Year: 2020

The Housing Secretary has announced plans to revise the Government’s model tenancy agreement to allow for “well behaved pets” in properties.

The Government says that the plan, announced at the weekend, will ensure that more landlords are catering for responsible pet owners wherever possible.

Commenting on the plan, Housing Secretary, Robert Jenrick MP said:

“Pets bring a huge amount of joy and comfort to people’s lives, helping their owner’s through difficult times and improving their mental and physical wellbeing. So, it’s a shame that thousands of animal-loving tenants and their children can’t experience this because they rent their homes instead of owning property.

“So, I’m overhauling our model tenancy agreement to encourage more landlords to consider opening their doors to responsible pet owners. And we will be listening to tenants and landlords to see what more we can do to tackle this issue in a way that is fair to both”.

The government’s model tenancy contracts for renters can be used as the basis of lease agreements made with tenants.

It is important to note that this initial action does not make it a legally binding requirement for landlords to accept pets, and that landlords still hold the right to refuse tenants with pets.

The Government’s other plans for the private rented sector
The Queen’s Speech, which took place last month, contained some other key announcements relating to the private rented sector, including:

• A commitment to scrapping Section 21
• Plans to improve the current Section 8 process
• The introduction of lifetime deposits for tenants
• Plans to continue to develop and implement measures to wider access to and expand the scope of the database of rogue landlords and property agents giving greater powers to drive improvements in standards, and empowering tenants to make an informed choice about who they rent from.

When the plans were first announced the RLA warned ministers they must make sure landlords have confidence in the repossession system post Section 21, or there could be a mass sell-off by landlords, making it harder for tenants to find a place to live.

Written by Victoria Barker

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Claim is made by specialist law firm Landlord Action which says extra workload after Section 21 evictions system are banned by government will lead to court system collapse.

The evictions court system is creaking under the pressure of its existing workload and will face collapse unless the government injects significant funds ahead of its Section 21 ban, it has been claimed.

Eviction law firm Landlord Action says it has dealt with numerous cases where court delays and administrative errors mean evictions are taking longer than ever, pushing landlords into further debt.

Its spokesperson Paul Shamplina says the situation is the worst he has seen during his 28 years working in the sector and has warned that the court system, which has faced closures and cost-cutting in recent years, will see its workload double after Section 8 evictions become the only tool available to landlords.

One of the key reasons cases are delayed is judges not being available for hearings, which are then cancelled and a new date set weeks or months ahead.

One eviction Shamplina (left) is dealing with that hinges on whether a ‘How to Rent Guide’ had been given to the tenant, starting on 27th June last year, has yet to be heard after two judges in succession became unavailable and administrative errors led to five court dates all of which have been pushed forward.

“We are experiencing cases like this time and time again,” says Shamplina.

“It’s not only causing extra work for us at Landlord Action, meaning we now have a full-time member of staff whose main responsibility is chasing courts for updates on possession orders, Notice of Issues and bailiff appointments, it is also causing extreme stress for the landlords who are already facing financial hardship as a result of rent arrears.”

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A high end lettings agency says the most expensive rural rental market in the north west of England is dominated by one factor – football.

Jackson-Stops says the super-prime lettings market in the region, especially in areas such as Alderley Edge, is largely driven by movement in Premier League football.

This demographic of buyer is fairly immune to any changes within the local, national and global economy and so Jackson-Stops expects activity in this part of the market to remain broadly flat in 2020, whatever happens in the wider economy.

It says that letting agents in the north west find that the Premier League clubs have a thorough understanding of what the respective local market rents are, and therefore offer their players guidance on the rental prices they should expect to be paying.

It says this sharply contrasts with other rural lettings markets, and it cites Northamptonshire – 100 miles south – where the country rentals sector is now seeing many would-be buyers arriving.

Not only is this demographic made up of those looking to ‘try before they buy’ but over the last year many former homeowners have decided to sell their property and rent a family home instead whilst they gain a better understanding on how the market in their area is likely to fare post-Brexit.

