Section 21 Retaliatory Eviction (England Only)

22 07 2015

Section 21 is one of the most important and significant sections in the Housing Act 1988. As you will know, after service of a properly drafted section 21 notice, a landlord can evict his tenant as of right, without having to give a reason. Arguably it was the cause of the ‘buy to let industry’ – as under the previous Rent Act 1977, landlords found it almost impossible to recover their property from tenants.

Retaliatory eviction: Deregulation Act 2015

When these regulations come into force in October 2015, section 21 notices will be invalid in the following circumstances:

  • if it is served after a tenant complains about the condition of their rented property and the landlord fails to provide an adequate response, and
  • the tenant then goes to the Local Authority and complains and they serve a ‘relevant notice’ on the landlord

An adequate response, is one which:

  • gives a description of the work the landlord intends to do to deal with the complaint and
  • sets out a timetable for doing it.

The landlord can’t serve a notice within 6 months of a Local Authority serving a relevant notice to them. A relevant notice is basically an improvement notice or a notice regarding remedial action being taken by the Local Authority.

There are exceptions if:

  • it was the tenant who caused the damage to the property being complained about, and/or
  • the property is genuinely on the market for sale (but this must be the open market and there must not be any intention to sell to a connected party).

The same rules will also apply to the common parts of a building (for example stairs and hallways outside rented flats) if the landlord had a ‘controlling interest’ and the condition of the common parts affected the tenants use of his rented property.

There is a commencement order which brings some of these changes into force on 1 July 2015. However, the requirement for the new section 21 notice cannot come into force until the statutory instrument has been published. We will of course update you as soon as we know.





Conservative promises

1 06 2015

Much has been written about what the Conservatives promised in the next five years, but here is an overview from their manifesto:

  • To extend the “Right to Buy” to 1.3m housing association homes in England.
  • To build 200,000 homes for the first-time buyers aged under 40, and sell them at a discount of 20% below market price
  • To deliver an additional 275,000 affordable homes by 2020, as well as 10,000 new rental homes at “below market rates” to help people save for a deposit.
  • To “at least” double the number of custom and self-built homes by 2020, partly by requiring councils to allocate land to local people to build or commission their own home.
  • New Help to Buy ISA’s for first-time buyers to help them get a deposit for a house. Aspiring homeowners will have access to a Help to Buy ISA, which will top up 350 for every £200 saved towards a deposit, up to a maximum top-up of £3,000.
  • Buyers with a 5% deposit can apply for a five-year, interest-free government loan equivalent to 20% of a new-build property’s value under the existing Help to Buy Scheme. This was due to be pulled next year, but will now be extended until 2020.
  • Alternatively a Help to Buy mortgage guarantee allows potential buyers a better chance of a mortgage to buy a home with a 5% deposit, with the government protecting lenders if the borrower defaults. This will now remain until 2017.
    To create a £1bn Browfield regeneration fund to unlock sites for 400,000 homes.




A MILLION TENANTS COULD LOSE THEIR HOMES

29 04 2015

Nationwide property lettings specialist, Belvoir, attacks ‘flawed’ policies

Labour’s pledge to introduce Draconian new policies in the private residential property sector could result in up to one million tenants losing their homes.

That’s the hard-hitting message issued today by Belvoir, one of the country’s largest and most respected property lettings and management companies.

“In a series of measures designed to appeal to housing tenant voters, Ed Miliband claims to be on their side by curbing rent increases, capping rents and abolishing letting agent fees,” says Belvoir’s Commercial Director, Dorian Gonsalves.

“But these, alongside several other extremely flawed policies such as making landlords commit to three-year tenancies, will prove catastrophic since they will force many landlords out of the private rented sector – sparking a housing crisis.”

There are currently 11 million people renting homes in the UK. This equates to 20 per cent of the population and includes 1.5 million families with children.

“We know that many decent and ethical landlords are starting to tire of being branded ‘rip off’ operators,” he added. “In our experience, this could not be further from the truth. Whilst they do expect a reasonable return on their investment, professional landlords also play a crucial part in the nation’s economy and wellbeing by providing quality housing for people who either want to rent, or need to rent, a home on a long term basis.

“Labour’s proposals are being promoted and positioned as ‘anti-landlord’ when in fact, they will prove to be ‘anti-tenant’ should they be adopted.
“Faced with increasing costs, including the possibility of future mortgage rises, increased legislation and the possibility of not even meeting their total overheads, many thousands of landlords will decide to sell up.

“If just 10 to 15 per cent of all professional landlords leave the private rented sector it will throw the sector into chaos. Up to a million tenants could lose their homes. Instead of raising housing standards and providing increased tenant security, the exact opposite will happen.

“At a time when there is already a severe housing shortage in Britain, the Labour Party does not appear to have shown a thorough understanding of the private rented sector, or considered the wider issues.”

