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What Happened In The Lettings & Property Market in 2020

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Over the last 12 months, the UK lettings market has experienced the most abrupt change in its history. The global Covid-19 pandemic shut the property market for seven weeks in March and April with viewings and house moves banned. The residential lettings market has re-opened but is now very different from how it was pre-lockdown.

Lettings Property Market 2020

2020 has been a difficult year for many landlords. The eviction ban made it impossible for landlords to remove troublesome tenants and many more landlords have endured late rent payments as tenants suffered a drop in income as a consequence of lockdown.

More uncertainty lies ahead in 2021 as the end of the furlough scheme and rising unemployment may suppress tenant numbers and rents.

In the face of this uncertainty, many landlords are turning to guaranteed rent schemes for the security of their monthly rent paid on time and in full every month – whether the property has tenants or not. Read more about Assetgrove’s rent guarantees scheme.

As we reflect on 2020, here are our most-read stories from the past 12 months.

Calls for increased court funding before scrapping of Section 21

13th January 2020

Cuts to county courts are pushing landlords into debt as a result of delayed eviction proceedings, according to housing law experts.

increase court funding

Most eviction proceedings are dealt with in the county courts. But an increase in cases, and government spending cuts, have meant that evictions are taking longer than ever, with hearing dates frequently cancelled and costly delays for landlords.

Boris Johnson’s new government has renewed its commitment to ending Section 21 no-fault evictions. But many in the industry have expressed concern that scrapping Section 21 will increase pressure on the system, as landlords are forced to use the Section 8 eviction process, which involves a court hearing. Some experts have also called for the creation of specialist courts dedicated to housing matters.

Paul Shamplina, founder of specialist eviction and housing law firm Landlord Action said: “The situation is the worst I have experienced in my 28 years in this industry. Cases are being overlooked, delayed or thrown out due to administrative errors and there is little we can do to improve matters for landlords when we are at the mercy of the courts.”

Said Mr Shamplina, “I do not believe the government has a thorough understanding of the implication that scrapping Section 21 will have on the courts with the extra administration, recruitment of more judges (which is extremely difficult) and requirement for more bailiffs.

“Combined with all the other changes, some landlords will feel that the length of time to gain possession of their property is too great a risk, so may decide to sell up.”

Read more about this story on the Landlord Today website.

If you’re a landlord concerned about financial losses during eviction proceedings, read about Assetgrove’s guaranteed rent scheme. The scheme provides a fixed income and deals with evictions and rent arrears for you.

Looking ahead – how will landlords invest in 2020?

27th January 2020

Investing in houses of multiple occupation (HMOs) will be the preferred strategy of landlords who plan to add to their portfolios in 2020, according to new research from Paragon Bank.

How will landlords invest in 2020

The data, from the final quarter of 2019, revealed that a third of landlords looking to buy property aim to invest in shared housing. A quarter plan to buy flats with just 18% looking to purchase terraced homes.

HMOs appeal to experienced landlords because they can provide a higher yield than homes rented through standard tenancies. According to Paragon’s research, HMOs achieve an average yield of 6.5% compared to 5.6% across other property types. However, this type of housing is often more complex to manage.

The figures revealed that 10% of landlords, with four or more properties, have plans to increase their portfolio in 2020. This compares to just 1% of landlords with fewer properties.

They also show a slight improvement in landlords’ confidence in the sector since the previous year. Paragon’s Confidence Index (produced by asking landlords to rank their confidence out of 10) saw a score of 6.2 during the period – up from 5.8 the previous quarter and the highest figure in a year.

Paragon’s research also highlighted a trend towards business restructuring. More than six out of 10 landlords, expecting to purchase property in the next quarter, will do so in a limited company – up from 38% two years ago.

Richard Rowntree, director of mortgages at Paragon, said: “The private rented sector needs to grow to meet increasing levels of tenant demand and it’s clear that portfolio landlords will drive that growth.

“Not only are they looking to build their portfolios, they are also looking at more complex types of property that will deliver higher yields, such as HMOs.”

Read more about this story on the Mortgage Strategy website.

Growth in Airbnb-type lets “concerning” for the private rented sector

10th February 2020

ARLA Propertymark is calling for government action to stem an increase in landlords turning to Airbnb-style short-term lets. The industry body wants to see a level playing field between long and short-term lets when it comes to regulation and taxation.

Growth in Airbnb Lets

It also wants ministers to consider limits on short-term lets in areas where they impact on the supply of rental homes.

