Landlords

Two in five renters fear they will never afford to own a home

A significant number of people renting in the UK say they will never be able to afford a home, according to new research by Halifax and YouGov.

The study found that two in five renters cannot see how they will ever be in a position to buy a property, despite a desire to own a place of their own.

It was also revealed that around three in ten private renters in the UK think it is now normal for people to rent for life. However, just 14% of those aged between 18 and 24 share this view, with more than half of this group believing they will one day own their own property.

Renters aged between 35 and 44 are less optimistic about  being able to ever acquire a property, with a third considering it normal to rent for life and 28% believing that they will never buy somewhere.

Russell Galley, managing director at Halifax, commented: “Taking that first step onto the property ladder remains a rite of passage for many,” said Russell Galley, managing director at Halifax.

“Last year, first-time buyers accounted for the majority of the mortgage market for the first time in well over 20 years. This shows that with the right support and a few sacrifices, home ownership can remain an attainable goal.

“The financial hurdle of saving enough for a deposit might feel like a daunting or at times near-impossible task, but there are a number of options out there, including government schemes and family support mortgages, to help put first-time buyers on the right track.”

Property expert urges BTL landlords to ride out recession

With Britain edging closer to its first recession since the financial crisis, a leading property auctioneer is urging property investors, including buy-to-let landlords, to hold their nerve against the spectre of an economic downturn.

The country’s dominant service sector, which accounts for about 80% of the economy, unexpectedly plunged into contraction last month, in a sign of the increasing stress facing the economy as Brexit looms.

According to IHS Markit and the Chartered Institute of Procurement and Supply (Cips), activity in the sector fell as companies reported a fall in sales, job losses, cancelled and postponed projects and weak investment levels.

There has been a recent rise in properties going into receivership, banks unwilling to lend for construction projects and a decline in tenants looking to rent business or residential properties, according to Mark Bailey, managing director of Landwood Group, who says that a rise in auction sales is also evident, largely down to an increase in repossessions.

He said: “Worryingly, at Landwood we are also receiving more instructions over the past few months than we have done for a year or more – instructions for properties that have sadly gone into receivership.

“It is harder for property owners to let business space and for domestic landlords to find tenants  – there’s no doubt that a squeeze is on.

“With each failed building project, banks become more nervous to lend, builders stop building… and we fall headlong into a dreaded recession. Once we do, it’s anyone’s guess how deep it is or how long it lasts.

“The blame for all of this cannot be put at the door of Brexit… well, not entirely. There is no arguing with the fact that this is a period of change – domestically and globally. People err to the negative whenever there is change on the horizon – until events transpire and the scales balance out. The big issue is uncertainty and property is key to all of this. Uncertainty causes negativity, while a solid market has the opposite effect.”

So, if the pointers are all correct and a recession is upon us, what is the advice?

“Sit tight,” said Bailey. “Whether you are a commercial property owner or a domestic landlord, try your best to ride it out, perhaps for six months, before making any business decisions. Look at your borrowings and don’t over-stretch yourself at this time.

“There are always people who benefit from downturns in the market and they tend to be cash buyers. So if you have cash to invest long-term, a ripe time to buy may be about to begin.

“For the rest of us, it’s time to batten down the hatches and ride out the storm – see you on the other side.”

Rogue landlord ordered to pay almost £3,000 for unlicensed HMO

A buy-to-let landlord in Worcester has been ordered to pay almost £3,000 for operating an unlicensed House of Multiple Occupation (HMO) on Canterbury Road, WR5.

Worcester Magistrates Court heard that Mohammed Rafiq operated a premises illegally, leaving the council with little option but to take legal action against the landlord.

Rafiq was charged with three offences for breaches of the management of HMO regulations, including failing to supply firefighting equipment and having insufficient fire alarms, failing to install emergency lighting and the failure to display his name, address and contact details at the house.

Cllr James Stanley, chair of Worcester City Council’s communities committee, commented: “The majority of landlords in Worcester abide by the law but as this case demonstrates, the City Council won’t hesitate to act in cases where landlords exploit tenants, provide dangerous or substandard accommodation or flout their legal obligations,” said.

“I would urge any Worcester residents who are facing difficulties with their tenancy or have concerns about an HMO to contact the City Council’s housing team for advice and support.”

Property expert urges BTL landlords to ride out recession

With Britain edging closer to its first recession since the financial crisis, a leading property auctioneer is urging property investors, including buy-to-let landlords, to hold their nerve against the spectre of an economic downturn.

The country’s dominant service sector, which accounts for about 80% of the economy, unexpectedly plunged into contraction last month, in a sign of the increasing stress facing the economy as Brexit looms.

According to IHS Markit and the Chartered Institute of Procurement and Supply (Cips), activity in the sector fell as companies reported a fall in sales, job losses, cancelled and postponed projects and weak investment levels.

