Weekly landlord news digest: Issue 38

In our weekly news digest, brought to you by Hamilton Fraser Total Landlord Insurance, we provide our readers with the latest industry news and important updates.

This week, we discuss the potential banning of Section 21, which has been a topic of heated discussion within the industry. Many are against the banning of Section 21 as it will result in significant changes for both landlords and tenants.

In other current news, ARLA reports that rent charges for tenants have hit a record high in August. It is believed that this is mainly in response to the recent tenant fee ban which prevents landlords and letting agents from charging tenants additional charges for services.

Elsewhere, a trading standards crackdown catches 53 letting agents breaking the law. Two landlords were fined more than £45,000 between them in separate cases where they had rented out unsafe and overcrowded shared houses.

 

Concerns about section 21 continue to rise

While concerns about the potential abolition of Section 21 continue to circulate around the industry, LandlordZONE have put together an article about the results of this ban and how it could affect the industry.

As reported by LandlordZONE, Capital Economics (CE) have produced a report on behalf of the National Landlords Association (NLA), which forecasts the potential consequences of the ban. The report suggests that a ban on Section 21 could be devastating for the private rented sector in England.

Some of the major figures included in the report were:

  • 960,000 less homes will be available to renters
  • 770,000 less homes will be available to tenants on housing benefit or Universal Credit
  • 600,000 tenancies will see an increase in rent

However, the report did also identify some possible solutions. For example, the report suggested that reforms to court processes could help landlord and tenant disputes, evictions, and other cases to be resolved quicker, cheaper, and more efficiently. This could help prevent some of the adverse effects of removing the Section 21 rule for landlords.

Though some are still not convinced that these are true solutions to the ban and believe that removal of the Section 21 eviction process will undoubtedly result in a significant drop in available homes.

“Any government which thinks it appropriate to risk the loss of nearly one million rental homes at a time of housing crisis needs to reassess its priorities as a matter of urgency (…) Rather than playing to the gallery, the government should be looking to support and incentivise good landlords to remain active and provide homes to those who need them, rather than making it harder and causing these landlords to exit the market.”

– Chris Norris, Director of Policy and Practice at the NLA

The abolition is not yet set in stone and there is still time to have your say on the issue. The consultation for the abolition of the “no-fault” eviction rule closes on 12 October, 2019.

As previously reported, Hamilton Fraser brand ambassador, Paul Shamplina, is taking action by urging as many landlords as possible to complete this survey to have their say before it is too late.

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Buy to let rents hit another record high

Buy to let rents reached a new record high for the fourth month in a row in August. Letting agent trade body ARLA reports revealed that 64 per cent of landlords raised their rent prices, mainly in response to the tenant fee ban that came into effect in June.

The ban stops landlords and letting agents charging for services such as setting up, renewing or ending a tenancy.

ARLA says 35 per cent of tenants are paying higher rents than a year ago, and those in the West Midlands and Yorkshire & Humber have been affected the most with 80 per cent struggling to afford their monthly rent charges.

ARLA Chief Executive David Cox recently explained that tenant demand has risen as more homes have become available to rent. However, there are still concerns over the rapid increase of rent charges.

“Although it’s positive to see that supply has risen, it is nowhere near enough to counterbalance the rapid pace of rising rents, which have reached a new record high for the fourth month running (…) Unfortunately, the impact of the Tenant Fees Act will continue to be felt by tenants, as in order to keep their heads above water landlords will need to continue increasing rents to cover the additional costs they now have to bear.”

– David Cox, ARLA

How many tenants does it take to change a lightbulb?

New research, provided by The Mortgage Lender, shows that dealing with petty complaints is one of the most challenging aspects of being a landlord.

One in four landlords say they have had a complaint over something the tenant should have resolved for themselves – like changing a light bulb.

But some tenants’ negligent maintenance of their rental  home is still the biggest issue for property investors with 40 per cent having to manage property damages and 20 per cent stolen or damaged furnishings.

Another prominent issue is rent arrears, with 23 per cent of landlords having tenants with up to 12 weeks of missed payments and 19 per cent being in arrears.

Peter Beaumont, deputy chief executive at The Mortgage Lender, said: “Our research suggests being a landlord isn’t for the faint-hearted, finding tenants who will pay on time, look after the property and be able to change their own light bulbs doesn’t appear to be easy.”

This could suggest that it may be beneficial for landlords to take more time and caution in selecting their tenants in order to avoid dealing with these issues.