According to research from ARLA Propertymark, for its Impact of Short-Term Lets report, 10% of landlords are considering switching to short-term lets. This would mean 50,000 fewer properties for long-term tenants, pushing up the cost of renting.

Figures also suggest that 4.5 million properties, the equivalent of 19% of the UK’s housing stock, have been used for short-term lets.

The number of active UK listings on Airbnb rose by a third in 2018 – in London the number has risen four-fold from 18,000 in 2015 to 77,000 in 2019.

David Cox, chief executive of ARLA Propertymark, said: “The growth in short-term lets is particularly concerning for the traditional private rented sector.

“As landlords are continuously faced with increased levels of legislation, it’s no surprise they are considering short-term lets as a chance to escape this.

“Unless the sector is made more attractive, landlords will continue to exit the market resulting in less available properties and increased rent costs.”

ARLA wants the government to consider the issue when bringing in new legislation which may incentivise landlords to opt for short lets.

The report follows a study by London Councils, the body representing the capital’s 33 boroughs. It found that more than 73,500 flats and houses were available on the six leading short-term letting portals – equating to one in 50 London homes. London Councils has also called for greater regulation of the sector.

Read more about this story on the Property Wire website.

Citizens Advice warns about deposit replacement schemes

24th February 2020

Citizens Advice is alerting tenants to the drawbacks of using deposit replacement products instead of a traditional deposit, protected in a government-backed scheme.

The advice charity’s warning follows a BBC investigation, which found that many tenants did not understand that money paid into deposit replacement schemes is non-refundable and does not offset any financial liabilities at the end of a tenancy.

deposit replacement schemes

Deposit replacement schemes are insurance policies aimed at tenants in the private rented sector, who do not have enough cash for an upfront deposit. Instead, tenants pay a monthly or annual fee on top of their rent.

The schemes offer landlords protection against unpaid rent or damage and may pay out more than the amount of money which can legally be held in security deposits. But, while the landlord will be reimbursed by the insurer, the tenant may still be pursued for the claim. Where tenants pay into the policy for years, it may cost them far more than the maximum five weeks’ rent, which can be held in a security deposit.

Citizens Advice has also highlighted the issue of letting agents receiving commission to promote the schemes to tenants, which means they could be breaking financial conduct rules.

Amy Hughes from Citizens Advice said: “Tenants should be wary of deposit replacement schemes and, in particular, should consider the cost over the anticipated duration of the tenancy when compared to a deposit, now generally capped at five weeks’ rent in England.

“Tenants should also be mindful of the fact that a traditional deposit can be offset against any future liability, refunded if no such liability arises; gives access to free arbitration via protection and allows sanctions against the landlord if protection requirements are not met — deposit replacement schemes offer none of these.”

Writing in Landlord Today, Tahir Farooqui, CEO of deposit insurance provider Canopy defended the industry: “Letting agents have come under heavy fire, with claims that they are mis-selling the deposit insurance schemes. In reality, the majority of letting agents ensure that tenants understand how the alternative deposit schemes work; are clear that the fees are generally non-refundable; and have understood the terms and conditions of whatever choice they make – whether it is a traditional deposit, or an insurance scheme.”

Read more in this blog from Citizens Advice and in Landlord Today.

Landlords warned about ‘No DSS’ discrimination after new legal cases

9th March 2020

Landlords are being warned about discriminating against benefit claimants after legal victories by two women.

Amanda Staples and Emma Loffler won out-of-court settlements against ‘No DSS’ policies by letting agents, on the grounds of indirect discrimination. Both are single mothers who rely on benefits to supplement their earnings.

Stop No DSS

Ms Staples has three primary-aged children and needed to find a home to rent after the breakdown of her marriage. Speaking to the BBC, she said: “I had noticed ‘No DSS’ adverts before but I thought I would be able to find somewhere locally so my children could still go to the same school and so I could keep my job there.”

In spite of offering to pay up to 12 months’ rent in advance, Ms Staples was unable to find accommodation. “I kept ringing around estate agents and when I said I would be a housing benefit [claimant] it was a blanket ‘No’.”

With backing from the housing charity, Shelter, she took legal action against one agent. The agent settled the case out of court, agreeing to write a public letter of apology and to pay £3,000 in compensation and £10,000 in legal costs.

In the case of Ms Loffler, a public letter of apology was also issued along with £3,500 in compensation and £2,500 in legal costs.

In a previous ruling, Rosie Keogh successfully argued that blanket bans on claimants constituted indirect discriminating because of sex and disability, as women and disabled people are more likely to be reliant on benefits to help pay their rent. Ms Keogh’s case was cited by Staples and Loffler.