There has been a recent rise in properties going into receivership, banks unwilling to lend for construction projects and a decline in tenants looking to rent business or residential properties, according to Mark Bailey, managing director of Landwood Group, who says that a rise in auction sales is also evident, largely down to an increase in repossessions.

He said: “Worryingly, at Landwood we are also receiving more instructions over the past few months than we have done for a year or more – instructions for properties that have sadly gone into receivership.

“It is harder for property owners to let business space and for domestic landlords to find tenants  – there’s no doubt that a squeeze is on.

“With each failed building project, banks become more nervous to lend, builders stop building… and we fall headlong into a dreaded recession. Once we do, it’s anyone’s guess how deep it is or how long it lasts.

“The blame for all of this cannot be put at the door of Brexit… well, not entirely. There is no arguing with the fact that this is a period of change – domestically and globally. People err to the negative whenever there is change on the horizon – until events transpire and the scales balance out. The big issue is uncertainty and property is key to all of this. Uncertainty causes negativity, while a solid market has the opposite effect.”

So, if the pointers are all correct and a recession is upon us, what is the advice?

“Sit tight,” said Bailey. “Whether you are a commercial property owner or a domestic landlord, try your best to ride it out, perhaps for six months, before making any business decisions. Look at your borrowings and don’t over-stretch yourself at this time.

“There are always people who benefit from downturns in the market and they tend to be cash buyers. So if you have cash to invest long-term, a ripe time to buy may be about to begin.

“For the rest of us, it’s time to batten down the hatches and ride out the storm – see you on the other side.”

Scrapping Section 21 could lead to ‘open-ended tenancies and rent controls’

The government’s plans to scrap Section 21 notices to evict tenants could potentially pave the way for the introduction of open-ended tenancies and rent controls, according to London Assembly member Tom Copley.

The Labour politician is urging the government to press on with plans to outlaw the use of Section 21 eviction notices. 

In a letter to the housing secretary, Robert Jenrick, Copley said that with more than a quarter of Londoners now renting, more stringent measures should be put in place to prevent tenants being forced to leave rented homes with two months’ notice, without having to provide a reason for the eviction. In July, the Ministry of Housing, Communities and Local Government (MHCLG) launched a public consultation on its proposals to scrap the use of section 21 notices.

The MHCLG expects any changes to come into force by late 2020 or early 2021 and have highlighted that this will also be dependent on where other government priorities may take precedence.

But in his letter to the housing secretary, Copley called upon the government to swiftly scrap section 21 now that the consultation has closed. He said this was a “vital first step” towards providing more robust protections for the growing number of private renters.

Copley also wants to see the government take a further step towards sparking wider reform in the PR by following the example of other European countries and introducing open-ended tenancies. Copley said: “The threat of no fault evictions can deter tenants from reporting problems with repairs to their landlords for fear of retaliatory eviction. Abolishing ‘no fault’ evictions is the vital first step in protecting tenants in an often unfair and unforgiving private rented sector.

“There were thousands of no-fault evictions in London last year, but this is likely to be the tip of the iceberg. So we need to get on with scrapping section 21 without dither or delay.

“We know that the end of a private tenancy is now the leading cause of homelessness in the capital. It is clear that the sector needs quite radical reform as a matter of urgency.

“Of course, after abolishing section 21, the government have a golden opportunity to go further and follow the lead of many other European countries by introducing open-ended tenancies and rent controls.”

UK rental market looks more attractive for BTL landlords as rents rise further

Rents in the UK’s private rented sector continued to increase in September, the latest figures show. The data from HomeLet reveals that the average rent in the UK hit £697 per calendar month (pcm), up 2.2% on the same period last year.

When London is excluded, the average rent in the UK is now £797pcm, up 2.2% on last year. Average rents in London are now £1,694pcm, up by 3.3% on last year

All 12 of the regions monitored by HomeLet showed an increase in rental values between September 2018 and August 2019.  Five of the regions monitored by HomeLet showed an annual increase of over 3%, the North West, the East Midlands, the South West, Greater London and the North East

The region with the largest year-on-year increase was the North West, showing a 4.4% increase year-on-year.

HMO landlord hit with £40k fine

City of Lincoln Council has taken action against a House in Multiple Occupation (HMO) landlord in Lincoln for failing to comply with a number of safety breaches under the Housing Act 2004.

Julie Churchill who was responsible for an unlicensed HMO at 135 Monks Road, LN2, has been fined £40,000 for letting out a dangerous HMO that was also unlicensed.

Lincoln Magistrates Court heard that the property had no fire doors to the bedrooms, ground floor lounge or kitchen, no working fire alarms on the ground floor, while one of the three bedrooms had a door with a large gap to the top which would allow smoke to escape in the event of a fire. In addition, all the bedroom doors could be locked by a padlock which if in use, would not allow for a swift escape in the event of a fire.

It also transpired that the stairs were painted gloss black and had no slip resistance, while the kitchen did not have adequate facilities for occupants.  The court was also told that the seven unrelated immigrants occupying the property were unaware of their rights.

