Year: 2020

The Association of Residential Letting Agents has made an uncompromising set of demands on the government, asking it to implement a series of pro private rental sector policies at next month’s Budget.

Firstly it wants an exemption to the three per cent stamp duty surcharge for buy to let purchasers.

“By failing to offer exemptions to institutional investors, private rental sector policies have stifled the private rented sector where rents are rising. In February 2018, the Intermediary Mortgage Lenders Association estimated that buy to let investment fell from £25 billion in 2015 to only £5 billion in 2017. Furthermore, increasing the taxation burden on landlords’ results in costs being passed back to tenants through higher rents” it says.

In December ARLA reported that 32 per cent of agents witnessed rent increases, up from 16 per cent in December 2017 and December 2018.

“This is in contrast to only 1.1 per cent of tenants being able to negotiate a rent reduction, the lowest figure since records began. This means that people have less money to save and it is harder for them to get on the housing ladder” says the ARLA submission, which explains the situation is down to the fees ban and tax changes detrimentally affecting agents.

“The government must recognise that in order to remain profitable, landlords will increase rents to cover the additional fees they are now faced with and as a result tenants will continue to pay higher deposits.

“This is important because if supply of rental accommodation falls further, tenants will only be faced with more competition for properties, pushing up rent prices on good quality, well managed accommodation and decreasing tenants’ ability to negotiate rent reductions.

“Therefore, we believe the government must consider launching a review of all taxes relating to private landlords in order to develop policies that promote long term investment in the sector and reduce costs for tenants.”

The ARLA submission goes on to say that abolishing the three per cent surcharge on additional properties would encourage further investment into property – without abolition or exemption, there will be a continuation of the fall in sales on second and buy to let property which contribute towards the economy in tax.

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Newly released research from The National Landlord Investment Show has revealed an upward, positive trajectory of interest in the UK buy-to-let market, despite a turbulent 18 months for the industry.

Despite the recent political and financial uncertainty of the past few years, the research suggests UK landlords are looking ahead this year with a positive and vigorous outlook about their current and future position within the UK’s buy-to-let market.

The research found that 60% of UK landlords and property investors who attend the UK’s leading buy-to-let exhibition show are looking to invest in 2020, among some other interesting insights.

Whilst the overarching narrative presented about the future position of UK landlords has been one that is negative often dwelling on ‘regrets’ of landlords due to high regulations of the private rental market and uncertainties of the UK buy-to-let market within a post-Brexit context- this new research says different.

A growing theme of looking ahead to the future for UK landlords and property investors is prominent as over half (54%) expressed they are making an investment into property to plan for a pension whilst 27% admit they are landlords and property investors to build for their children’s future.

Out of the 60% of UK landlords and property investors who are looking to invest in 2020, nearly three quarters (71%) have expressed a preference to invest in residential property. Furthermore, one-fifth of UK landlords (20%) are hoping the 2020 shows will help them in their search for investment opportunities.

The findings further present a detailed insight into the portfolios of UK landlords and investors attending the show with three quarters (75%) indicating they do not own their properties within a limited company. Additionally, an increasing number of UK landlords and investors are showing an interest in commercial as well as residential investment opportunities with 1 in 4 (23%) now confirming they own commercial properties in their portfolio.

Tracey Hanbury, Director and Co-Founder of The National Landlord Investment Show shares her thoughts on the research findings: “What this research has shown is that contrary to other opinions within the industry there are exciting times ahead for UK landlords and property professionals. There is no better time than now to engage and stay up to date with the UK’s buy-to-let market at our Landlord Investment Show”.

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A new concept of co-living rental is being offered at a new purpose-built development in west London.

The firm constructing and operating the co-living rental units is Urban Living, a new business set up by the Hogarth Property Group, which owns the Orchards of London estate agency.

Urban Living’s 37 apartments in the Ealing area will be let out as co-living spaces – each will be a studio apartment with communal facilities including a lounge/dining room, on-site laundry, and cleaning services including the provision of bed linen.

Orchards of London will act as sole letting agents when the scheme launches on February 29, although expressions of interest are being taken ahead of that date.

Tenants can rent on three, six, nine or 12 monthly terms and there is no security deposit required.

Urban Living has worked with Ealing council to ensure a number of units will be available on a discounted rental basis to some applicants who qualify according to their income and where they currently work or rent.

The Hanger Lane development is the first of a number of co-living schemes planned by Urban Living, which is looking for sites for future schemes.

A statement from the firm says: “The nature of this type of development means that existing commercial or residential buildings may be suitable for conversion and redevelopment as well as green or brownfield sites for new build. If you have a site that you feel may have potential, Urban Living would love to hear from you and can be contacted via their website.”

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A government report suggests the private rental sector is attracting an increasing number of older renters – and the sector needs to change to accommodate this growing demographic.

‘Living Longer: Changes in Housing Tenure over Time’ is a report from the Office for National Statistics which says that although three-quarters of people aged 65 years and over in England own their home outright, an increasing proportion are older renters.

It says younger people are less likely to own their own home than in the past and more likely to be renting.