Shelter has warned that landlords discriminating against claimants could be breaking the law and face legal action. However, a recent YouGov poll of 1,000 private landlords revealed that 86% believed ‘No DSS’ signs to be lawful (or were not sure), while 29% said they did not let to people receiving housing benefit on the advice of their letting agent. Research by Shelter also found that more than one in 10 advertisements on main property portals contained phrases such as ‘No DSS’.

Shelter chief executive, Polly Neate said: “The message is clear – letting agents and landlords must not treat potential tenants as second-class citizens simply because they rely on benefits. If they continue to blindly discriminate against those receiving housing benefit, they risk legal action and a hefty fine.

“Not only is ‘No DSS’ discrimination outdated and grossly unfair, it is unlawful under the Equality Act because it overwhelming impacts women and disabled people, who are more likely to need support paying their rent.”

The Residential Landlords Association (RLA) wants the government to help landlords comply with the law by ending claimant-ban clauses in buy-to-let mortgages. The RLA also wants to see housing benefit aligned with local rent levels and the restoration of the option of having housing benefit paid directly to a landlord.

Read more about this story on the BBC website.

Coronavirus (COVID-19) lockdown guidance for tenants and landlords

14th April 2020

The housing minister Robert Jenrick has produced guidance for landlords and tenants about all aspects of property rental during the coronavirus crisis.

Lockdown guidance for tenants and landlords

Moving out or in

In terms of house moves, the government has made it clear that it wants people buying, selling or renting property to stay put for now, if they possibly can – particularly if it would involve moving somewhere that is currently occupied.

According to the guidance: “Home buyers and renters should, where possible, delay moving to a new house while measures are in place to fight coronavirus.

“If moving is unavoidable because you’re contracted and the parties aren’t able to agree a delay, you must follow advice on social distancing.”

Anyone with symptoms, or who is self-isolating or shielding from the virus, should follow medical advice and not move home for the time-being.

Rents

While a three-month ban on evictions is in place, no statutory rent-free period has been introduced. According to government guidance: “Tenants should continue to pay rent and abide by all other terms of their tenancy agreement to the best of their ability. Tenants who are unable to do so should speak to their landlord at the earliest opportunity.”

Landlords are, however, asked to be flexible in these difficult times. “As part of our national effort to respond to the covid-19 outbreak it’s important that landlords offer support and understanding to tenants who may start to see their income fluctuate.”

Repairs and inspections

During lockdown, landlords are expected to continue to keep their rental homes in a good state of repair and to fulfil their responsibilities. “Landlords’ repair obligations have not changed. Tenants have a right to a decent, warm and safe place to live.”

However, the guidance also states that: “In these unprecedented times we encourage tenants and landlords to take a pragmatic, common-sense approach to non-urgent issues which are affected by covid-19 related restrictions.”

Examples of issues which should be attended to during the lockdown period include leaking roofs, broken boilers or malfunctioning toilets. Should contractors need to visit a property, the advice is for them to be in separate rooms to tenants and for everyone involved to observe recommended practice on hygiene.

Read the full guidance on the gov.uk website.

Call for private sector rent freeze in the face of recession

11th May 2020

A think tank is calling on the government to introduce an immediate rent freeze to protect more than a million renters at risk of losing their jobs if the county slides into recession.

private sector rent freeze

The New Economics Foundation (NEF) says that 1.2 million people living in privately rented homes could face severe hardship. They include people missing out on government help because they have been made redundant, rather than furloughed, or don’t qualify for income protection for the self-employed.

Joe Beswick from the NEF said: “If we are to avoid an eviction crisis from rent arrears following the public health crisis, we must suspend the obligation to pay rent immediately.

“Many of those in the private rented sector, a group who were already economically vulnerable before this crisis, are falling through the cracks of the government’s support systems.”

According to the NEF, renters who lose their jobs will need to rely on universal credit, which could mean a dramatic fall in income and leave them short of money to pay for food and energy bills. The report also claims that furloughed private renters may struggle to make ends meet due to a drop in income.

Measures already announced to protect private renters during the covid-19 crisis include a three-month eviction ban, introduced in March. Landlords have been asked to be flexible with tenants who are struggling and to agree repayment plans. However, tenants are expected to continue to pay their rent during the lockdown.

The NEF has also called for a freeze on residential mortgages to protect landlords from a gap in income, with the Bank of England to provide low-cost loans.

Read more about this story in the Guardian.

How to do tenant viewings in the post-lockdown era

26th May 2020

As letting agencies get back to business following seven weeks of covid-19 lockdown, the government has issued advice for landlords conducting viewings while observing social distancing.