They had no tenancy agreement, rent book or rent receipt during their tenancy. Cllr Donald Nannestad, portfolio holder for Quality Housing at City of Lincoln Council, commented: “We’re extremely pleased to bring another case to justice as part of our ongoing battle to crack down on rogue landlords in Lincoln.

“This property was dangerous and as a council, we will not allow landlords to ignore their legal responsibilities, even if they refuse to engage with us. “We have a statutory duty to ensure HMO properties are compliant with standards, and this is with good reason.

“Most landlords have proactively applied for HMO licences or responded to reminders when the regulations changed in October last year, so it’s not fair to those who comply with the law and pay their licence fees.

“A big thank you to the council’s private housing and legal teams for bringing this case to justice.

“We want to ensure Lincoln is a safe place for everyone to call home.”

Vast majority of BTL landlords remain committed

An overwhelming majority of buy-to-let landlords are optimistic about their future in the private rental sector with 84% looking to maintain or expand their portfolio over the next 12 months, fresh research shows.  Just 16% of landlords are looking to reduce the number of properties they have over the next 12 months, according to the latest report published by The Mortgage Lender.

The report, ‘The Mortgage Lender, Buy-to-let: The Landlord Experience’, reveals that the most common number of properties for landlords is between two and four – 45% – while 11% of property investors are now using a limited company structure for their investments.

The report also shows that around half of all landlords agree that tax changes have led to a reduction in the number of private landlords, but just 1% think that has led to a rise in the quality of rental properties. Meanwhile, just 15% of landlords are seeking out specialist tax advice about their rental properties, while only four in 10 – 42% – are using a specialist buy-to-let mortgage broker when organising their borrowing.

Peter Beaumont, The Mortgage Lender’s deputy chief executive, commented:

“Our special report provides an in-depth guide to the buy-to-let market, including landlord obligations and yields around the country.” 

The report also reveals that property maintenance, care of property and tenant behaviour are the top three concerns keeping landlords awake at night.  Beaumont added: “Our panel of landlords have shared their worries and opinions with us and we’ve included landlord case studies to demonstrate the depth of borrower circumstances we are dealing with on a regular basis.”

Barclays introduces fresh rate cuts

Barclays has introduced a new set of rate reductions to its buy-to-let and residential ranges. In total, there have been 19 changes, with cuts of up to 0.13%.

In Barclay’s BTL section for purchase and remortgage, the 60% loan-to-value (LTV) two-year fix with £1,795 product fee has had its rate cut from 1.42% to 1.37%. 

Barclays recently launched a new five-year fixed rate buy-to-let product at 75% LTV. The purchase only deal is available at 2.19% and is subject to a £1,295 product fee. Last month, the lender cut its 75% LTV two-year fixed rate deal from 1.68% to 1.65%. This deal is subject to a £1,795 fee and a maximum loan value of £1m.

Craig Calder, director of mortgages at Barclays, said: “The new reductions we have announced will ensure we continue to offer a highly competitive fixed rate range that provides certainty of payments.”

Labour to allow private tenants to buy their rented homes!

The Labour Party could bring in a radical “right to buy” scheme if it gains power at the next general election which could help millions of private tenants in the UK to buy their rented homes at a reasonable price, the shadow chancellor has suggested.

John McDonnell is promoting the idea as a way to make it easier for workers to buy the homes they live in, while also tackling what he calls the “burgeoning buy-to-let market” and the problem of landlords who do not maintain their properties.

John McDonnell wants to see tenants have a better chance of buying their homes from landlords (Kirsty O’Connor/PA)

In what would be a day of reckoning for many of Britain’s 2.6 million landlords, the mooted right-to-buy scheme in the private housing market would echo Margaret Thatcher’s policy of the 1980s relating to government housing, under which millions of council tenants bought the property in which they lived. Mr McDonnell set out some loose guidelines for the Labour idea – first suggested by Jeremy Corbyn during his 2015 bid for leadership of the party – based on the premise that the sum paid by tenants wishing to buy their dwelling would not necessarily be the market price.

“You’d want to establish what is a reasonable price, you can establish that and then that becomes the right to buy,” he told the Financial Times. “You (the government) set the criteria. I don’t think it’s complicated.”

Mr McDonnell suggested the plan would be a way of redressing problems such as landlords refusing to invest in their properties while making a “fast buck” at the cost of their tenants and the community.

“We’ve got a large number of landlords who are not maintaining these properties and are causing overcrowding and these problems,” he said.

Mr McDonnell also detailed a bold share transferal proposal, under which a Labour government would confiscate some £300 billion of shares in 7,000 large companies and hand them to workers, in what would be one of the largest ever raids by a government on the private sector seen in a western democracy. Under that plan, every company with more than 250 workers would have to gradually transfer 10 per cent of their shares to their employees, the paper said.