Year: 2020

The number of tenants experiencing rent increases fell for the second month in a row according to ARLA Propertymark.

Its latest snapshot – which looks at October’s market – shows that in that month just 37 per cent of agents witnessed landlords increasing rent compared to 40 per cent in September and 48 per cent in August.

The October 2020 figure is 13 per cent down on a year earlier when the figure stood at 50 per cent.

Meanwhile the number of new prospective tenants this year rose to the highest on record for the month of October, with an average of 88 per branch.

Regionally, the West Midlands had the highest number of new tenants registered per branch, with an average of 173, and Scotland had the lowest figure with an average of just 30 new prospective tenants registered per branch.

The number of properties managed per letting agent branch rose from 193 in September to 213 in October. Year-on-year this is an all-time high for the month of October, with the previous record being 201 in 2019.

The number of landlords selling their buy to let properties fell from five per branch in September, to four in October.

“This month’s figures are testament to the fact that letting agents are continuing to support landlords and their tenants during the pandemic, with rent increases continuing to fall for a second month in a row” explains Angela Davey, president of ARLA Propertymark.

“As the UK experiences continued lockdown measures and regional restrictions, it is essential that tenancies are maintained to keep the rent flowing as the stability of the private rental sector is key to the economy’s bounce back from the impact of Covid-19.”

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Labour claims over 350 households in London alone were issued with a Section 21 notice during the first lockdown in spring – and it says this shows why the government should fulfil its pledge to scrap S21 completely.

The government pledged to outlaw Section 21 evictions in April 2019, and a consultation on the proposal ended over a year ago, in October 2019.

Now Labour’s London Assembly housing spokesman, Murad Qureshi, has written to the government asking for a timeline.

Qureshi has also called for the reinstatement of the mandatory evictions ban, saying: “Shelter is a basic need and a fundamental right, and we don’t want a desperate situation this winter where vulnerable people are once again left on the streets.”

He continues: “Even with the evictions ban in place, it is absolutely galling that hundreds of Londoners were forced to seek emergency help from their local council at the height of lockdown after being issued with a section 21 eviction notice.

“Over the last year, the government has failed to honour its pledge to scrap no fault evictions, despite announcing the policy to great fanfare. Ministers must stop dragging their feet on this.”

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Industry players worry that million of tenants will struggle to pass referencing after prolonged periods on the recently-extended scheme.

A leading referencing platform has warned that the lettings industry faces a major challenge when the extended furlough scheme ends on 31st March.

Last week Chancellor Rishi Sunak revealed that the scheme, which has so far supported some 9.6 million jobs since the first lockdown, has been extended by five months until the end of March.

“It’s clear the economic effects are much longer lasting for businesses than the duration of any restrictions, which is why we have decided to go further with our support,” said Sunak.

But having so many people on furlough for such a prolonged period is presenting problems for many letting agents as landlords reject or ask for guarantors for prospective tenants, if they have been furloughed.

Simon Tillyer, Vouch
“We’re clearly dealing with a new set of challenges when it comes to not only referencing but also the whole rental market,” says Simon Tillyer, Founder and Director of Vouch.

“With furlough extended, a major spike in unemployment predicted, and an ongoing stay on evictions, the landscape that agents and landlords are grappling with is an ever-shifting one.

“What we’re focusing on is ensuring our referencing product anticipates these challenges and works hard to flag evolving risk factors.

“We’re then offering additional support alongside this, such as Rent Protection Insurance and enhanced customer service offerings to further mitigate against uncertainty.”

SPOTTING FURLOUGH

Another referencing supplier which uses Open Banking protocols to check tenants, but which wants to remain anonymous, told The Negotiator that most systems provide reference providers with ‘average’ income levels for a tenant over usually a 12-month period. But this means it’s harder to spot when a tenant has been furloughed and their income drops by 20%.

“But the longer a person is on the scheme, the easier it will become to detect if a tenant has been furloughed,” a spokesperson says.

Hamptons International also says that problems with referencing mean it is getting increasingly hard for less affluent tenants to move home which, its research shows, is already beginning to show in the market with affluent areas seeing an increase in home moves, and poorer areas witnessing a drop.

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An MP claims the proliferation of short lets via Airbnb and similar online platforms is indirectly pricing local people out of their areas.

Hywel Williams, MP for Arfon in Wales, says there has been a huge increase in short lets across the county of Gwynedd – a trend that “simply isn’t sustainable” as people are being priced out of homes in their own communities.

Williams, a Plaid Cymru MP, says “greater controls” are required to limit the volume of local housing stock used for short lets.

A recent report by Welsh nationalists claimed a third of homes sold in Gwynedd and on Anglesey in the past year were purchased as additional properties.

Meanwhile Welsh Revenue Authority figures show that 38 per cent of house purchases in Gwynedd in the year to April involved a duty surcharge – the sign that they were likely to be second homes or buy to lets.

