Year: 2020

Paul Shamplina, the founder of Landlord Action and star of a Channel 5 programme on evictions, says he fully backs the extended notice period required for possession during the Coronavirus outbreak.

From the end of last week, the emergency Coronavirus Act extended the notice period required for possession using Section 8 and Form 6a (Section 21) from two months to three months.

“I have worked with landlords for 27 years, been through two recessions and seen the crippling effect that falling into rent arrears can have both on landlords and tenants” says Shamplina.

“My number one piece of advice is ALWAYS communication and now, more than ever, I am urging landlords to work with their tenants. Pick up the phone, drop an email, send a text, reach out to see how they are affected by this crisis and similarly explain how it is affecting you.

“Given the scale of the crisis we find ourselves in, no tenant should be evicted as a result of being affected by Covid-19.”

He says that he accepts some in the industry are concerned that the Act – previously thought to completely ban evictions for the next three months – does not formally prevent landlords from serving a notice of intention to possess.

Instead it only extends the notice period that a landlord is required to serve on a tenant from two months to three months.

“However, I would point out that ongoing cases are already being adjourned, court buildings are closing, and evictions cancelled.

“[Last week] the London Bailiff Centre contacted us [at Landlord Action] to say all evictions in March and April have been postponed and we have even had Section 21 possession claims sent back to us in the post. In reality, landlords may not be gaining possession of their property until the end of the year because of the new legislation change and delays to the court system, so I would advise landlords to work with their tenants as much as possible”

He also makes a plea to tenants to realise that the vast majority of landlords are small-scale owners with one or two properties. Their ability to prop tenants up will be limited too, especially if their own circumstances have changed.

“The new measures do not end a tenant’s liability for rental payments, just as a mortgage holiday for landlords does not exempt them from repaying the bank, it simply delays it” continues Shamplina.

“That is why it is in the best interests of all tenants and landlords to work together, understand each other’s limitations and establish a reasonable payment and review plan when the time is right.”

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Legal expert warns landlords that the eviction process faces a perfect storm after the pandemic ends, and to prepaer now rather than wait until restrictions are lifted.

Landlords who have a pressing need to evict tenants once the government’s Coronavirus evictions restrictions have been removed should get ready now, a leading legal expert has warned, and not wait.

Tim Frome, who is Legal Director of Landlord Action, says the evictions ban, the temporary shutting of the court system for landlords and the government’s promised changes to pre-action protocols will all create significant problems once the crisis is over.

Although landlords may be keen to help tenants who have struggled financially during the crisis or lost their jobs, there are many landlords who have problem tenants whose rent payments stopped before the crisis hit.

Once evictions can start again, landlords face extra delays to an already slow process. Those who are not prepared could face waiting for up to a year to get their properties back.

Seven months
“Even if the system worked perfectly and landlords stuck to best practice, it can take up to seven months to go from a tenant defaulting on their rent to the bailiffs arriving, assuming they refused to vacate,” he says.

Frome says all too often landlords do not serve notice as soon as a tenant has defaulted on their second month’s rent payment. Therefore, tenants are often four to five months behind on their rent by the time Landlord Action issues a claim at court.

“It then takes four to eight weeks to get a hearing date, then between one week to 28 days for possession depending on the case and the tenants’ circumstances,” says Frome. “It then can take another two months to get the bailiffs in if they refuse to vacate.”

The government’s promised changes to pre-action protocols will further elongate the process, as it will require tenants and landlords to spend longer trying to agree a payment plan and trying out other solutions before going to court.

“For these reasons, landlords must be ready before the Coronavirus restrictions are relaxed or ended,” says Frome.

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Research by a leading mortgage brokers reveals both small, medium and large lenders suspending or severely reducing their buy-to-let mortgage ranges.

Lenders are pulling the plug on mortgage applications and reducing their buy-to-let product ranges, leaving landlords struggling to find deals.

Online buy-to-let mortgage broker Property Master warns that the buy-to-let mortgage market is going into reverse as the impact of the Coronavirus begins to bite, with some lenders even quitting the market for the foreseeable future.

“Landlords are finding that their borrowing options are being drastically reduced as lenders respond to this new record low base rate environment and fears of falling house prices by withdrawing entire product ranges,” says chief executive Angus Stewart.

Products withdrawn

“We have had clients mid-way through a mortgage application only to find the process is halted and the product withdrawn before they can reach completion and the release of funds.”

It reports that Saffron Building Society, which offered a range of mortgages including for portfolio and limited company landlords, now has no products available, while The Melton Mowbray Building Society and Vida have followed suit.