Alejandra Garcia who owns the Hanley office in Stoke-on-Trent, adds: “As independent lettings agents we strive to uphold the very highest of standards and do not set out to promote any one particular political party. Our sole concern is to ensure that both landlord and tenants’ interests are fully safeguarded and protected.

“We feel we have a duty to speak out when we believe that such flawed policies could cause long lasting damage to people’s lives. Rather than be confrontational, we want to work with any future Government to bring about on-going positive reform and regulation of the entire private rented housing sector.

“The only way to provide true tenant security is to treat them with honesty and respect and provide a quality service at a fair and reasonable price.

“If these policies and plans are allowed to go through they will cause irreparable damage and unnecessary misery for tenants and their families who are quite happy to regard a rented house as their home.”





The Rent to Own Scheme promised by Liberal Democrats

2 04 2015

The Lib Dems are promising to help first-time buyers get on the property ladder through a ‘rent-to-own homes’ scheme, if they are in power in May. Under the plan, young people in England would make monthly payments equivalent to rent to build up a share in their home, without requiring a deposit. After 30 years, occupants would gain full ownership of the property.





NEWS IN BRIEF:

8 12 2014

Retirees are looking to invest their pension savings in the Buy to Let market, according to a survey from the Bank of Ireland. George Osborne’s pension reforms, to be introduced next year, will give pension holders the freedom to invest in an asset of their choice. Research shows that 42% of pensioners will take a lump sum to buy a property or to pay off their mortgage while 13% said they will use a lump sum to pay off the balance on their own mortgage. Over a quarter said they intended to purchase homes on a BTL basis to generate rental income to their retirement.





Are they all the same? A Landlord’s quick guide to the General Election

23 04 2010

With the general election looming, and now less predictable than ever, I thought it would be a good time to refresh ourselves about what the main parties are proposing. Over the next week or so I’ll analyse what each of the main parties have been saying about the private rental market during the campaign but for today I thought I’d have a quick look through the manifestos to see what I can find.

To avoid any allegations of bias I’ll deal with the parties in alphabetical order.

First then the Conservatives. Their manifesto is headed “An Invitation to Join the Government of Britain” and so I was looking out for measures that could help private landlords meet more of the requirement for social housing. This is a subject close to my heart being based in an area like Stoke-on-Trent where social housing needs are so acute. Unfortunately there is nothing in the document to make it clear how the party would help utilise the army of private landlords who would be delighted to let to social tenants so long as the right safeguards were there.

Instead the manifesto focuses on improving the lot of social tenants by increasing their freedom to move from one property to another and even one area to another. How this will be achieved is not clear but presumably it will be with the removal of the bureaucracy currently involved. Assuming this change applies to social tenants in private accommodation and not just in council accommodation then it will certainly help Landlords as a reduction of bureaucracy will hopefully avoid the almost inevitable early arrears that arise because of delays in councils processing housing benefit changes.

The conservatives also propose measures to make it easier for social tenants to purchase their council homes and also to allow them to run businesses from them. Sensible ideas at face value though of little relevance to private landlords.

The Labour party manifesto contains no new surprises other than perhaps to NOT mention compulsory licensing of Landlords and Agents. It does however state that there will be a national register of Landlords so perhaps this amounts to the same thing. Previously vaunted proposals around this area have been augmented by mention of a legal right to a written tenancy agreement (something no sensible Landlord would be without already!), provision of free and impartial advice (such as already available from the Citizen’s Advice Bureau), and a new requirement to ensure that all rental properties are sufficiently insulated. This has received little publicity during the campaign but if implemented without sensitivity could cause considerable cost to some Landlords. My advice is to take up whatever free or subsidised insulation as is offered by councils from time to time to improve the housing stock in their areas.

In keeping with the new spirit of true three party democracy the Liberal Democrats have chosen to be equally light on detail in their manifesto when it comes to the private rental market. The words Tenant and Tenancy do not appear even a single time in their document. They have come up with one typically radical proposal regarding grants and loans to help bring 250,000 empty properties back onto the market. There will be grants available where this will create social housing and loans (terms unspecified!) where this will create new private lets. There is no doubt that we still face a shortage of quality rental housing stock so this move will certainly help. Owners of these properties will benefit although owners of competing properties may see slight downward pressure on rental values should a large number become available in a specific area.

So that’s a quick overview for now. I will take each party in turn over the next week or so to analyse what their changes will mean for our market.

Finally I will end with a shameless plug. On Thursday 17th June we are holding the first ever West Midlands Property Event at Port Vale FC at 6pm. Tickets are free and the speakers there have been asked to give investors up to the minute advice about financing and regulations after the election. So it’s the perfect opportunity to come along and get in the know.