This is the highest proportion anywhere in Wales.

The MP has told local media: ”Whilst letting out your own home for a short period to supplement your income is understandable, what we are now seeing are houses being permanently taken out of the local housing stock for holiday rental purposes.

“The proliferation of Airbnb properties and similar UK wide and international companies nowadays is not only limited to rural, isolated communities. We are fast-seeing terraced houses in urban areas across Gwynedd being snapped-up as long-term holiday rentals.

“And these are two to three-bedroom properties, which would otherwise be ideal starter homes for young families or first-time buyers. It simply isn’t sustainable to have so much of our local housing stock being put beyond the reach of those who live and work here, not to mention taking a market share from local guesthouses and B&Bs.”

He is urging the Welsh Government to follow the example set by cities such as Paris, Berlin, Amsterdam and Barcelona, which all have restrictions on Airbnb and similar lettings.

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Two leading eviction experts have rejected recent calls by landlord and property educator Ranjan Bhattacharya to reduce the evictions notice period to 14 days.

His controversial claim, which was made during a YouTube video for his 27,600 subscribers four weeks ago, asked fellow landlords to sign a petition calling on the government to reduce the notice period.

Bhattacharya argues that the existing system – even when the current restrictions are discounted – is unfair to landlords, claiming it can take up to a year in normal times to evict a tenant.

But Tim Frome, legal director at Landlord Action, and John Stewart of the NRLA have rejected this, point out that it is both unlikely to happen politically and also paints landlords in a bad light, however well intentioned.

“I’m afraid that this kind of campaign is not helpful during the Covid crisis and it’s unlikely to have legs when the pandemic is over,” says Stewart (left).

Frome agreed, saying that in normal times two months is a reasonable period of time to give notice to a tenant before seeking to take action in the courts.

“You’ve got to remember that these are people’s homes even though, of course, there has to be a reasonable time period to get the property back if a tenant breaches the terms of their tenancy, and I think two months’ notice strikes that balance.”

The pair were talking during a live webinar at today’s National Landlord Investment Show, which normally takes place at Olympia but this year is online only.

Stewart also revealed during the webinar that the NRLA has been lobbying the government to give landlords who face unreasonable tenants who change locks, ignore communications and fail to pay their rent to be given an easier access to evictions.

“This needs to transferred to the Section 8 notice process once Section 21 is abolished,” he said.

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Pre-Covid signs were promising. Possession action was falling with figures from the first quarter of this year the lowest in 20 years.

However even before the pandemic saw courts close for six months, there was a backlog of cases, as they were operating at full capacity.

With increasing numbers of landlords having to use bailiffs to enforce judgements, already lengthy wait times are set to increase further, an issue compounded by problems recruiting bailiffs.

As part of the NRLA’s deep insight series, senior policy officer James Wood looks at theses waiting times – which vary substantially across the country  – and examines what the Government can do to address the issue.

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Landlords have criticised the Chancellor for cutting the amount tenants relying on benefits will be able to claim to pay their rent.

According to a report by the Office for Budget Responsibility published alongside the Spending Review today the Local Housing Allowance will be frozen in cash terms from next year. This means that the rate will fall below the current level which is set to cover the lowest 30 per cent of rents in any given area.

The NRLA is warning that the announcement represents a kick in the teeth for those renters and landlords struggling with the consequence of rent arrears through no fault of their own.

The current rate was set in April to help renters whose incomes had been affected by the pandemic to meet the cost of their rents. A recent analysis by the Joseph Rowntree Foundation suggests that five per cent (200,000) households in the private rented sector are in arrears. 30 per cent of all private rented households are worried about paying their rent in the next three months, compared to 19 per cent immediately pre-COVID-19.

The vast majority of private landlords have done everything they can to support struggling tenants. However, given that most landlords are individuals and not property tycoons, it will become increasingly difficult to keep affected tenancies going without adequate financial support to pay off rent arrears.

Ben Beadle, Chief Executive of the National Residential Landlords Association, said:

“Many renters and landlords are struggling with the consequence of rent arrears through no fault of their own yet the Government is failing to take the action needed to address this.

“Whilst the Chancellor has spoken about the need to support those who find themselves homeless, it would be much better to provide the funds needed to sustain tenancies in the first place.”

The chancellor’s spending plans did not include any proposals with regards to tax changes – which will be announced in the budget this spring.

In its submission ahead of the spending review the NRLA had asked for a comprehensive financial package for landlords and tenants, in the form of a tenant loan scheme.

This would allow tenants affected by Covid-19 to borrow money, interest free, to cover rent while they got back on their feet, which could then be paid back over a period of time.

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A top property law firm is questioning whether the government’s current eviction moratorium – effectively banning evictions until mid-January at the earliest – is actually even legal.

