all landlords whose tenants are experiencing financial difficulties due to coronavirus.

The government and the National Residential Landlords Association are asking landlords to show compassion.

We hope, for ourselves and for everyone’s sake, that life becomes more stable as soon as possible. Until then, it seems all we can do is be pragmatic, avoid panic, and support each other as best we can. We hope you can consider this.

Do let us know if speaking on the phone would be helpful.

Looking forward to hearing your response.

Best wishes from us all.”

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Three months after its initial launch date, the National Residential Landlords Association has today gone live.

The UK’s two leading landlord associations have at last merged to create the National Residential Landlords Association (NRLA).

The union was first announced in September last year but both the merged organisations, the RLA and the NLA, postponed the original launch date of January 1st after its original schedule proved ‘too ambitious’.

In September it was also revealed that the NRLA had a new chief executive in the form of Ben Beadle (left), a social housing executive.

In January Beadle said that despite a target of January being set at the time of the members’ vote last September, this was ‘ambitious and technicalities have put dates back by a few weeks’.

Today’s announcement, three months later, has revealed that the new merged organisation is to be chaired by Jodi Berg (pictured, top).

She replaces the two outgoing chairs of the NLA and RLA, Alan Ward and Adrian Jeakings, who remain on the NRLA board.

Berg’s experience includes a non-executive directorship of the Tenancy Deposit Scheme and chairmanship of public bodies including an NHS Trust, the Administrative Justice Forum and a probation service.

She says: “I think the new NRLA has a bright future and it is great to be on board from day one.

“As an association we now represent more than 80,000 landlords and the more we grow this number, the stronger our voice will be.

“We need to encourage landlords to come together and support each other and work with other areas of the sector to bring about positive change for both landlords and tenants.”

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Research by Goodlord shows rapidly slowing market as public heed government’s announcement not to move home.

Lettings activity within England and Wales is fast falling off a cliff-edge, latest industry research shows, although it is far from dead.

Research by rental platform Goodlord reveals that the number of new applications for rented properties has dropped by 25% since the 23rd March when Boris Johnson announced the lockdown.

But activity had begun to quieten several days before his televised announcement and, after comparing day-by-day new rental applications via the Goodlord platform, its researchers reckon yesterday’s activity levels were 44% down on the same day last year.

On the other hand, the pandemic has yet to severely impact the funnel of agreed lets, which are less than 15% down on last year.

“It’s been an unprecedented month for the whole economy and the property market has been at the sharp end of the impact,” says Tom Mundy, COO of Goodlord (left).

“While we’ve seen a dramatic decline in the last ten days compared to 2019, the lettings market is and will continue to be needed.

“As tenancies expire and contract renewals are needed, agents will continue to play a crucial role in ensuring that this process can still be handled quickly and securely and the temporary changes to right to rent mean that can take place almost entirely remotely.

“While no one knows how long the current restrictions will last, we can be confident that a sharp increase in demand will be recorded in the lettings markets as soon as measures are loosened.”

The lockdown has also had one unexpected benefit – void periods have been shortening thanks to a surge in contract completions ahead of the lockdown as tenants rushed to secure a home.

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