Year: 2020

Specialist lender Oblix Capital has warned that the Government’s plan for a new UK points-based immigration system could threaten the real estate growth in the country, due to its current dependence on workers from the European Union.

Immigrants will need enough points (70) to be eligible to apply to work in the United Kingdom.

Under the new policy, individuals hoping to live and work in the UK will be awarded points according to characteristics including whether they have a job offer in place, their proficiency at English and expected salary. Immigrants will need enough points (70) to be eligible to apply to work in the United Kingdom.

20 points will be awarded to any applicants offered a “job in a shortage occupation”, as outlined by the Migration Advisory Committee (MAC). The list does not currently include any construction roles; without the 20 points that would be allocated in these circumstances, it will be much more difficult to meet the total requirement of 70 points.

Rishi Passi, CEO at Oblix Capital has warned that due to the wages earned by some construction workers – in particular manual labourers – the UK could struggle to meet future housing demand.

He said: “We welcome that the Government has adopted the MAC proposals to reduce its salary threshold for 20 points from £30,000 to £25,600. However, there are concerns that a reduction in the number of so-called ‘lower skilled’ workers that are eligible to work in the UK could produce problems for the industry.

“We are currently experiencing a construction skills shortage, and this morning’s proposals could exacerbate the issue. We are expecting initiatives to support roles in agriculture and the NHS, among others and, if the Government is hoping to build one million homes in the next five years, we may need similar support to find the right people with the right skills to help achieve that goal.”

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Across England, two-bed properties make the Best Buy-To-Let Investment for landlords when it comes to current rental yields, according to lettings management platform, Howsy.

Two-bed properties have an average yield of 4.8% compared to 4.1% for a one-bed, 4.5% for a three-bed and 3.6% for properties with four or more bedrooms.

It also seems that investing in a two-bed up north is a better bet to maximise those rental yields with the North East seeing the highest average yields for a two-bed property at 5.5%.

The North West is the next best option with the average rental yield for a two-bed at 5.3%, followed by Yorkshire and the Humber at 5.2% and the East and West Midlands at 5.1% and 5% respectively.

The average rental yield for a two-bed in the capital currently sits at 4.5%, but interestingly, London is the only region where a two-bed doesn’t offer the best yields across all room sizes.

This title is reserved for the lowly one-bed where rental yields on this property size hit 4.6%.

If you’re in the market for a three-bed, then the North West is the most lucrative region with yields at 4.9%, while Yorkshire and the Humber is your best bet for a four-bed or above with an average rental yield of 4.3%.

Founder and CEO of Howsy, Calum Brannan, commented: “As a landlord, maximising the profitability of your buy-to-let investment is as vital now as its ever been and property size and type are as important as location when it comes to doing so.

“While the two-bed property is traditionally the most popular amongst tenants and landlords due to the additional size without going overboard on costs, there is a slight regional variation in the capital.

“This is of course, due to the high rents you can secure in London even on a one bed and the overwhelming demand for properties that have seen even the smallest ‘studio flats’ rent for above-average prices.”

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Digital checker will aim to reduce administrative burden on landlords caused by controversial policy with an online right to rent checking service.

An online service allowing landlords to fulfil their obligations with the Home Office’s controversial right to rent scheme is due to launch later this year.

Since February 2016, private landlords have been required to check the immigration status of all prospective tenants and ascertain whether they are legally allowed to rent property in the UK. Failure to comply can result in fines of up to £3,000 per tenant or a prison term of up to five years – if it is found there was “reasonable cause to believe” the tenant in question did not have the right to rent property in the UK.

The scheme, which was brought in as part of then-home secretary Theresa May’s “hostile environment” agenda, has proven hugely unpopular with a comprehensive range of groups, including organisations representing landlords, lettings agents and tenants, and charities dedicated to housing and human rights.

Among the many concerns raised about right to rent is the additional administrative burden on landlords of conducting the relevant checks.

CSW reported last year that the Home Office had begun work on an online service through which landlords could perform the relevant checks on individuals’ immigration status. However, members of the consultative panel set up to advise the department on the implementation of the policy described the version of the service they had been shown last summer as “very limited”.

Immigration minister Kevin Foster has recently reiterated that “the Home Office is planning to launch an online digital right to rent status-checking service to support landlords in conducting right to rent checks”.

No date has been set for the service to go live, but it is understood the government intends to launch the tool before the end of 2020.

Such a service would follow the April 2018 launch of a digital service allowing employers to check prospective employees’ right to work in the UK. The creation of this online service was supplemented by amended legislation and official guidance for employers “which sets out how they can use the online service in complying with their responsibilities” under immigration law.

“The Home Office is transforming the way migrants demonstrate their immigration status and right to work and rent in the UK,” Foster added, in response to a written parliamentary question from Labour MP Alex Norris.

While an online right to rent-checking service would allay some concerns about the scheme, the criticisms levelled against it are far broader and deeper.

Last year a High Court judge ruled that the programme is inherently discriminatory and breaches human rights law. The Home Office is appealing the judgement.