Post lockdown viewings

It goes without saying, but anyone showing prospective tenants around a property should maintain the 2m distance rules, which could be tricky in a flat or small house. Minimise to-ing and fro-ing by working out the best route around the property first. If you’re still not sure what 2m looks like, visualise the height of a front door.

Hand washing is still vital in preventing the spread of coronavirus, so do this before and after the viewing – and provide hand sanitiser so your prospective tenants can do the same.

Give the property a thorough clean in advance. Clean any items that are likely to be touched during viewings with an antibacterial spray, paying particular attention to doorknobs, handles and bells. Do this before and after each viewing.

Viewings should not go ahead if anyone involved is experiencing symptoms or has recently tested positive for coronavirus. The same applies if they are within the isolation period, because someone their household has shown symptoms. Viewings should also be avoided if anyone in either household is being shielded because they are extremely vulnerable. It is important to ask these questions when arranging the viewing – and to double-check before anyone enters the property.

In addition to your cleaning routine, open windows to improve ventilation. You should also leave internal doors and cupboards open and lights switched on during the viewing to minimise any unnecessary contact.

If you already have tenants in the property, try to arrange for them to go out to limit the number of people present.

Once the viewing has finished, the prospective tenant may have more questions. If you have outdoor space, continue your discussions outside, or suggest you follow up with a phone or video call. And finally, if they are interested, remember not to seal the deal with a handshake!

Read more about this story on the Landlord Today website.

Rental sector looks beyond the evictions ban

8th June 2020

The National Residential Landlords’ Association (NRLA) is calling for a “careful re-opening of evictions,” following the easing of coronavirus lockdown measures.

Beyond the eviction ban

In March, the government introduced a three-month ban on evictions, due to end on 25 June. In addition, the notice period for some tenancy types was extended to three months.

Landlord groups have claimed that the measure is placing a strain on property owners. According to the NRLA, more than half its members have experienced some hardship due to unpaid rent or void periods. Landlords who had begun eviction proceedings before lockdown could find themselves waiting more than a year to receive any income from their property.

Buy-to-let landlords are eligible for three-month mortgage holidays, to help keep a roof over tenants’ heads if they can’t afford their rent. However, the NRLA says this will mean costs for landlords further down the line.

According to the NRLA, the government could help tenants cover their costs by removing the five-week waiting time for Universal Credit applicants.

Ben Beadle, NRLA chief executive said: “A number of our members are having issues that arose pre-Covid and not able to get possession of their property.

“We think a careful re-opening of evictions needs to take place that prioritises pre-Covid debt, anti-social behaviour and [cases involving] domestic violence.”

Meanwhile the Mayor of London, Sadiq Khan has spoken about the pressure on the capital’s tenants, post-Covid. He said: “Many renters are just one pay cheque away from homelessness. It’s completely unacceptable that London renters should be facing a ticking timebomb where they could lose their home.”

The Mayor has called for increased regulation of the sector alongside higher welfare payments. He wants evictions to be banned beyond 25 June, where coronavirus is a factor in non-payment of rent, alongside the scrapping of Section 21 evictions.

Read more about this story on the Landlord Today and Property Wire websites.

Advice for landlords with cash flow difficulties

22nd June 2020

Buy-to-let landlords struggling to make ends meet as a result of the coronavirus pandemic have been given the option of deferring their self-assessment tax payments on account, which are due by 31 July.

Landlord cash flow

HM Revenue and Customs (HMRC) is giving people until 31 January 2021 to make their July payments. But anyone needing to take up this deferment must contact HMRC as soon as possible.

Covid-19 has left landlords across the country struggling financially as tenants are unable to meet rental payments. The extension of the ban on evictions, until the end of August, has also meant landlords may be unable to tackle problems with arrears.

However, it is thought that many landlords do not know about the change in tax payment arrangements from HMRC. The change means that no penalties or interest for late payments will be charged in the deferral period. However, anyone in a position to make the July payment is urged to do so – to avoid being faced with a larger bill in January 2021.

If you feel you will still struggle to meet your payments in the new year, you should contact HMRC to discuss a payment arrangement well before the deadline.

Fiona Fernie, tax dispute resolution partner at accountants Blick Rothenberg, explained: “HMRC have said that July tax payments for anyone who pays by self-assessment can be delayed until January, but if they have the money, I would urge them to pay now so that they are not faced with a double bill.”

“Understandably, most people are primarily thinking about how to pay the mortgage and put food on the table, but it is important to remember that the postponement of the 31 July 2020 payment on account merely delays the liability; it does not wipe it out.”