Together Money has suspended lending in both the buy-to-let and residential market, and Barclays has withdrawn all its products for portfolio landlords.

The Mortgage Works and HSBC have both withdrawn their tracker mortgages for the foreseeable future, while other lenders are tightening criteria; Kensington Mortgages, for example, has reduced maximum loan to value lending criteria down from 85% to 75%. Some lenders have increased rates despite the 0.65% fall in base rate.

Stewart adds: “We would urge lenders to continue to support landlord customers, especially those who were moving successfully through the mortgage application process and would otherwise have expected to be shortly in receipt of a loan.   Similarly, we would urge banks to stand by the commitment made by the Government to provide payment holidays to landlord customers.”

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A leading supplier says the current market standstill is an opportunity for the industry to rethink how short lets can be regulated in line with the rest of the private rental sector.

No Letting Go, the UK’s largest provider of inventory services, says that one immediate issue highlighted by the Coronavirus crisis is that the recent move by some residential landlords towards short lets on Airbnb and similar platforms has now been hit by travel lockdowns in the UK and many other countries.

A report from the UK Short Term Accommodation Association suggests that some 70 per cent of short-term rental bookings have been cancelled since the outbreak of coronavirus, rising to as high as 90 per cent for some companies.

This has prompted Nick Lyons, chief executive and founder of No Letting Go, to suggest there’s an opportunity in the current ‘market pause’ to reassess how regulation works for an increasingly diverse rental sector.

One of the biggest issues associated with the growth of the short-term lets market is a lack of regulation and enforcement, according to No Letting Go.

In London, homes are only permitted to be let on a short-term basis for 90 nights per year. However, it is thought that this rule is widely flouted, with Camden council reporting that 3,400 – or 48 per cent – of available short-let properties in the borough had exceeded the 90-night allowance.

There is also considered to be little or no regulation around property upkeep, tenant vetting or contracts when it comes to landlords letting properties on a short-term basis.

“As the short-term lets industry faces its first major hurdle due to the current global situation, now could be a good time for the sector to consider how it could be better regulated in the future when normal service resumes” Lyons suggests.

“The regulation that is in place – such as the 90-day per year rule – needs to be properly enforced, while there needs to be serious thought given to introducing laws similar to those that traditional landlords must comply with.”

He says the recent creation of a trade body for short lets, the UK Short Term Accommodation Association, is a positive step but more needs to be done to bring the sector in line with the rest of the market.

Lyons warns that a lack of regulation and formal tenancy procedures means properties being let on a short-term basis are at an increased risk of damage. Short-term lets properties also have a reputation for being used as party venues – another scenario in which the chances of damage or theft are significantly higher.

“Our advice for landlords looking to move into the short-lets market is to be careful. Yes, the returns can be impressive but without putting in place necessary measures, you could be putting your long-term investment at risk.

“Meanwhile, for agents looking to manage more short-lets and take advantage of a booming market, it’s vital their management packages offer some protection to landlords.

“This could include a professionally compiled inventory, thorough vetting process, taking deposits and providing access to comprehensive insurance or rent guarantee policies” he says.

And he concludes: “We expect the short-term lets market to continue to grow once the Coronavirus pandemic abates. However, landlords’ properties could be at risk if there is no commitment to further regulation in the sector, so it would be good to see a concerted effort to see more protective measures introduced.”

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Demand for rental properties with gardens or other outdoor space has soared in terms of portal listings – perhaps no surprise in light of the improving weather and continuing Coronavirus outbreak.

Research by tradesperson comparison site HaMuch shows that this demand for a garden rental home is at its highest in Bristol, Nottingham and London.

The site looked at the percentage of homes listed to let across the UK’s major cities that advertise garden space, and then looked at what proportion of these total listings had already been snapped up by tenants to reveal which are the hottest spots for garden buy to lets.

The research shows that at 47 per cent Bristol is the UK city with the highest demand for a garden rental property, followed by Nottingham (40 per cent) and London (39 per cent).

Cambridge also ranked high with demand for a rental property with a garden at 33 per cent along with Plymouth on the same percentage.

In London, Lewisham is home to the highest level of tenant demand for a garden rental at 53 per cent.

“Garden space has always been a sought-after feature whether you’re buying or renting but with current government restrictions on movement, a garden rental has just become a lot more in demand – particularly now the weather is improving” explains the site’s founder, Tarquin Purdie.