“There are many underlying factors impacting the rural rental market; ranging from movement within the Premier League, recruitment freezes in big cities and those looking to sell up and rent in the event of a property price crash. Despite these varying factors, we expect rental prices to remain stable throughout 2020” explains Jackson-Stops chairman Nick Leeming

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The Association of Residential Letting Agents has set out its demands should the governmental go ahead with proposals for lifetime deposits.

In its election manifesto the Conservatives pledged to introduce passports “to make private renting easier and cheaper.”

Now ARLA – which was represented on the government’s Tenancy Deposit Reform Working Group and made formal representations to the government in September suggesting how the current deposit system should be reformed – lifetime deposits – has commented on the latest proposal.

“If the introduction of a passporting system is to be viable the government must ensure that both the outgoing landlord’s deposit can be used if needed, whilst the incoming landlord has certainty, they will get the full deposit they have agreed with the tenant” it says.

And it continues: “Would this lead to the change in landlord and tenant behaviour? Most likely, however, the government must introduce a measure that reduces the risks landlords and agents face with three things that can help tackle or prevent negative behavioural changes in a passporting system.

“Firstly, a tenant guarantee. Secondly, a requirement to have an inventory. Thirdly, the requirement for a written tenancy agreement.”

And ARLA adds: “In the weeks and months ahead, ARLA Propertymark will be scrutinising the government’s proposals and working with Propertymark members to ensure the reforms are fit for purpose. “

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No date has yet been set by the government for the second reading of the Renters Reform Bill 2019-20.

The Bill was announced in the Queen’s Speech on December 19.

In addition to abolishing the so-called ‘no fault’ Section 21 evictions the Renters Reform Bill will also give landlords the right to gain possession of their property through the courts “where there is a legitimate need”.

The Renters Reform Bill will also pledge wider access to the rogue landlord and estate and letting agent database, and create a portable ‘lifetime deposit’ scheme for tenants to allow mobility within the rental sector.

There is also mention of introducing minimum qualifications for the sector by stating the legislation will “professionalise letting agents, to the benefit of tenants and landlords”.

However, a statement from the House of Commons issued just before Christmas confirmed that no date had been given by the government for its second reading.

Progress on the measure is likely to take some time if the Tenant Fees Act is an indicator – that was first mentioned in November 2016 but only came into force in June 2019.

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Countrywide has calculated that with many landlords exiting the buy to let market, the number of homes available to rent has dropped, particularly in London and the South.

There were 7.8 per cent fewer properties available to rent in the first 11 months of 2019 compared with the same period last year.

In the South of England however, where more landlords have sold up, there were 11.7 per cent fewer homes available to rent. Countrywide – in an analysis revealed through its up-market brand Hamptons International – says there are signs that investors are starting to return to the market, particularly in London.

During the first 11 months of the year, landlords bought 11 per cent of the homes sold in Great Britain – the same level as last year, but some five per cent lower than in 2015.

In November alone, the proportion of homes bought by investors increased to 12 per cent.

London recorded a bigger rise: landlords purchased 13 per cent of homes sold in the capital during the first 11 months of 2019, up from 11 per cent during the same period of 2018.

Hamptons says this was the first rise since 2015, but is in part due to fewer owner-occupiers transacting in the market.

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An overwhelming proportion of letting agents – 84 per cent – say rents will rise next year, well up on the 65 per cent saying the same thing 12 months ago.

The figure comes from the Association of Residential Letting Agents which adds that more than three-fifths of members believe demand will continue to rise and rents will rise.

However, 68 per cent think the number of landlords operating in the private rented sector will decline next year, as they are driven out by rising costs and higher taxes – the same number believe taxes will rise again in 2020.

David Cox, chief executive at ARLA Propertymark, says: “For far too long, successive governments of all political persuasions have passed significant amounts of complex legislation for landlords.

“As a result, much of this year has dampened landlords’ appetites to invest and expand their portfolios, with many consolidating their assets, or choosing to step away from the sector altogether.

“This has impacted tenants most, who have restricted supply and have been faced with less choice and paying higher rents.

“Looking ahead to 2020, we hope the government recognises the importance of increasing supply for tenants and uses it as an opportunity to make the market more attractive for landlords.

“This will encourage more landlords back into the market as well as ensure that tenants, including those who are most vulnerable, are not at a disadvantage in being able to find a suitable and affordable home to rent.