Read more about this story on the Landlord Today website.

Landlords “doing all they can” for tenants affected by Covid

13th July 2020

Claims that the end of the evictions ban, on 23 August, will mean a big increase in tenants losing their homes have been disputed by the National Residential Landlords Association (NRLA).

Landlords doing all they can

The housing charity Shelter has published research, which suggests that almost a third of renters are depressed or anxious about their housing situation – with 226,785 people at risk of losing their homes. Shelter’s chief executive, Polly Neate called for court powers, “to ensure that no renter is automatically evicted, and the impact of coronavirus is always considered”.

But according to the NRLA, the Shelter report does not recognise that most landlords are doing all they can to maintain their existing tenancies.

An NRLA survey of 2,000 tenants in England and Wales found that most (84%) had paid their rent as usual during the crisis and had not needed to ask their landlord for any support. Of the remainder, three quarters received a positive response from their landlord.

Chris Norris, policy director for the NRLA, said: “Throughout the lockdown, our surveys show that the vast majority of landlords have been doing all they can to keep people in their homes.

“It is important though to distinguish between tenants affected by covid-19 and those who were building rent arrears before lockdown, sometimes for several months and sometimes wilfully.

“When the courts re-start hearing possession cases the latter should be the priority along with instances where tenants are committing anti-social behaviour or domestic abuse.”

Mr Norris added that the NRLA and other housing organisations have been supporting landlords and tenants struggling as a result of the crisis. This includes practical guidance for addressing arrears – such as by raising concerns at an early stage and putting in place rent deferrals, reductions and suspensions.

Read more about this story on the Landlord Today website.

Landlords should check properties’ green credentials now

24th July 2020

Buy-to-let landlords should assess how energy efficient their rental homes are now, in case they are eligible for funding under a government scheme, launching soon.

Landlord check green credentials

Through the Green Homes Grant scheme, the government pays two-thirds of the bill for energy-efficient home improvements, costing up to £5,000.

Online applications for the grants, which were announced by the chancellor Rishi Sunak in his summer statement on 8 July, will open in September.

Heather Powell, property partner at tax and accountancy firm, Blick Rothenberg said: “The applications for the grants will open in just over a months’ time so buy-to-let landlords need to assess their properties now and get their applications in as fast as possible because thousands of people will apply.”

The grants can be used to fund wall and loft insulation, as well as draught proofing and double glazing. These measures can all improve the energy performance certificate (EPC) rating for a property. Since 1 April this year, all rental properties must achieve a rating of at least E, unless they qualify for an exemption.

Says Heather Powell: “It is also likely that the government will tighten energy efficiency regulations still further in 2021, making these works essential for many rental properties.”

The improvements will ensure homes are warmer and mean lower energy bills, making them a more attractive prospect to potential tenants.

The £2 billion Green Homes Grant scheme is aimed at kickstarting the economy and sustaining thousands of jobs following the coronavirus pandemic. It is also part of a £3 billion package of green measures designed to help the UK reach net zero carbon emissions by 2050.

Property owners need to apply online to join the scheme, where they will find details of accredited local suppliers. Once a quote has been approved, a voucher will be issued, with the government paying two-thirds of the bill.

Read more about this story on the Property Wire website.

Act now if you want to move to limited company status, landlords advised

10th August 2020

Landlords considering setting up a limited property company should act while the chancellor’s stamp duty holiday is still in force, according to tax experts.

Landlord Limited Company Status

Setting up a limited company for your property business can make good financial sense as it means landlords benefit from mortgage interest tax relief on their buy-to-let properties.

The downside, is that incorporating ownership of a property or portfolio to the limited company attracts stamp duty land tax (SDLT), which could be a hefty cost.

The stamp duty holiday was announced by the chancellor, Rishi Sunak on 8 July as part of a package of measures designed to kick-start the UK economy following the coronavirus pandemic.

The move means that there is no stamp duty to pay until 31 March 2021 on properties costing up to £500,000. Homes costing more than £500,000 will attract a 5% rate on the part of the sale up to £925,000. The stamp duty holiday means buyers or those transferring property to a limited company could make savings of up to £15,000.

The holiday applies to additional properties as well as to the main residence, meaning savings for landlords, even though they still need to pay the 3% second homes stamp duty surcharge.

Matt Warwick, from property tax specialists MJ Bushell said: “Before the SDLT holiday there had been a lot of debate about whether incorporation is the right approach to take and whether it saves sufficient money to merit the switch.

“Now though, it is clear to see that there is a chance for landlords to take advantage of the higher allowance and lower property prices to expand their property empires.