On October 21 – in news given relatively little publicity at the time – the Lord Chancellor and Secretary of State for Justice, Robert Buckland QC MP wrote to bailiff organisations asking them not to undertake any evictions in areas that have been classified as Tier 2 or Tier 3 under current Covid alert systems.

On November 5 he wrote a further letter asking bailiff organisations not to undertake any evictions during the lockdown unless these were cases relating to illegal trespass, squatters, nuisance or antisocial behaviour, domestic abuse, fraud or deception and properties unoccupied following the death of a tenant.

Now the Hagen Wolf law firm is questioning the lawfulness of this de facto ban.

A statement from the firm says: “The Lord Chancellor cannot lawfully suspend evictions by request, nor can he carve out exceptions, on a whim and without legislation. There may be legal challenges to this at some point.

“There is even a power to seek losses from bailiffs under the County Courts Act for losses caused by bailiffs not enforcing warrants.”

The managing partner at Hagen Wolf, Matt Pugh, adds: “After a long pause over the summer, the courts began dealing with residential possession claims from 21 September 2020, in effect restarting the lengthy eviction process. The backlog of cases was also likely to take many months to address.

“We are now in uncharted territory as there will also be a moratorium on all evictions during lockdown, over the Christmas period – December 11 2020 to January 11 2021 – and after that in areas designated as tier 2 or 3. It means that even though the courts will process residential possession claims, up to and including a possession hearing, but tenants will not be evicted for an indefinite period.”

Pugh says that given under the government’s Coronavirus powers, areas can be moved into Tier 2 or 3 overnight.

“This in practice means no evictions for the foreseeable future. However, that could change if the Lord Chancellor seeks to impose legally dubious exceptions” says Pugh, concluding: “Good luck evicting anyone right now, or for the foreseeable future, whatever the reasons.”

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Charities and opposition politicians are putting fresh pressure on the Government to bring back its eviction ban for the entire winter.

As the country starts the next national lockdown, they’re hoping the halt on evictions in Tier 2 and Tier 3 Covid restriction areas might be extended to the rest of the UK.

Labour’s shadow housing secretary Thangam Debbonaire (above, left) and Shelter chief executive Polly Neate (above, right) have both called on the Government to urgently reinstate the ban.

Neate says: “With England set to enter another national lockdown and Covid cases on the rise, the Government needs to move again to make sure no-one is forced out of their home this winter by banning evictions nationwide. It is simply too dangerous to allow more people to become homeless now.”

Director of Generation Rent, Alicia Kennedy, tells LandlordZONE: “Putting workers back on 80% of wages with benefits insufficient to cover the rent means that once again thousands face getting into debt. The Government must suspend eviction proceedings again to give renters assurance that they can stay safely in their homes.”

Refusing to budget

However, so far, the Government is refusing to budge. A spokesperson at The Ministry of Housing, Communities and Local Government told LandlordZONE that it’s already taken unprecedented measures to protect tenants during the pandemic and that these are under constant review.

“Landlords must give six months’ notice for all but the most serious eviction cases – such as those involving domestic abuse – and we’ve taken action to prevent people getting into financial hardship by helping businesses to pay salaries, extending the furlough scheme, and boosting the welfare safety net by over £9 billion,” they said.

Along with the Christmas evictions moratorium already announced by the Government last month, with courts halting proceedings in Tier 2 and 3 areas, landlords there now have to wait until the New Year before they can proceed.

As LandlordZONE recently reported, tenants outside Tier 2 and 3 areas can halt evictions relatively easily by claiming – but not having to prove – that they have Covid.

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Leading evictions expert Paul Shamplina has warned landlords hoping to regain possession of their homes from tenants with rent arrears that the lockdown due to start tomorrow will, in practice, usher in a new evictions ban in everything but name.

Possession hearings have been proceeding in most courts since the stay on court proceedings was lifted on September 21st.

But since the ‘Tiered’ system of local lockdowns in many areas of the UK shut down bailiff evictions, it has been getting increasingly difficult for landlords to proceed even if they have green light to begin an eviction by a court.

All bailiff evictions will now come to a halt across England when the new lockdown kicks in tomorrow, as they did during the previous lockdown.

“Although the government will soon request that bailiffs down tools, in practice very, very few bailiffs would want to go into properties and get close and personal with tenants when the infection rate is rising and a national lockdown has been announced,” says Shamplina.

Six days

He points out that when the new lockdown ends on December 2nd, landlords then only have eight days to proceed with authorised evictions before the four-week long  ‘Christmas truce’ begins on December 11th.

“Assuming the lockdown isn’t extended, this means evictions won’t restart until the second week in January after which there will be a significant bottle-neck of cases that need to be dealt with by bailiffs,” says Shamplina, whose company Landlord Action has one of its landlord clients featuring on BBC London News this week.

“So unlucky landlords could be waiting until February or March to regain possession.”

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