UK property repossessions rising
Buy-to-let and home owner repossessions jumped in the third quarter of 2019.
UK Finance figures show that 1,330 home owner mortgaged properties were taken into possession, up 19% annually, while 800 buy-to-let mortgaged properties were repossessed, up 40%.
UK Finance said these figures were still below levels seen between 2009 and 2014 and were partly due to regulatory changes when it comes to lending.
The trade body said: “Lenders continue to show flexibility to borrowers in financial difficulty and possession is always a last resort.”
Its data showed that arrears remained at historic lows.
The proportion of home owner mortgages in arrears of 2.5% or more fell 9% annually to 71,590.
Within the total, there were 22,300 home owner mortgages with more significant arrears of more than 10%, which was 8% fewer than in the same quarter of 2018.
In the buy-to-let sector, there were 4,550 mortgages in arrears of 2.5% or more, down 5%.
Of these, there were 1,170 buy-to-let mortgages with arrears of more than 10%, down 1% on a year ago
RICS says so-called rental reforms hitting house market
The RICS claims Brexit and the general election are hitting the housing market everywhere.
The RICS also called on the next government to stop tinkering with the private rented sector through “misguided” reforms.
According to RICS estate agency members, new buyer enquiries, sales and new instructions are all down for yet another month. Market appraisals have also dropped again.
Prices are flat, and on the lettings side, tenant demand continues to rise as more landlords are forced to leave the sector.
The RICS report said that enquiries from new applicants fell for the second month running in October right across the UK.
Sales also dipped everywhere, other than in Northern Ireland where agents noted a marginal increase.
New instructions were down for the fourth consecutive month across the whole of the UK.
In addition, agents reported a decline in the number of market appraisals.
On the lettings side, agents reported a drop in new instructions from landlords, and said that the pace of decline is gathering momentum.
RICS agents expect to see more rent rises.
Simon Rubinsohn, RICS chief economist, said: “Both buyer and seller activity remains in a holding pattern, hampered by political and economic uncertainty. Given the upcoming general election next month, it appears unlikely that these trends will pick up to any meaningful extent over the remainder of this year. The picture remains very different on the lettings side, however, with tenant demand gathering momentum over recent months. This is running against an increasingly tight supply backdrop for rental properties and seems set to squeeze the pace of rental growth higher going forward.”
Government has no plans to introduce national register of landlords
The Government has stated that it has no plans to introduce a national register of private landlords. By the way, note that favourite politician’s phrase “we have no plans”.
It has not even undertaken an assessment of the proposal, made in a report back in January when the Chartered Institutes of Housing and of Environmental Health jointly called for a register.
The two organisations said that such a register would make it easier for local councils to identify landlords in their areas and would reduce the need for new licensing schemes.
However, in response to a parliamentary question, Viscount Younger of Leckie on behalf of the Government said that the Government has no current plans for a register, which could place an “additional regulatory burden” on them.
He said that local authorities currently have a wide range of powers available to them, including access to a database of rogue agents and landlords.
ARLA Propertymark called for local authorities to adopt a collaborative approach with landlords and agents, and in strong language said that licensing schemes are not the answer,
ARLA chief executive David Cox said: “Licensing does not work. Licensing has never worked and never will work.
“Newham have done 1,200 prosecutions, or 240 a year, out of 47,000 properties. That is 0.5% of properties in their area that they have done anything about and have done prosecutions. I would note that that is with 140 officers. What we need is education. Landlords need to be trained in what they need to do. Agents need to be trained in what they need to do.
Filling in a piece of paper and giving it to the council and paying £500 is not going to teach them the 150 laws that they need to understand.”
Tenants stealing more electricity to power cannabis farms
Theft of electricity by criminals using rental properties for cannabis production is soaring.
Overall cases of electricity theft where there are police investigations are projected to be 13% higher this year than last, with an expected 2,200 cases.
In 23% of cases of electricity theft, police suspect it was stolen for the cultivation of illegal drugs.
Insurers say that claims from landlords whose properties have been converted into illegal cannabis farms now account for a third of the total value of all malicious damage claims.
A leading insurance firm said that cannabis production in rental properties can easily cause thousands of pounds worth of damage, including mould and water leakage.