“Of course, each person’s situation is different, but with a potential saving of £15,000 in stamp duty per property there surely isn’t a better time to re-evaluate your position and consider incorporation. With only six months or less of relief available, investors must act soon.”

Read more about this story on the Property Wire website.

Industry reacts to eviction ban U-turn

1st September 2020

Landlord bodies have criticised the government’s decision, at short notice, to extend the ban on evictions for a further four weeks. The Ministry of Housing, Communities and Local Government has also instructed landlords to give tenants six months’ notice of eviction to prevent a possible homelessness crisis over Christmas.

Eviction ban U-turn

Reacting to the move, groups have called on the government to do more to support landlords facing financial hardship. Ben Beadle, CEO of the National Residential Landlords Association, said: “Private landlords cannot be expected to foot the bill for government failure. There must now be a plan to support households to pay their bills and to compensate landlords fully for their lost income. Only this will give both tenants and landlords security and reduce the risk of widespread tenancy failure.”

While delaying the end of the eviction ban for most tenants, the government has announced that the courts will begin hearing cases involving anti-social behaviour and domestic abuse once they reopen.

But according to Mr Beadle: “Landlords have been left powerless in exercising their legal right to deal with significant arrears unrelated to Covid-19, anti-social behaviour and extremely disruptive tenants who make life miserable for their neighbours and housemates.”

Timothy Douglas, Policy and Campaigns Manager, ARLA Propertymark said: “Given the backlog of cases already facing courts, it’s key that the government introduces sufficient guidance during this period to enable eviction proceedings to begin again smoothly and fairly when the ban is lifted.”

The extension will end on 20 September. Landlords are advised to continue to work with tenants, who are struggling as a result of the pandemic, and look at flexible payment plans to avoid evictions where possible.

Read more about this story on the Landlord Today and ARLA Propertymark websites.

Six months’ notice for evictions introduced

14th September 2020

The government has confirmed that landlords must now give tenants six months’ notice if they wish to regain possession of their property through the courts.

Six month notice period for evictions

The rule was introduced by Housing and Communities Secretary, Robert Jenrick on 29 August and will stay in place until at least 31 March 2021.

It applies in most cases, including section 21 no-fault evictions and tenants with rent arrears of less than six months. However, exceptions will be made in serious cases involving long-standing arrears and anti-social behaviour or domestic abuse perpetrators.

The move is aimed at protecting tenants during the winter, as the government’s furlough scheme approaches its end. It follows the extension of the ban on evictions by one month, until 20 September 2020.

Mr Jenrick said: “We have developed a package of support for renters to ensure they continue to be protected over winter. I have changed the law so that renters are protected by a six-month notice period until March 2021.

“For the most egregious cases, for example those involving anti-social behaviour or domestic abuse perpetrators, notice periods have returned to their normal level, and landlords will be able to progress serious rent arrears cases more quickly.”

Industry groups had called for more help for landlords with problem tenants, or arrears, which were built up pre-covid.

The new notice periods for landlords seeking possession in the most serious cases are:

anti-social behaviour or more than six months’ accumulated rent arrears (now four weeks’ notice)

domestic abuse or making a false statement (now two to four weeks’ notice)

breach of Right to Rent immigration rules (now three months’ notice)

New court rules, which come into force on 20 September, mean landlords must set out in their claim any relevant information about a tenant’s case, including the impact of the pandemic on their circumstances. If this information is not provided, judges may adjourn proceedings.

Mr Jenrick added: “These changes will support landlords to progress the priority cases while keeping the public safe over winter.  We will keep these measures under review and decisions will continue to be guided by the latest public health advice.”

Read more details on the government website.

Covid leads to illegal eviction fears

28th September 2020

Illegal evictions have increased by as much as 50% in some areas since the start of the coronavirus pandemic, housing experts claim.

illegal eviction fears

The reports follow the six-month ban on evictions in England, which ended on 20 September. Although landlords are now able to begin eviction proceedings, they must give tenants six months’ notice to quit in most cases.

Illegal evictions take place when landlords force tenants to leave the property, rather than seeking possession by legal means through the courts. Usually, illegal evictions involve changing the locks or removing a tenant’s belongings. However, there have been reports of more serious cases involving violence and threatening behaviour by rogue landlords.

There are estimates that hundreds of thousands of tenants could fall into arrears if there is a second Covid spike, and when the furlough scheme ends in October. This, coupled with the new six-month notice period and pressure on the court system, mean housing experts fear an increase in landlords taking matters into their own hands.