Half of people in their mid-30s to mid-40s had a mortgage in 2017, compared with two-thirds 20 years earlier; and people in their mid-30s to mid-40s are three times more likely to rent than 20 years ago.

A third of this age group were renting from a private landlord in 2017, compared with fewer than one in 10 in 1997.

The ONS says: “If this trend persists into their older ages, in the future, older people will be more likely to be living in the private rental sector than today. Changes in housing tenure patterns could have implications for what life will be like for older people in the future.”

In response to the report Chris Knight – chief executive of part of the Legal & General empire – says: “These forecast statistics seem to be only an extrapolation, comparing the actions of the current generation with the previous generation. It’s also very possible that tomorrow’s retired people will adapt in different ways, such as entering the housing ladder in later life and borrowing into retirement.”

And Lindsay Judge, principal policy and research analyst at the Resolution Foundation, says: “The 30-year fall in home ownership among young families rightly receives widespread attention. But today’s ONS analysis also highlights the lesser discussed effect of this shift – the rise of the middle-aged renter, and the possibility of many more families renting privately in retirement.

“The prospect of renting privately in retirement will alarm many people as it could mean high costs, and low levels of housing security. It also carries huge cost implications for the state as the UK’s housing benefit bill could escalate. As well as supporting home ownership, the government must reform the private rented sector to ensure it provides homes fit for older as well as younger people.”

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The government’s hugely-publicised database for rogue letting agents and landlords has been running for almost two years and has…wait for it…just 22 entries.

The This Is Money service from the Daily Mail has used Freedom of Information requests to ascertain that the names of only 21 rogue landlords or property agents had been submitted by 15 local authorities since the database for rogue letting agents launch in April 2018.

This contrasts with reported government estimates that there may be in excess of 10,000 rogue landlords alone across the UK, and numerous stories on Letting Agent Today and other publications highlighting offences involving agents and buy to let owners.

There are actually 22 entries on the database but these apply to just 21 individuals or companies.

This Is Money says the entries cover 38 offences committed by the named people or firms; there are three entries for banning orders, 15 for criminal convictions for banning order offences, and four entries for individuals with two or more civil penalties within 12 months.

The Ministry of Housing, Communities and Local Government is quoted by the paper as saying: “The database is targeted at only the very worst and persistent offenders, those who have committed banning order offences. It takes time to secure convictions or civil penalty notices for offences that may be recorded on the database.

“The offence must have been committed after 6 April 2018, the landlord or agent must have been prosecuted and convicted, and the appeals process must be complete. The local authority can then apply to the First-tier tribunal for a banning order and a hearing must be scheduled.

“When a banning order has been imposed, the local authority must record it on the database.”

Last year MHCLG launched a formal consultation on whether to broaden the database to include other offenders; responses are currently being analysed, including that of the Association of Residential Letting Agents – aka ARLA Propertymark – which supports wider access to the database for tenants and agents.

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A trade group’s submission to the Treasury ahead of next month’s Budget includes a call for the new Chancellor to slash Capital Gains Tax on rental sales for landlords who sell their properties directly to their tenants.

The Residential Landlords Association and the National Landlords Association – which are due to merge – have jointly called on Rishi Sunak, who became Chancellor only last Thursday, to use his first Budget to reverse the decline in the supply of rental sales housing.

The RLA and the NLA want a fundamental review of the way rented housing is taxed to ensure that tax policy supports, rather than contradicts, government objectives.

They propose that the stamp duty surcharge of three per cent is dropped where landlords add to the net supply of housing through developing new properties, bringing empty homes back into use, or converting large properties into smaller and more affordable units of accommodation.

They propose that tenants are supported into homeownership by introducing a Capital Gains Tax exemption where landlords sell a property to a sitting tenant.

In addition, they call for tax relief where landlords invest in measures to improve the energy efficiency of a rented property or let adapted properties long-term to tenants with accessibility needs.

David Smith, RLA policy director, says: “The tax system for rented housing is failing. It encourages the provision of holiday homes over long-term properties to rent, it deters investment in new housing and provides no support to those wanting to make energy efficiency improvements.

“For the sake of those living in rented housing or who are looking for accommodation, Ministers need to use the Budget to urgently change course to ensure that their tax policies are positively aligned with their wider housing objectives to encourage good landlords to provide long-term affordable housing.”

And NLA director of policy and practice Chris Norris adds: “HM Treasury has constructed a series of barriers to investment, which make running an efficient and successful lettings business borderline impossible. Mr Sunak must recognise that housing costs can only be reduced by making it easier, not harder, to provide good quality rented homes.”

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The latest market snapshot produced by PropTech firm Goodlord suggests that even in the south west of England – where renters are at their oldest – the average age of the private renter is still in the low 30s.

The youngest renters can be found in the north west of England, with an average age of 32 years.

The market snapshot also looks at rents: average prices increased in half of the regions in January, although there was an overall drop in the average UK rental cost.

It was positive news for rental prices in Greater London, the north east, north west, and south east, where prices either held steady or saw a modest increase during January. The north west saw the biggest shift, with average prices rising by five per cent.

However, it was a different picture in the East Midlands, West Midlands, the south west and Wales, where the average cost of rent was down compared to December.

