RLA CLAIM VICTORY FOR COMMON SENSE - (goto top)
The RLA has welcomed today’s announcement (June 17) by Housing Minister Grant Shapps, to change the Planning Use Class regulations introduced by the previous Labour government days before the end of the last parliament.
Following a personal call from Grant Shapps, RLA chairman Alan Ward says:“It’s a victory for common sense. The prospect of 8,500 planning applications clogging up the town hall system made a nonsense of landlords’ and tenants’ rights to choose who may live in a house. The measures were ill-considered and would have had a universal effect on the private rented sector when they were trying to control a problem in a limited part of the student market.
“We thank the minister for keeping a pre-election promise and look forward to the consultation process to see how new regulations can be applied appropriately in local circumstances.
“The Residential Landlords Association has consistently argued that the changes were draconian and endorsed the view of the Rugg report (November 2008) that the problem existed in only 76 of 8,000 council wards. Despite only being in place for a few weeks the impact has been to drop house values for owner occupiers and fossilise markets for shared houses, potentially creating a two-tier market,”said Alan Ward.
He also praised the thousand of landlords who responded to RLA requests to email their MPs and sign a petition on the pre-election Number10 website.
“Most landlords will be able once again to exercise their right to let to a group of, say, three nurses wanting to share a house, without having to ask permission from the local authority”
It is believed the new measure will be effective from October following consultation.
CAPITAL GAINS – 40% OF NOTHING - (goto top)
STAGNATION threatens the private rented sector if Chancellor George Osborne raises Capital Gains Tax in his emergency budget on Wednesday June 22.
If CGT rates double for landlords, it would eat significantly into landlords’ savings and will be seen by many as a raid on their pension funds warns a powerful lobby group across all sectors of the market – mortgages lenders, landlord associations, agents and major property investors.
Disincentivising housing investment now will simply deprive more young people of their own home. It is therefore important that the provision of private rented housing is treated as an ‘entrepreneurial business activity’ for the purpose of capital gains tax.
RLA chairman Alan Ward says:“Most landlords are holding property long term. The reintroduction of taper relief would support that strategy. However, they are talking about“entrepreneurial”activity and buying-to-let is still classed as un-earned income. We have to convince Mr Osborne that active landlords are in business.”
The UK will need an extra 270,000 new homes every year between 2011-16 according to government figures. The PRS has been a unique source of housing over the past decade. In excess of one million additional households have found a home in the sector since 2000. By contrast, over the same period social renting has shrunk by 600,000
“We can do it”says Alan Ward.“Currently two out of every three new households created find their first home in the private rented sector.”
The RLA is also campaigning for roll-over tax relief. This applies where money from the sale of one property is re-invested in another. Says Alan Ward,“This keeps the market flexible but usually enables landlords to improve or develop the new property. Over 40 percent of rental properties date from before 1919 and it is vital these are upgraded to ensure sufficient stock.”
The group lobbying the Treasury includes the RLA plus Association of Residential Lettings Agents, British Property Federation, Council of Mortgage Lenders, Intermediary Mortgage Lenders Association, National Landlords Association and Royal Institution of Chartered Surveyors.
There is still time to sign the RLA letter to your MP and the Treasury – to date over 2,000 landlords have done so.
Landlords hit by soaring rent arrears - (goto top)
A quarterly survey of 500 private landlords has shown that rental arrears have reached their highest level since the research began in 2006.
The survey, by market research agency BDRC Continental, found that in the last 12 months, 34% of landlords have had tenants who fell into rental arrears.
The amount of tenant debt could reverse a slightly improved trend in buy-to-let landlords’ own debts.
According to debt charity Credit Action, the number of buy-to-let landlords who are in arrears of more than 1.5% fell in the first quarter of this year.
At the end of March, the figure stood at 19,300 or 1.56% of all buy-to-let loans, compared with 20,700 (1.69% of loans) at the end of 2009.
The number of buy-to-let properties taken into possession in the first quarter was 1,400, up from 1,200 repossessions in the preceding three months, but the same as a year ago.
Age of aspiration is back, says Shapps - (goto top)
Aspiration to home ownership will be encouraged, said housing minister Grant Shapps, but he made it clear that renting will remain an important choice.
In his first speech as housing minister, he said that the age of aspiration is back. It was not right to deny a new generation something his own generation had enjoyed – the chance of home ownership.
“This new Government is not in the business of pouring cold water on people’s aspirations.”
He said it was human nature to aspire to owning the roof over one’s head. And he promised:“I will work every day to help people achieve their aspirations to own their home.
“Of course, I am not arguing that everyone should somehow aspire to home ownership. Renting a home can be a positive and flexible choice. And social housing provides a sense of security for millions of families.
“I am simply saying to those who aspire to own their own home: this Government will support you. You will not be ignored. The age of aspiration is back.”
He went on:“There are an estimated 1.4m households who aspire to own a home but are unable to do so because of house prices and mortgage availability.
“There are hundreds of thousands of people in rented accommodation, or living with parents, who yearn to be first-time buyers. It is now true that the average age of the first-time buyer is 37.