According to solicitor Giles Peaker, the government’s eviction ban has failed to confront a growing problem with rent arrears. “There are a number of problems with what the government has done. They haven’t dealt with the underlying issue of rent arrears at all. They’ve effectively punted the problem further down the line.”

Data from the tenant advice service Safer Renting shows that there have been almost 1,000 illegal evictions in London over the past 15 months, with a 50% rise in cases since March. The majority of these are in outer-London boroughs, but the organisation has also been called about central properties, including one in Mayfair.

Landlords who are prosecuted for illegally evicting their tenants face an unlimited fine and a two-year prison sentence.

Read more about this story in the Independent.

Right to rent checks made easier for landlords

12th October 2020

The government has announced a new, online right to rent checking system, aimed at making it easier for landlords to complete the process.

easier right to rent checks

The measures, which could be introduced as early as November, follow changes to the scheme during the coronavirus pandemic.

The new system will allow prospective tenants to view their Home Office profile, including data about their eligibility to live in the UK. The tenant can then choose to share this information with a landlord, using an online access code, instead of showing physical documents.

Safeguards are being put in place to make sure that landlords can only see information relating to right to rent – not other data about the tenant.

Landlords of properties in England must check that someone has the right to rent before letting them a property, or face a penalty.

Right to rent is regarded as a controversial measure. Last year, the high court ruled that requiring landlords to check the immigration status of prospective tenants was racially discriminatory. However, in April, the Home Office successfully appealed against this judgement.

Immigration Minister Chris Philip said the online service would make it simpler for landlords to carry out the checks while offering them protection. “It allows checks to be carried out by video call, and landlords will not need to see documents as the right to rent information is provided in real time directly from Home Office systems,” he said.

In March, right to rent checks were temporarily adjusted due to coronavirus, meaning landlords could carry out checks over video calls and tenants could send scanned documents by email, rather than originals.

The new online system will be voluntary, with landlords still able to use the existing document-based checks while it becomes established.

Read more about this story on the National Residential Landlords Association website. Read an overview of right to rent checks on the government website.

Moves to end “discriminatory” pet bans for tenants

26th October 2020

As a bill is launched to make it easier for tenants to keep pets in rental homes, an online petition on the issue has gained more than 2,000 signatures.

End pet ban for tenants

The Dogs and Domestic Animals Accommodation and Protection Bill has had its first reading in the House of Commons on 14 October.

The bill, from conservative MP for Romford, Andrew Rosindell, has cross party support, including from former business secretary Andrea Leadsom and former Lib Dem leader, Tim Farron.

Mr Rosindell has dubbed his bill ‘Jasmine’s Law’ after the case of a Weimaraner owned by a Surrey family – Jasmine can’t be looked after during holidays by the family’s son who lives in a rented apartment with no-pet conditions.

The bill aims to reform the laws on renting, removing pet-ban clauses as long as owners can demonstrate that they care for their pets in a responsible manner.

Earlier this year, housing secretary Robert Jenrick removed, no pet clauses from the government’s model tenancy agreement. But Mr Rosindell does not believe the move went far enough. He said: “Having owned two Staffordshire Bull terriers myself, Spike and Buster, I also know just how close the bonds can be between a dog and the owner and how devastating it can be when you lose them.

“Moving into a new home is a normal part of life, but what if every time you moved, you faced the threat of being separated from someone you loved? Can a house or a flat ever really be a home if you have been forced to abandon a family member just to be able to move in?”

The bill is scheduled to get its second Commons reading in January. If passed, it would require owners to take a test of responsible ownership and obtain a vet’s certificate, confirming that they have a healthy, well-behaved animal.

Hannah Bennett, who launched the online petition on the Petition Parliament website said: “It is completely unfair that a person or family can be refused accommodation based on the fact they have a pet. Most of the time people only have a small dog or cat, and it can be incredibly difficult to find accommodation as it is, let alone with this clause in place.”

Read more on the Landlord Today and Negotiator websites.

Call for ‘furlough’ for renters as England enters lockdown

9th November 2020

Tenant campaign group, Generation Rent has called on the government to introduce a ‘coronavirus home retention scheme’ for struggling tenants.

furlough for renters

Following the news that England would enter a four-week national lockdown, the group wants evictions for rent arrears to be suspended and for £750 million to be made available to clear tenants’ debts. The money would also fund discretionary grants to allow landlords to claim for up to 80% of lost income.

In addition, Generation Rent is asking for action to ensure that benefits cover housing costs, while renewing its call for the abolition of Section 21 evictions, to prevent “unnecessary hardship”.