The insurer is warning of signs, including where tenants wish to pay up-front for the lease.
Labour confused over stupid right to buy policy
The Labour Party says it will bring in ‘right to buy’ for private tenants – but that it will restrict the policy to larger landlords.
Shadow chancellor John McDonnell was asked by The Times about its controversial policy, saying it had raised concerns that landlords would be forced to sell off their properties at below market rates.
The Times said that McDonnell has now decided that the policy should not apply to those who only own “one or two” rental properties.
He told the paper: “There’s a large number of individuals or families who have bought another property as their asset for the future and we wouldn’t want to endanger that.”
However, critics said that Labour’s amended right to buy policy would still seriously harm the sector.
David Alexander, of property management firm Apropos by DJ Alexander, said: “The shift appears to be aimed at placating individuals and families with smaller property investments and focusing on large scale investors.”
“However, the policy of buying anyone’s property at a price decided by government rather than market value would instantly destabilise the whole housing market.”
£4 million to help councils combat criminal landlords
The Government has announced almost £4 million extra funding for councils to crack down on criminal landlords.
Almost £4m is being made available to councils which can put in their bids.
The new funding comes on top of last year’s £2m programme which was shared among 56 projects.
For example, Burnley used £60,000 to carry out inspections of rented homes.
After his mum agreed he could speak, Housing Secretary Robert Jenrick said: “It’s unacceptable that a small minority of unscrupulous landlords appear to be breaking the law and providing homes which fall short of the standards that tenants rightly expect. Everyone deserves to live in a home that is safe and secure, and the funding announced today will help to further strengthen councils’ powers to crack down on criminal landlords and drive up standards in the private rented sector.”
Councils have less than a month to apply for a share of the pot, with the deadline for applications on December 1st.
David Smith, policy director of the Residential Landlords Association (RLA), said: “We welcome the Government’s focus on rooting out criminal landlords. For too long the debate has been driven by ideological calls for more regulation of the sector.”
He concluded “What is needed is better enforcement of the powers already available to root out the minority who bring the sector into disrepute.”
Tenants making fortune out of illegal sub-letting
Tonight, Monday 28th October at 7.30pm, BBC Inside Out (London) will highlight the growing number of people making a business out of their tenancy via Airbnb, without their landlords’ permission. The show covers the story of a landlord who ended up £10,000 out of pocket after his tenants ‘professionally’ sublet his property in Bloomsbury on Airbnb.
This is a growing problem, particularly in Central London and is partly a result of how too tenant-friendly the law has become. Contrary to the nonsense talked by Shelter etc , it is incredibly hard for landlords to evict even criminals who are illegally sub-letting.
The tenants had a 22-month AST arranged through Base Property Specialists ltd. During a periodic inspection, consented to by the tenants, the agent arrived early to witness the tenants checking a family into the property. On returning to the office, the agent reviewed Airbnb to find the property listed both as a single dwelling and as two separate bedroom rooms. Airbnb had more than 70 booking reviews for the property, with the first being the same month that the tenants’ tenancy commenced, showing they had been subletting it from the beginning.
Despite the tenants requesting to stay and subsequently removing the key safe and repairing the damage, Base Property continued to receive reports from neighbours of people coming and going. When the agent arranged for a plumber to fix a maintenance issue, he was told by the occupants, a Russian family, that they did not speak English and were renting the property.
By this point, the tenants were refusing to engage with the agent. They continued to host on Airbnb despite denying it, even using a professional laundry service to prepare the beds. They refused access to contractors who were due to fix a leak, causing further damage to the property. Kristjan Byfield called in the help of Paul Shamplina of Landlord Action who served the tenants with a Section 8 notice and thereafter, the Landlord Action solicitors issued possession proceedings.
Rise in mortgage applications
High street banks approved 43,276 mortgages for house purchase last month – 13.5% up on September last year.
Altogether there were 85,880 mortgages approved by the main high street banks last month. Remortgage approvals were 23.4% higher than in September 2018.
However, trade body UK Finance noted that September last year was a particularly subdued month for the mortgage market.