“Change should make the private rental sector fairer for all involved, and not penalise those landlords who provide high quality, affordable housing for thousands of tenants.

“Propertymark’s election manifesto outlines a number of urgent housing reforms we hope the new government will take forward to improve the sector, particularly regulating property agents through the recommendations of RoPA– the Regulation of Property Agents working group.”

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Just over a third of private landlords to reduce investments in the number of homes they let or quit the rental sector altogether in 2020.

A survey of over 2,000 shows that 34 per cent of landlords to reduce investments in the rental market – a big rise on the picture a year ago.

And the Residential Landlords Association, which commissioned the survey, says only 12 per cent of landlords are looking to expand the number of homes they rent out, down from 14 per cent a year ago.

The fall in supply comes despite the Royal Institution for Chartered Surveyors warning that the demand for private rented homes is outstripping supply, and as Rightmove has spoken of there being “strong demand” from tenants.

Some 45 per cent of landlords told the RLA that the Stamp Duty Levy on additional properties had been a deterrent to further investment in property.

Now the RLA is calling on the government to scrap the Stamp Duty levy where landlords provide homes adding to the net supply of housing. This should include developing new build properties, bringing empty homes back into use and converting larger properties into smaller, more affordable units of accommodation says the RLA.

David Smith, the association’s policy director, says: “This is yet more clear evidence of the sell-off of private rented housing largely due to the government’s extra tax on new rental homes. It is ridiculous that when the country needs all the extra housing it can get, it penalises good landlords who invest in new homes.

“With a new government and a Budget due, we need a shift in policy to one that supports investment because otherwise there will be a growing supply crisis in the private rented sector as demand continues to rise.”

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The government’s Queen’s Speech has confirmed what the industry has effectively been expecting for some months. There will be a new lifetime deposit scheme which according to a government statement “will see tenants’ hard-earned deposit move with them from property to property – giving tenants more control over their lives and keeping more of their cash in their pocket.”

Proposals to abolish Section 21 no-fault evictions have also been confirmed: the government says this means “landlords will no longer be able to uproot tenants from their homes at short notice and with no good reason – bringing greater security to millions of families who live in rented accommodation.”

But Whitehall also insists that there will be “new powers to strengthen the rights of landlords to gain possession of their property through the courts when they have a clearly valid reason to do so, in order to create a fair market where good and responsible landlords flourish.”

These were all broad commitments made in the Conservative manifesto at the General Election.

Campaigning charity Shelter, which has long argued for the abolition of Section 21, was quick to back the Queen’s Speech. “Very proud Shelter has campaigned for this and kudos to [pressure group] Generation Rent for consistent leadership to get this over the line” tweeted Shelter’s chief executive, Polly Neate.

A statement from Georgie Laming, campaigns manager at Generation Rent said: “The new Renters’ Reform Bill is brilliant news for renters. It’s proof that the government is finally recognising that the unique challenges of Generation Rent need to be addressed head on. Ending unfair evictions will reduce homelessness and provide renters with a house they can call a home for as long as they want. The new lifetime deposit scheme will also save renters taking out expensive pay day loans to make end meets during a house move.”

And Dan Craw Wilson, Generation Rent’s chief executive, himself tweeted: “There it is in black and white … now official government policy. Big job in 2020 is to get the detail of the new law right so renters are treated fairly.” Craw Wilson then appealed for “a few quid” to fund the campaign his group has been waging against landlords and agents.

Meanwhile the government plans to scrap ‘no fault’ evictions have been described as “ruinous” by the National Landlords Association. Its chief executive Richard Lambert says: “Landlords need certainty of their ability to end failing tenancies. If this cannot be provided by Section 21 then the government must reform the courts. Strengthening landlords’ rights will make no difference if the court process is seen as simply delaying or obstructing possession.

“The NLA is deeply concerned that the government will precipitate a housing emergency, deepening the crisis of supply and affordability faced by many households. Landlords will stop letting to tenants who are perceived as higher risk and ultimately sell properties which would otherwise provide much needed homes for those who cannot afford to buy.