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One of the lettings sector’s biggest trade bodies is calling on government to make a clear statement to help landlords who are facing campaigns for an end to any rent payment during the Coronavirus crisis.

The newly-formed National Residential Landlords Association – the merged group coming from the National Landlords Association and the Residential Landlords Association – says “more and more” members are saying tenants are under the impression they no longer have to pay rent as a result of the pandemic.

The association is now asking government to clarify its guidance; that rents should continue to be paid where possible.

Some tenants believe that because lenders have provided the option of a three month mortgage payment holiday to landlords, they should not pay rent for this period.

Groups including the National Union of Students are also campaigning for rent breaks for tenants.

The NRLA says it believes flexibility is necessary but is demanding the government publicise its guidance that tenants must still meet their legal and contractual obligations where they can – including paying rent – to dispel any myths.

“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 and through no fault of their own” says NRLA chief executive Ben Beadle.

“It is not an automatic payment holiday and landlords who successfully apply still have to make these payments later on. It is not a grant” he continues.

“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. This is not a green light to tenants everywhere to stop paying their rent.”

He says that given 94 per cent of private landlords rent property out as individuals and 39 per cent have reported a gross non-rental income of less than £20,000, many depend on the extra rental income for their livelihood.

The NRLA has called on landlords to show as much flexibility with tenants as they are able to within their means and has been heartened by the many stories showing tenants and landlords pulling together at this difficult time.

This has included landlords offering properties rent free for NHS workers where they afford to do so.

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A BBC News investigation has exposed some Airbnb and other short let platform users as flouting lockdown regulations.

The probe has found some Airbnb hosts advertising their properties as “Covid-19 retreats” and “perfect for isolating with family” in the countryside – despite Coronavirus regulations suggesting holiday accommodation should be provided only to keyworkers needing to self-isolate.

Of many Airbnb hosts contacted by the BBC, only one said their property was available solely to keyworkers.

In response to the findings, government minister Nigel Huddleston said: “Our advice is clear. Essential travel does not include holidays, leisure travel and visits to second homes – and people must remain in their primary residence.

“It is incredibly irresponsible, and dangerous for some property owners to be marketing themselves as ‘isolation retreats’. We are writing to companies today to remind them of their responsibilities at this time.”

Individuals and businesses could face fines of up to £960 for breaking these rules, the government added.

Last month, Airbnb announced a worldwide extension to its “extenuating circumstances” policy, stating all guests booked for check-ins between 14 March and 31 May would be eligible for full-refund cancellations.

Airbnb had previously told the BBC: “We announced a platform where hosts on Airbnb are offering NHS and other front-line medical staff free places to stay and Airbnb will waive all fees associated with the stays. We are in regular discussions with the government about travel restrictions during the lockdown period and have introduced measures and guidance for both hosts and guests.”

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ne of the UK’s largest insurance companies says there is no legal framework available to it that would enable the insurance giant to pay claims now that evictions have been suspended for three months by the government.

One of the UK’s largest insurance companies, Direct Line, has confirmed to LandlordZONE that it has closed its doors to new rent guarantee policy claims, but will honour those which are already under way.

The shock news confirms our story earlier this week that key insurance companies in the UK were withdrawing, or had already withdrawn, from the rent guarantee market.

Direct Line’s announcement will not be welcome news for its thousands of rent guarantee landlord clients, not least because until relatively recently it ran TV adverts promoting the product starring Hollywood actor Harvey Keitel (pictured).

“We are currently in unprecedented times as the impact of COVID-19 spreads through all aspects of the UK economy,” a statement from spokesperson Unni Henry from the parent company The Direct Line Group, says.

“The Government’s commitment is that no tenant will be evicted during a three month period and that landlords are able to apply for a three month payment holiday on their Buy to Let mortgages if necessary.

“During this three-month period we cannot pay any new rent guarantee claims as there is no legal mechanism to allow us to take a claim forward.

“Once this three-month period has ended, and providing the Government re-establishes the legal process, we will be able to progress with the claim as per the policy guidelines.

“Following the end of this period landlords and their tenants will then need to work together to establish affordable repayment.”

Henry says Direct Line is offering landlords practical support so they can help their tenants during the crisis including digital templates for payment plans.

Also, its legal advice helpline will continue to be available throughout this period. Landlords should refer to their policy documents for contact details.

“If the landlord’s rent guarantee claim has already been accepted and they are in receipt of rent guarantee payments, these will continue to be paid during the pandemic,” says Henry.

“For discussion on individual claims, landlords will need to contact the claims team via the number in their policy documents.”

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