The organisation also noted that credit card spending, at £11bn, was just over 10% higher than in September last year, but said that repayments were in line with the increase.
Government should exempt social housing tenants from ban on Section 21
The Government should exempt social housing from its plans to abolish the assured shorthold tenancy regime, claiming that the proposals could “inadvertently reduce the supply of homes for rent.” So says a report by a leading law firm.
The Ministry for Housing, Communities and Local Government (MHCLG) launched a consultation on abolishing so called ‘no-fault’ evictions and improving Section 8 grounds which closed last Saturday, 12th October, after a 12 week period.
The Government is proposing to remove Assured Shorthold Tenancies (ASTs) from the Housing Act 1988 which would mean that all landlords, both private and social, would be restricted to offering only the more tenant-protected assured tenancies.
The report argues that the proposals could have the unintended effect of reducing the supply of homes for rent. This they say would affect the private rented sector or those offered by private registered providers (PRPs) of social housing.
If the assured shorthold tenancy and the use of Section 21 of the Housing Act 1988 is abolished, landlords will be unable to evict tenants without giving a reason in court, an adversarial system which introduces uncertainly and costs for landlords, and a massively increased workload for an already overstretched court system.
Brexit causing house sales slump, says Land Registry
Land Registry data shows that sales volumes fell in June, which was probably the result of Brexit.
Provisional transaction figures in the latest Land Registry House Price Index suggest transactions were down by 6.4% across the UK.
The statistics, based on around 85% of registered transactions, show sales fell 5.8% in England, 13.4% in Scotland, 4.5% in Wales and 1.8% in Northern Ireland on an annual basis.
Meanwhile, house price growth bounced back from a seven-year low in August, the Land Registry says.
Average prices rose 1.3% annually and 0.8% on a monthly basis to £234,853.
This is a faster pace than the 0.8% annual and 0.3% monthly growth recorded in July.
House price growth was strongest in Wales where prices increased by 4.5% in the year to August, up from 3.8% in the year to July.
The lowest annual growth was in London, where prices fell by 1.4% over the year to August, followed by the south-east where prices fell by 0.6% over the year. It is possible that London is more affected by Brexit than other regions of the UK.
Zoopla says rents rising at fastest rate for three years, but still affordable
Zoopla reports that rents are rising at their fastest rate for three years.
The report said that the annual rate of UK rental growth for new lets is now 2%, up from 1.3% a year ago. It blames tightening supply as levels of new investment decline, a result of tax and policy changes.
Despite the rent rises, it says the growth is half the level of earnings growth, which the ONS puts at 4% over the last three years, and that actual rental affordability is trending downwards.
The report puts the average rent at £876, up from £859 a year ago, with average time on the market at only 17 days.
The report also says that there are more home moves in the UK rental market than in the sales sector – 1.2m compared with around 1m. It says private renters move on average every four years, while home owners move every 20.
Landlord disincentives encouraging people to sell
According to research by a leading estate agent, only 7% of homes that came on to the rental market this year were listed for sale in the previous six months.
This indicates a decrease in the number of ‘accidental landlords’ - people who decided to rent their property after failing to find a suitable buyer.
Last year, 8.6% of homes were previously advertised for sale before they went on the rental market.
Every region recorded a fall in the proportion of homes let by accidental landlords, with London seeing the biggest drop – although London is still the accidental landlord capital of the country.
So far this year 10.1% of homes listed to rent in London had been up for sale during the previous six months, down from a peak of 12.6% in 2018.
Now, people who might otherwise be considering renting their home out before selling have a strong incentive to beat the taxman – and have only a few months left in which to do it.
Changes introduced in last year’s Budget and set to be implemented next April, will increase the amount of Capital Gains Tax that landlords who have previously lived in the property will have to pay if they sell. This will come on top of the 3% Stamp Duty surcharge that home owners already have to pay if they buy an additional property.
Landlords - help stop abolition of Section 21 - last chance!
The government's consultation on their proposed abolition of Section 21 closes tomorrow, 12th October
This is your last chance to let the government know what YOU think about the proposed end to the Section 21 No Fault Eviction process.
If this no fault process is closed off then the only means of evicting tenants will be via the Section 8 process, which until now has been used to cover non-payment of rent, damage to property etc. It can be an even longer process than Section 21.
