The biggest landlord news of the week: 25/1/19
Each week, Hamilton Fraser takes a look at the biggest headlines from across the landlord landscape, and brings them all together to ensure you’re up-to-date and in-the-know.
This week: Landlords’ biggest worries, new standards for buy-to-let and risky deals that are hitting property investors hard.
Buy to let ombudsman gets government go-ahead
Communities Secretary James Brokenshire has green lighted a new buy-to-let ombudsman to deal with tenant gripes over poor housing.
The independent Housing Complaints Resolution Service will settle complaints made by tenants
about repairs and maintenance in their rented homes if they have failed to come to an agreement over the issue with a landlord.
The service will be compulsory for landlords to join and will have the power to award compensation to tenants. Failing to sign up to the service could lead to a fine of up to £5,000.
Brokenshire explained that the service will offer tenants a faster and more effective way to resolve complaints and is seen as a way raise living standards for renters living in buy to let homes.
“Creating a housing market that works for everyone isn’t just about building homes—it’s about
ensuring people can get the help they need when something goes wrong,” said Brokenshire.
“But all too often the process can be confusing and overly bureaucratic, leaving many homeowners and tenants feeling like there is nowhere to go in the event of problems with their home.
“The proposals I have announced today will help ensure all residents are able to access help when they need it, so disputes can be resolved faster, and people can get compensation where it’s owed.”
Legislation to make the Housing Complaints Resolution Service law will move forward as soon as possible, said the secretary, but he has not confirmed any dates.
“I want to give people a clearer and simpler route to redress through a new Housing Complaints
Resolution Service,” said Brokenshire. “My aim is for this to become a single one-stop-shop for
housing complaints and help prevent anyone with a problem from being turned away.”
Biggest landlord worry is finding good tenants
No real surprise, but the biggest challenge for buy-to-let landlords is finding tenants who pay rent on time and look after their property, according to Zoopla’s State of the Property Nation 2018 report.
Half of the landlords surveyed revealed that they had problems signing up the right tenants, while many have concerns about dealing with red-tape and housing law changes.
Another one in four worries about how tax restrictions on claiming mortgage interest relief will impact their property business—although more than a third of landlords confessed that they did not know how the change would affect them.
A shocking 31% of landlords admitted they were unaware homes needed a licence if they were shared by five or more tenants.
And although they are worried about law changes, few plan to do anything to comply.
“Most of the landlords who find the legislation changes a challenge are not planning to do anything in response. However, some are planning to leave the market, while others plan to move to a letting agent to help them manage their properties,” said the report.
New standards for buy-to-let homes
Property investors in Scotland face a raft of new laws to ensure private rented homes meet minimum standards for tenants.
The Scottish Government has published a draft Bill outlining the new rules, which will phase in between March 2019 and March 2027.
The first set of rules will establish a minimum standard for living conditions in a private rented home in Scotland by combining the Tolerable Standard with the Repairing Standard.
Landlords already comply with both standards, but the rules will be updated to cover all rented homes from March.
Drop in homes going under the hammer
Fewer sellers are putting their homes under the hammer at property auctions, according to new data.
Properties offered for sale dropped by 4.4% in 2018 – down to 26,279 from 27,494 the year before.
Three out of four homes were sold, but the cash raised for sellers fell 6.3% from £3.19 billion in 2017 to £2.89 billion in 2018, says the report from market monitor the Essential Information Group (EIG).
“The ongoing Brexit turmoil leaves an outlook that remains uncertain, at least in the short term,” said EIG spokesman David Sanderman.
“The entire property market, private treaty included, is seemingly on tenterhooks whilst Parliament continues to try and negotiate a way out of the mire.”
Millions missing as investors warned of risky deals
Lawyers and insolvency experts are warning property investors about risky buyer funded deals that promise high returns but fail to deliver.
Hundreds of investors have lost millions of pounds to suspected fraudsters who finance building costs out of investor deposits. The government’s Insolvency Service raised concerns over buyer funded transactions after the collapse of developer Absolute Living Developments.
Six directors were banned for a total of 54 years amid concerns of misuse of £12 million of investor cash, while investigators are tracking another £68 million of assets signed over to a third party.
Meanwhile, the Solicitors Regulation Authority was probing eight law firms for claims alleging fraud or misuse of more than £100 million of investor cash.
Councils spend £22m renting homes they once owned
London councils are paying millions each year to rent homes they once owned but sold at massive discounts under the Right-to-Buy scheme.
The claim comes from Labour London Assembly member Tom Copley who asked each council in the capital about Right-to-Buy.
His report claims 42% of homes sold under the scheme are now buy-to-let homes, with some landlords owning portfolios of five or six former council homes.
London councils are renting 2,333 homes that were sold under Right-to-Buy at a cost of £22.35 million a year.
“Something has gone very wrong when tens of thousands of homes built to be let at social rents for the public good are now being rented out at market rates for private profit, sometimes back to the councils that were forced to sell them,” said Copley.
Under Right to Buy rules, London tenants can claim a discount of up to 70% of the value of their home, capped at a maximum £108,000.
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