“That 37-year-old is not asking for a hand-out: they just want a chance. We need to give them that opportunity.”
Talking about the massive challenge to beat Britain’s financial crisis, Shapps said it was important to create a stable housing market.
“I see responsible lending and responsible borrowing as two sides of the same coin,”he said.
The View from Westminster - (goto top)
With the dust now settled after the election, there is a real opportunity for the RLA to seek a fresh start with building relations with new MPs, ministers and officials.
As the work of the new Government gets under way, it has two pressing issues concerning the Private Rented Sector.
Firstly, the coalition’s likely intention to increase Capital Gains Tax for non-business assets is of huge concern to many landlords.
Depending on what the emergency Budget says on June 22 (I am writing this beforehand), RLA members should continue to be active in lobbying their local MPs with the aim of at least reducing the level of any rise and seeking a review for the re-classification of owner-managed buy-to-let homes as business assets.
The second key issue concerns regulation. The good news is that housing minister Grant Shapps MP has said that he will not be implementing the previous Government’s plans for a national register. This will make self-regulation an attractive option.
The not so good news is that Shapps has announced that he will not be rescinding changes to the Use Classes Order to restrict the growth of HMOs. But he has said that he will be reviewing them, and the RLA will be keen to present him with evidence of the detrimental impact they are having.
RLA members should make their local MPs aware of the problems now being caused, and then pass on to the Association any helpful evidence and replies they receive.
*Ed Jacobs, of the Public Affairs Company, writes the View from Westminster. The Public Affairs Company is a consultant to the RLA.
‘Party flats’ landlords could be given Asbos - (goto top)
Landlords of short-term and holiday rental flats in Edinburgh face being served with Asbos.
They let out ‘party flats’ to stag and hen party groups for weekend stays. But local residents claim they are plagued by drunken revellers in the early hours and have been campaigning for action.
The Labour MSP for Edinburgh Central, Sarah Boyack, said the Scottish Government has agreed to consider changing the law to make it easier for councils to tackle the problem.
The current law allows tenants in short-term and holiday lets to be served with Asbos, but because stag and hen groups stay such a short time, it is not seen as a practical solution.
Boyack said she had a“very constructive”meeting with communities minister Alex Neil.
She said:“The minister has agreed to examine options which would mean amending the Anti-Social Behaviour Act to extend the capacity of serving notices not just to tenants but to landlords and owners of short-term and holiday lets.
“The suggestion is that councils could have the power to require landlords to do certain things such as limit numbers, noise insulation and so on, and they would have to have enforcement powers and a backstop to enable them to serve a stop notice if there was persistent non-compliance with orders.”
New RLA development course available - (goto top)
Recently the courts have introduced a ‘Pre Action Protocol’ which has to be followed before you can issue a County Court Small Claim. To help you understand this ‘Pre Action Protocol’ the RLA has introduced a new RLA development course, County Court Small Claims Proceedings.
The aim of this half day course is to guide you through this protocol from writing the initial letter, to advice on completing court forms to the various methods of enforcement once you have judgement. For more information click here.
In addition to the County Court Small Claims Proceedings we also have numerous other RLA development courses situated around the country in: Norwich, Cardiff, Manchester, Leeds, London, Reading and Bristol. You can be sure that a course is being held, or will soon be held, convenient to you.
Click on any of the following links for course information, dates and venues:
Letting for Landlords Course
The Complete Letting Agents Course
Property Inventory Course
Local Housing Allowance Course – How to Benefit as a Landlord
Housing Health & Safety Rating System (HHSRS) & Inventory Course Combined
Landlord jailed after horrific fire case - (goto top)
A landlord has been jailed for two-and-a-half years after a fire in one of his properties left a teenage tenant so badly burnt she was given less than 1% chance of survival.
Only pioneering skin grafting techniques saved Layla Skalli’s life after she suffered 80% deep tissue burns all over her body following the blaze at her flat in Norwich.
The property above a mobile phone shop became a raging inferno last year, and tenants in three adjoining properties were lucky to escape. Fire crews rescued a woman living in a second-floor apartment above Miss Skalli’s flat as she prepared to jump for her life. Other tenants climbed down a drainpipe to escape.
Landlord Michael Billings appeared at Norwich Crown Court to admit charges brought by both the Health and Safety Executive and Norfolk Fire and Rescue Service.
The court heard Billings failed to provide even the most basic protection for his tenants, such as fitting a working fire alarm system, installing the correct number of fire doors or providing adequate means of escape. The gas appliances in the flats above the shop had not been serviced or properly inspected.
Judge Paul Downes sentenced Billings, of Barsham, Beccles, Suffolk, to two-and-a-half year’s imprisonment and ordered him to pay £20,000 in costs. Judge Downes said he would review the sentence if Billings pays Miss Skalli £20,000 as a show of remorse.
The judge also ordered a £400 award be paid out of the public purse to Dominic Gale, a passer-by who raised the alarm after spotting the fire. The cause of the blaze has never been conclusively found.