Image below links to Government consultation:
Landlords still await announcement on scheduling of new electrical safety checks
The mandatory electrical safety checks announced by the government are yet to receive an actual start date.
Esther McVey, The Housing Minister said “In July 2018, the Government committed to introducing mandatory five-yearly electrical safety inspections for electrical installations in privately rented properties. This will be achieved through secondary legislation, subject to parliamentary time. In the meantime, it remains best practice for landlords to ensure that the electrics in their properties are safe.”
David Smith, policy director for the Residential Landlords Association, told EYE: “The first duty of any landlord is to ensure the properties they rent out are safe.
David Cox, chief executive of ARLA Propertymark, said: “We agree that it is best practice for landlords to ensure that electrical safety checks are carried out regularly in their properties and to get into the habit of doing so before legislation comes in.”
Robert Jervis-Gibbons, public affairs manager at campaign group Electrical Safety First, said: “Electrical Safety First is extremely concerned that the Government has not yet provided a timescale to implement mandatory electrical safety checks in the private rented sector, particularly since it announced its intention of doing so last year.
This has become a critical issue that needs to be addressed, particularly in response to the tragic fires at Grenfell and Lakenal House, which appear to have been caused by electrical products.”
Have YOUR say on the removal of Section 21 now!
New research, commissioned by the National Landlords Association (NLA) and carried out by Capital Economics (CE) has predicted that the private rented sector in England, which now accounts for around 20% of all households, would be devastated by a ban on section 21.
CE’s report also forecasts a 59% reduction in housing for those tenants claiming housing benefit (HB) now incorporated into Universal Credit (UC), and rents potentially could increase by 13 per cent.
• 960,000 fewer dwellings available to renters
• 770,000 fewer dwellings available to tenants on housing benefit or Universal Credit
• 600,000 dwellings could see rent increases.
However the report says there are possible solutions that could avoid this:
Making Section 8 cases, faster and cheaper, could off-set the effects of removing of Section 21 for many landlords.
However, CE thinks the removal of the “no-fault” eviction process, and replacing it with an improved but adversarial Section 8 process, would still see a likely drop of between 180,000-390,000 available homes. Between 130,000-300,000 fewer homes would be available to those on housing benefit, and rent increases are likely from between 110,000-240,000 properties.
Click here to tell this so-called Tory government what YOU think about the abolition of Section 21. But you must respond by 12th October.
HMO Landlord hit with £40,000 fine
Julie Churchill, an HMO landlord has been found guilty and fined £40,000 for letting out a dangerous and unlicensed House in Multiple Occupation.
It is the second largest fine levied against a landlord obtained by City of Lincoln Council.
Julie Churchill’s property was deemed dangerous by the magistrates for failing to comply with a number of safety breaches under the Housing Act 2004.
The house had no fire doors to the bedrooms, ground floor lounge or kitchen, no working fire alarms on the ground floor, and one of the bedroom doors had a large gap to the top which would allow smoke to pass in the event of a fire.
Three of the bedroom doors could be locked by a padlock which if in use would not allow for a quick exit.
The court heard that if a fire had erupted in this building, these inadequate fire warning systems and lack of fire containment measures would have put the tenants at extreme risk.
The stairs were painted gloss black and had no slip resistance in the event of a tenant falling, and the kitchen didn’t have adequate facilities for the seven tenants living in the property. One of the occupied bedrooms was below the legal minimum size for an adult.
It was heard in court that the repair of these defects would have cost Churchill as little as £6,000.
When the four-bedroom property was inspected by police and housing officers under a magistrates’ court warrant in January, the occupants were found to be seven unrelated eastern European and sub-Saharan immigrants in four bedrooms.
The tenants spoke little English and were unaware of their rights, receiving no tenancy agreement, rent book or rent receipt during their tenancy. Only two of the seven tenants knew what the landlord’s name was.
Churchill was taking up to £1,480 per month in rent, which at that rate would give her a massive income of approximately £35,520 over the two years she had owned the property.
It is evil trash landlords like this who, despite being a tiny minority, give all other landlords a bad name.