Overall, the UK average rental cost dropped from £902 to £874, demonstrating a sluggish start to the year for the market.

It was also a mixed picture for void periods; the average held steady compared to December, but four regions saw an increase in void periods.

Across the UK, the average rate of voidage held steady at 20 days – the same rate as December.

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Generation Rent – an outspoken organisation sharply critical of lettings agents and many aspects of the private rental sector – is calling for councils across the UK to crackdown on Airbnb and other short let platforms.

It has launched an online petition calling for all such firms and platforms, which it describes as “holiday let companies”, to share data with local authorities who can instead prioritise properties for those in longer-term housing need.

The petition, which you can see on the 38degrees website, claims that the short lets sector in London is to all intents and purposes unregulated because landlords and ‘hosts’ can simply switch from one short-lets platform to another.

This sector is poorly policed both in the capital and beyond, says the group, because councils are cash-strapped.

The petition says:

“The Government to enforce mandatory data sharing by all holiday let companies so that councils throughout the country can crack down on short term lets and prioritise homes not hotels

“Why is this important? It’s been revealed that 1 in 50 homes in London are now holiday lets, meaning families and those working in the capital are being forced out of their homes and facing higher rents.

“Right now, if a home in London is rented out on the holiday let market for more than 90 days in the course of a year then the landlord is required to apply for planning permission to let it out to tourists.

“However, because there are loads of holiday let companies out there, landlords can bounce from Airbnb to HomeStay to Hostmaker and to FlipKey without regulation. Cash-strapped local councils don’t have the staff or the data to track down landlords that are breaking the law.

“The rise of holiday lets is growing throughout England, and councils outside London have even fewer powers to do anything about it.

“The massive rise in companies like Airbnb and HomeStay means more evictions for long term tenants, less secure private rented housing available for Londoners and rents are being pushed up.”

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A London Labour council wants to introduce rent controls to its borough. The South London Press reports that Lambeth councillors have voted through a Lambeth Living Rent motion calling for the power to establish and enforce local rent controls.

The council has no power to control rents but wants government agreement for it to do so.

The Lambeth Living Rent proposal actually came from a Green Party councillor but was backed by Labour as well.

Paul Gadsby, Lambeth council’s cabinet member for housing, is quoted by the paper as saying: “I backed this motion because it supports the work we are already doing to protect tenants’ rights which has included expanding resources dedicated to the private sector and publicly calling for rent controls to be considered.

“We are taking a tougher line on hitting rogue landlords with heavy fines as well as naming and shaming them. Prior to this motion, we had already committed to a wider consultation with residents on our next steps for the private rented sector. I am pleased the Greens are now fully backing our approach.

“More generally, it is clear the high costs of rent as a result of our broken housing market are unaffordable for all but high earners. Hardest hit are the younger generation, women, people from low income backgrounds and [minority] communities.”

You can read the full report here.

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Agents and landlords are advised to think carefully before allowing tenants to keep pets, despite a government with a new model tenancy agreement.

The advice comes from inventory provider No Letting Go, and follows last month’s announcement by the Ministry of Housing, Communities and Local Government that a new model tenancy agreement would include provision for tenants to keep pets.

Housing Secretary Robert Jenrick says he wants more landlords ‘catering for responsible pet owners’ and wants to increase the number of rental advertisements that are clearly pet-friendly – the figure now is just seven per cent.

Jenrick suggests the revised model agreement would stipulate that total bans on renters with pets should only be implemented where there is a good reason, such as a property being too small or having no outside space.

“For those landlords that choose to follow the government’s model tenancy, there could be several grey areas around which types of pets they have to accept and what constitutes a well-behaved pet” explains No Letting Go founder and chief executive Nick Lyons.

“Something like the behaviour of an animal is subjective, so it’s easy to envisage problems arising when tenants keep pets and things don’t go to plan.

“If tenants are able to argue that their pets are ‘well-behaved’, it may be harder for a landlord to successfully make deductions from a security deposit where damage is caused” he says.

Lyons says these grey areas over liability of damage could cause financial problems for landlords.

“At this stage, we’re also wondering what would happen to a deposit and the liability for damage if pets were introduced during a tenancy,” he adds.

“Due to the variables of rental properties, animals and tenants themselves, it seems only right that landlords are able to make decisions on accepting pets on a case by case basis, rather than having to accept all pets within a certain framework if they choose to follow the model tenancy agreement.”

No Letting Go says that landlords following the model tenancy agreement once it is revised will need to make sure they have the relevant pet protection in place.

This includes suitable insurance and detailed and independent inventories carried out at the start and finish of a tenancy. What’s more, if they do choose to accept pets, they will need to monitor the condition of their property effectively through mid-term inspections.

“A thorough inventory could help a landlord to prove any damage and whether a pet has been ‘well-behaved’. This sort of information could be crucial in costs of repairs from tenants’ deposits” says Lyons.

“Due to the Tenant Fees Act, landlords can no longer charge higher security deposits to tenants with pets. Therefore, they must take a range of other steps and measures if they want to keep their property safe while tapping into the growing number of tenants who want to keep pets” he concludes.

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