That ruling, made by Mr Justice Martin Spencer, came following a legal challenge launched by the Joint Council for the Welfare of Immigrants. The challenge was supported by organisations including the Equality and Human Rights Commission and the Residential Landlords Association – both of which have participated in the Landlords Consultative Panel convened by the Home Office to monitor the scheme.

Other organisations represented on the panel include the British Property Federation, the housing charity Shelter, the UK Association of Letting Agents, and the Royal Institute of Chartered Surveyors.

Another panel member, National Landlords Association policy and practice director Chris Norris, told CSW last year: “We have been – sceptical would be too light a word – very concerned about Right to Rent. Frankly, I don’t think there’s anybody around the table that likes the policy.”

Blog Post from Civil Service World

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The typical landlord’s income from property has plummeted by a fifth in under a decade according to the National Landlords’ Association.

Its latest survey of members, in the final quarter of 2019, shows an average yield of 5.4 per cent, down from 6.7 per cent in 2011.

This fall of 19.4 per cent represents a drop in income from property of more than £19,000 against an average residential property portfolio, suggests the NLA.

The worst affected landlords are those with larger portfolios, 20 or more properties, who have seen typically achievable yields fall from 7.7 per cent less than a decade ago to 5.8 per cent today – a drop of almost one third.

Throughout the last decade the cost of acquiring property and managing homes has increased significantly, whilst typical monthly rents have increased below inflation over the same period.

For instance, since 2011 average house prices have increased by 40.23per cent whilst rents have risen only 14.5 per cent.

“Although it’s popular to paint private landlords as greedy parasites, only interested in pushing rents as high as they can go, the fact that rents continue to track below inflation, and far behind house price inflation, illustrates that this is far from the case” explains Richard Lambert, NLA chief executive.

“Being a landlord in the UK remains a worthwhile, and potentially profitable endeavour, but it is not a means of turning a quick profit. Anyone planning for future investments should think very carefully about their options and maintain realistic expectations of a reasonable return. A long-term strategy is essential, as is a commitment to providing a high quality service.”

Blog Post from Letting Agent Today

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A property management company operating residential properties across London and the South East is to pay fines and costs totalling £30,000 after pleading guilty to a series of fire safety failings at an address in Palmers Green, North London.

Chilling details of a fire in a Palmers Green apartment block four years ago reveal how its 20 residents narrowly escaped death after a fire broke out in a stairwell.

Seven-year-old firm Harper Stone Property Ltd was taken to court following a fire four years ago in the stairwell of the apartment block which, although it did not lead to a loss of life, was a close call for its 20 residents including one who had to be rescued by the fire brigade from a window sill.

The fire broke out within the common stairwell of the ground floor of the four-storey block on 14th August 2016, spreading through the stairwell to the third floor and preventing residents from leaving via the main stairs.

Following the blaze, a London Fire Brigade (LFB) inspection of the property revealed several breaches of the Regulatory Reform (Fire Safety) Order 2005. This is a set of rules created out of the Regulatory Reform Act 2001 that requires any person who has some level of control of a premises to take reasonable steps to reduce the risk from a fire and make sure people can safely escape if there is one.

Inspectors found that property management company Harper Stone had not assessed what aspects of the premises might pose a threat to the safety of tenants; that there were no emergency lights in the stairwell or common hallways; and that the flat entrances had not been fitted with fire doors.

“There was a fire risk assessment carried out for this premises but those responsible for the building’s management had failed to act on its findings,” says Dan Daly, the LFB’s Assistant Commissioner for Fire Safety (left).

“There’s no excuse for leaving people’s safety to chance, especially when information is so readily available to those with responsibility for safety in buildings to understand what their duties are and ensure they comply with the law.”

Blog Post from The Negotiator

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It’s been revealed that a clampdown on buy to let sector by HM Revenue and Customs has produced millions of pounds of additional tax revenue.

In 2019 HMRC found 11,129 landlords who had underpaid their income tax, or had not paid income tax at all on their buy to let rental properties. In 2018 the figure was just 8,704.

The Revenue also reclaimed £44.7m in tax from the clampdown on buy to let landlords last year, compared to just £32.8m in 2018.

The figures, obtained by a Freedom of Information request by the Daily Telegraph, are a result of HMRC’s Let Property campaign, introduced in 2013 and scheduled to run for just 18 months but now extended indefinitely.

Landlords are open to HMRC claiming back up to 20 years of undeclared tax on rental income if they are found to have avoided paying the tax deliberately.

For landlords who identify themselves to the Revenue and admit to having made mistakes, up to six years’ tax can be recouped.

In 2013 HMRC estimated that 1.5m landlords may have been underpaying their tax or were paying no tax at all.

Blog Post from Letting Agent Today

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The government has given the green light to Waltham Forest council licensing scheme, set to cover 18 of its 20 wards and starting on May 1.