Andrew Skalli, the brother of Miss Skalli who is now 20, said:“The actions of Michael Billings have ruined my sister’s life. We want to remind every landlord that they have a legal and moral obligation to the safety of their tenants, something Billings gave no thought to.
“But no amount of time in prison could make up for the pain he has caused my sister and my family. Despite this, we remain grateful to the people who made this prosecution possible and hope it helps save other lives.”
Information on gas safety can be found on the HSE website at www.hse.gov.uk
A guide to landlords’ duties can be found at www.hse.gov.uk/pubns/indg285.pdf
Landlord who flyposted pays the price - (goto top)
A landlord who illegally placed posters advertising his properties to let in public phone boxes has been fined £2,450 after being caught for a second time.
Dhruv Bhatti, of Woodley, Berkshire, was seen putting the posters up in the Reading area by a Streetcare Team. His actions led to a prosecution by Reading Council’s planning enforcement team.
Bhatti admitted seven flyposting offences and was fined £350 for each offence and ordered to pay £989 in costs, making a total of £3,439.
He was fined on a previous occasion when he continued to put up posters despite being warned by the council to stop.
No more red tape, landlords are promised - (goto top)
Housing minister Grant Shapps will not license either private landlords or letting, promising them ‘no more red tape’.
Speaking in Parliament, Shapps said the private rented sector is already governed by a well-established legal framework and the Government has no plans to introduce any further regulations.
The announcement delighted landlords but failed to impress agent organisations, including the Association of Residential Letting Agents and the National Approved Letting Scheme, which have been campaigning for all agents to be regulated.
Ian Potter, operations manager of ARLA, said:“We are extremely disappointed with the housing minister’s decision to scrap the previous Government’s plans for the regulation of letting agents. A minimum requirement must be surely be consumer redress and protection of all funds taken from the public, not just tenants’ deposits.
“Currently, any person or organisation can become a letting agent. Until that is changed via national regulation, unprofessional, unqualified and unethical operators will continue to exist, to the detriment and expense of consumers and the market as a whole.”
Caroline Pickering, chairman of NALS, said:“We have seen a significant increase in agents misappropriating the monies of tenants and landlords. For those consumers with a licensed NALS firm, they can claim back monies from the Client Money Protection scheme, but not everyone is that lucky.
“We have been working with the police on many cases to charge those unscrupulous agents using consumer monies as an overdraft, and worse yet, absconding completely, and charges have now been made in some cases, and more expected. But the Government needs to take action to end this illegal behaviour.
“People will continue to be at risk just when they need to know where they can safely go when they need to rent a home. If the Government does not plan to protect the consumer by introducing much-needed regulation, we appeal to them to talk to us and the industry urgently.”
As well as ditching licensing, Shapps also dropped plans for a national register of all private landlords, plus proposals for a ‘trip adviser’-style website where tenants could say what they liked about landlords, and for a national housing hotline.
In his statement, Shapps said there were three million private tenants, the“vast majority”of whom were happy with the service provided by an estimated one million landlords.
Instead, he urged councils to use the powers they already have to tackle the minority of rogue landlords – for example, by forcing them to put right hazards in their properties or by using councils’ discretionary licensing powers.
Remortgaging by buy-to-let landlords falls - (goto top)
Remortgaging by buy-to-let landlords has fallen to its lowest level for five years as deals dry up.
Specialist lender Paragon said that remortgaging accounted for 28% of buy-to-let business handled by brokers during the first quarter of this year, down from 30% in the final quarter of 2009. This is the fifth consecutive quarterly fall and the lowest level since the first quarter of 2005.
Conversely, the proportion of first-time landlords rose for the second consecutive quarter, accounting for 21% of buy-to-let lending.
The proportion of business from landlords extending their portfolios also fell during the period, from 52% in the fourth quarter of 2009 to 45% during the first quarter of 2010. Property substitution, where the landlord is purchasing property to replace one being sold, rose from 2% of business to 5%.
John Heron, Paragon Mortgages’ managing director, said:“There is little incentive for landlords to move from their existing lender, and even if they wanted to, there is a serious lack of buy-to-let mortgage products available.
“The low interest rate environment means that most landlords with a mortgage are financially better off staying on their reversionary rate with their existing lender rather than remortgaging to another lender.
“If they did want to move, their options are very limited. Moneyfacts figures show there are only approximately 300 buy-to-let mortgage products available today, compared with over 3,500 at the market’s peak.”
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RLA appoints video inventory partner - (goto top)
If a picture is worth a thousand words a digital video inventory could be worth a million...
Video inventories are the perfect cost effective way to accurately record the condition of your property and its contents. By providing clear visual evidence this will greatly assist you in resolving problems that may arise from landlord/tenant disputes or any home insurance scams.
The RLA is now able to offer Video Inventories as one of its many services. The RLA’s Official Partner is The Video Inventory Agency. The Video Inventory Agency offers friendly, reliable, independent video inventory services carried out by professionally trained and certified inventory agents throughout the UK.
If you would like more information about Video Inventories or The Video Inventory Agency, click here.