“If ministers do not address the problems of capacity within the Courts Service before removing landlords’ ability to use the no-fault procedure, the dramatic increase in cases that will be brought before it will bring the system to its knees.”

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Whether you blame Brexit, political shenanigans or divine intervention, the London property sector has taken a bit of kicking over the past few years with regards to house prices and buyer activity.

Whilst in the three months to October we did see some sign of confidence regaining in the London property sector, with a 24% uplift in activity compared to the same time last year, questions remain as to whether the tide is starting to turn or whether it’s too early to say.

For those still feeling shy of the London property sector, but wanting to buy or invest within reachable distance – the capital is, after all, one of the world’s top financial centres – an attractive solution could lie in the commuter towns just outside the capital. Offering better affordability, growth and good accessibility, these areas have grown significantly in popularity amongst buyers and renters alike over recent years and, as such, have emerged as top investment hotspots.

With that in mind, SevenCapital has crunched the numbers to identify a shortlist of seven top areas to invest in property near London in 2020:

Bracknell

Bracknell represents one of the most exciting new markets within the London Commuter Belt. Sitting at the heart of the UK’s biggest tech hub and home to global brand such as HP, Dell, Honda and 3M, Bracknell offers its own thriving and fast-growing economy as well as easy access to central London. The town is also reaping the benefits of a £770 million town centre regeneration program, which has already seen the opening of a £240 million shopping destination, The Lexicon, which has transformed the town centre. Property Price Growth since 2014: 22%. Average rental yields: 4.52% to 5.75%

Slough

A commercial powerhouse and established commuter destination, Slough remains a property hotspot due to increased affordability, improved transport links and a £1 billion regeneration project taking shape. With property prices currently sitting at £379,254, Slough remains much more affordable than the London average of £628,416 and has seen much better growth over the last five years – 19% in Slough versus 12% in London.

Such is Slough’s attraction, nearly 46% of homes in the town are now let to London renters and with Crossrail on the horizon, that figure only looks set to move upwards. Property Price Growth since 2014: 19.91%. Average rental yields: 4.09% to 7.11%

Basingstoke:

Rated the 3rd fastest growing town in 2018, Basingstoke has seen impressive price rises of 219% over the last 20 years.

One of the top digital economies outside London, Basingstoke is home to 7,000 businesses including global names such as BNP Paribas, Fujitsu and The AA.

As a key destination within the London Commuter Belt, Basingstoke also offers direct access to London, Reading and Southampton in just 45 minutes. This makes it highly-attractive for London professionals that want affordability without losing accessibility to the capital. Property Price Growth since 2014: 17%. Average rental yields: 5.6%

Barking & Dagenham

With a population of 185,911 at the 2011 census, Barking and Dagenham is estimated to have around 212,000 as of last year, with this growth easily attributable to exciting plans to reinvent both areas.

More than £3 billion is currently being invested across both areas, which will see Barking transformed to create a New York style ‘mini-Manhattan’ complete with thousands of new homes, a central park, a redevelopment of the train station and a rejuvenated shopping centre. In Dagenham, it’s a similar story, with investment introducing a new train station, offering a 20-minute commute to the City, and more than 30,000 new homes built by 2030. Property Price Growth since 2014: 23%. Average rental yields: 5.22% to 6.23%

Horley

Just a stone’s throw away from Gatwick Airport, Horley has emerged as one of the most desirable investment locations in Surrey in recent years, as professionals have been priced out of the market surrounding areas such as Guildford – which has an average house price of nearly £200,000 more.

It’s location means travel is a synch, with residents able to reach the airport in around five minutes, and London Victoria just 30 minutes via a direct train route, making it popular with commuters. Property Price Growth since 2014: 48% Average rental yields: 4.52% to 7.2%

Luton

Home to a major airport and sitting just 22 minutes by train from London, Luton’s excellent transport links make it a popular, and affordable, town for commuters and business alike. With £1.5 billion investment plans announced in 2015 to create new jobs, an Enterprise Zone and a variety of mixed-use developments, plus the University of Bedfordshire providing a sizeable student population, it’s no surprise this town has enjoyed some serious house price growth over the past five years. Property Price Growth since 2014: 48%

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