The group’s director, Baroness Alicia Kennedy said: “As the furlough scheme nears its end, people are worrying about how they will keep their heads above water. More than a million employees are at risk of redundancy and a quarter of them are private renters.

“Thousands of renters started claiming Universal Credit at the start of the pandemic and have found that it is nowhere near enough to cover the rent they owe.

“Every month their debt piles up. Without additional support for renters, the government will preside over mass impoverishment of millions of people.”

Generation Rent estimates that 400,000 private renters work in the hard-pressed hospitality sector or in businesses, such as hairdressers and gyms, which could face closure as stricter measures are imposed.

Campaigners say these employees will become more reliant on Universal Credit to pay their rent and have called for the restoration of the Local Housing Allowance to the median rent and the removal of benefit caps.

Read more about this story on the Landlord Today website.

Capital gains tax reform – what will it mean for landlords?

23rd November 2020

Landlords who decide to sell up could be faced with higher tax bills, if the Chancellor, Rishi Sunak goes ahead with a move to align capital gains tax (CGT) rates with income tax.

Capital Gains Tax Reform

As Mr Sunak looks for ways to plug the Covid-19 deficit, a report, commissioned by the Treasury, is suggesting a rise in CGT, which is payable on the profits from the sale of second homes.

According to the report’s authors, the Office for Tax Simplification (OTS), £14 billion could be raised by increasing tax rates and reducing the personal allowance. It also says the tax could be made simpler by bringing it in line with income tax.

CGT is levied on the profit made after an item, which has increased in value, is sold. It applies to second homes, but also shares, investments and works of art. Rates vary depending on what has been sold and whether the seller is a basic or higher rate taxpayer. Sales of second homes, attract rates of 18% and 28% – compared to income tax rates of 20%, 40% and 45%.

The OTS also wants to reduce the £12,300 CGT tax-free allowance, meaning that more people would pay the tax. It says the tax “can distort decision-making,” by incentivising people to arrange their tax affairs so income is categorised as a capital gain.

Consultation on the issue received more than 1,000 responses with some arguing that that the tax is a barrier to a fair society.

However, critics have warned that increasing the tax could impact on the housing market, leading to a rush of buy-to-let landlords disposing of properties before the change. Once the tax has increased, landlords may hold on to properties for longer, affecting supply in the market.

The Chancellor tasked the OTS with reviewing CGT in the summer. He has not yet committed to implementing the proposals.

Read more about this story on the Landlord Today and This is Money websites.

Leader of the house “not unsympathetic” to private landlords’ plight

7th December 2020

The Leader of the House of Commons, Jacob Rees-Mogg, has expressed sympathy for private landlords, who have lost income due to the coronavirus crisis. However, there have been no announcements on moves to help landlords financially.

Sympathy with Landlords

Mr Rees-Mogg said: “We are grateful to landlords for their forbearance during this unprecedented time. Some may have been able to benefit from postponements of mortgage payments, which have been made available, but we strongly encourage tenants in all relevant government guidance to pay their rent or to have an early conversation with their landlord if they have any difficulty doing so.”

The leader of the house was responding to a call for a debate on the issue by fellow Conservative MP Robert Syms.

While the ban on evictions, introduced at the start of the pandemic, was lifted in September, the notice periods for asking tenants to leave have been increased in most cases.

Stressing the value of the private rented sector, Mr Syms said: “I know of landlords who have not been able to evict people exhibiting anti-social behaviour and causing distress to other tenants because of restrictions the government have imposed.

“Some people who could pay rent are not paying rent, but some of the residential landlords are still having to pay mortgages. This is a troubled sector and we should explore all of the issues.”

According to Mr Rees-Mogg: “The stay on possession proceedings was lifted on 21 September, and landlords can now take action on possession claims through the courts. Although we have laid regulations to require bailiffs not to enforce evictions until 11 January, there are exemptions … for the most serious cases, such as antisocial behaviour and illegal occupation.”

Landlords have reacted to the comments on the Landlord Today website. According to David Crisp: “[The] Government must set up special courts that can fast track evictions. So that the whole landlord system does not collapse leading to housing shortages that will inevitably [mean] even more pressure on Government funds.”

Best wishes for 2021

Here at Assetgrove we are optimistic about the London residential lettings market in 2021 and are looking forward to working with both our new and existing clients.

We wish you health and prosperity in 2021.

Neil Jennings

Neil is the Operations Director at Assetgrove Lettings, London's Leading Rent Guarantee Company, providing Landlords with no voids, property maintenance, fee-free property management and stress-free service.

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