Waltham Forest council, in its pitch to the Ministry of Housing, Communities and Local Government, said there was evidence over 8,000 rented homes contained significant hazards.

A borough-wide selective council licensing scheme was first launched in Waltham Forest in April 2015 and ends on March 31 this year; there will be a one month period in which there will be no scheme, before the new one begins on May 1.

Under its old scheme, now approaching its end, the council says it has issued more than 149 Civil Penalties and over 50 interim management orders; pursued 94 prosecutions, resulting in more than £323,000 in court-imposed fines.

It also claims credit for improving the condition of over 3,100 homes in the private rental sector.

Under the new regime starting this spring, there will be an early-bird discount for landlords signing up before the end of July.

Blog Post from Letting Agent Today

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Agents have come out fighting against a proposal being considered in one part of the UK to triple the time to remove a tenant via the eviction process to a six month notice period.

Under current legislation and the Rent Smart Wales system, landlords in the Principality must wait until six months have passed before they can serve notice through Section 21. However, if they serve an ‘unused’ notice at the start of the tenancy, they can move much more rapidly and evict a tenant with little delay.

However, new legislation proposed by the Labour-led Welsh Government means the ‘unused’ notice could not be served during the first six months of a tenancy – which in effect would mean tenants receive a guaranteed year in their home free from any possible eviction.

Welsh Government housing minister Julie James says this would “add further significant protections” for tenants, adding: “What we are trying to do is make sure good landlords are rewarded well and bad landlords are driven out of the market,”

The six month notice period has, unsurprisingly, been backed by Shelter and tenants’ groups.

But David Cox, the chief executive of ARLA Propertymark, says: “Extending notice periods from two months to six months under the Renting Homes (Amendment) (Wales) Bill will cause further shockwaves for landlords and agents.

“The proposals will make it even more difficult for landlords to reclaim possession of their property and add further longevity to an already lengthy and expensive eviction process.

“We are concerned that landlords will have no viable option of evicting problem tenants quickly and efficiently due to current court procedures.

“If landlords sell up due to the perceived risk, this will shrink the sector and contribute to landlords being more selective about who they let their property to.

“The Welsh Assembly must reconsider extending the minimum notice period and take a long-term, holistic view that supports those who are providing professional and well managed tenancies.”

Blog Post from Letting Agent Today

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The government has failed the private rental sector says the RLA Residential Landlords Association.

In a statement released even before the resignation of Chancellor Sajid Javid and the sacking of housing minister Esther McVey, the RLA says the government’s failure is evidenced by data released in recent days.

The Royal Institution for Chartered Surveyors is warning that private sector rents are set to increase by two per cent over the next year as a result of the demand for such housing exceeding supply as landlords quit the sector following recent tax changes.

The RLA says that alongside this it has been disclosed that just 18 individual landlords and property agents and five companies are registered on the database of rogue landlords for offences committed since April 2018.

The association argues that this means either the number of problem landlords is not as high as many have argued or local authorities are focussing too much time on licensing good landlords instead of rooting out the criminals.

And government figures released just yesterday show that it now takes an average of almost half a year for courts to process claims for repossession of their property.

The RLA argues that during this time tenants may be refusing to pay any rent, indulging in anti-social behaviour or damaging the property.

John Stewart, RLA policy manager, says: “This series of statistics clearly shows the negative impact of government policies. At the end of the day it is tenants who are suffering. The drop off in supply caused by good landlords who find operating in the market more difficult means it is increasingly difficult for tenants to secure somewhere to live and they are then faced with higher rents.

“Ministers need to change course and instead of attacking the private rented sector, there should be policies and taxation to encourage growth in the supply of rental accommodation to meet the ever increasing demand.”

Blog Post from Letting Agent Today

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The National Landlords Association has issued Coronavirus guidance for the lettings sector on the Covid-19 infection.

Although much of the advice is a repeat of existing government guidelines on the issue, the NLA’s move is the first by one of the major lettings trade bodies to address the issue.

In a note on its website, the association says that while there may be concern about tenants’ exposure to the virus, the government continues to state that the risk to individuals in the UK remains low.

“Based on current official Coronavirus guidance, landlords do not need to take any specific action regarding tenants’ exposure to coronavirus. The government has remained vigilant in identifying and tracing potential carriers of the virus and has established isolation wards across the country to maximise the chances of containment” says the association.

It says its members are encouraged to refer to official government and NHS guidance – details are at the bottom of this story.

The association says the current medical advice is that anyone who has travelled into the UK from the countries listed below in the last 14 days and is experiencing respiratory problems, a cough or a fever should remain indoors and call NHS 111 even if symptoms are mild.

The countries are mainland China, Thailand, Japan, the Republic of Korea, Hong Kong, Taiwan, Singapore, Malaysia and Macau.

People who have travelled from the city of Wuhan or Hubei Province in China are advised to remain at home for 14 days after arrival and avoid contact with other people, even if they have no symptoms.

Key websites which agents and landlords can consult include this one from the Department of Health and Social Care, and this one from the NHS.

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