Summer Budget 2015 – Landlords Reactions

10/09/2015

Faced with concerted media campaigns, most highly critical of the way landlords treat their tenants, there’s perhaps another side to the story which usually gets ignored in the popular press.

A new landlord study by Access Legal, a referral and support network run by legal firm Shoosmiths, found that 1 in 5 landlords fear they will be out of business within 12 months.

The Shoosmith report, which is based on interviews with 2,000 landlords using OnePoll, conducted in in August 2015, claimed that UK landlords are losing around £9.9 billion* every year through unpaid rent and damage to their properties.

Concerted anti-landlord media campaigns, a flood of new regulations to comply with, and the final straw for many, the Summer Budget tax relief reductions, mean that many long established and responsible landlords are wondering if it’s all worth their trouble.

Here’s a sample of recent Guardian landlord – tenant stories:

“Stuck with a terrible landlord? As if tenants have any other choice”
“Britain’s housing system is an example of just how bad it can get for renters”
“What’s behind the massive increase of renters in poverty?”
“Renters may abandon a government that fails to stand up for their rights”
“Even renters who work should be worried about housing benefit changes”
“Stop talking about renting a home as though people have a choice”
“Private landlords gain £26.7bn from UK taxpayer, says campaign group”
“Generation rent v the landlords: ‘They can’t evict millions of us”
With 95% of landlords letting out between 1 and 4 properties** according to government figures, most are part-time landlords with around 50% of these managing their own properties. The increasing regulatory burden will mean that some good landlords will consider leaving. In future, in additional to the annual gas safety checks, landlords will need to:

Ensure there is a current Energy Performance Certificate (EPC) for every letting
Ensure that smoke and carbon monoxide (CO) detectors are in place and working
Ensure that a letting meets planning use requirements (HMOs)
Ensure that the letting is licensed by the local authority and pay the fees if required
Check electrical systems and appliances
Carry out legionella assessments
Do immigration checks on prospective tenants taking care not to fall foul of the discrimination laws.
(It is recommended that all landlords and agents show how they are meeting their regulatory requirements by completing simple risk assessments)

According to Access Legal 90% of landlords polled felt they should not be responsible for immigration checks, though the new obligations are to be introduced nationally following a “right to rent” pilot scheme in the West Midlands since November 2014.

The main concerns of landlords highlighted in the report were increasing upkeep costs, the coming cuts to tax relief announced in the Budget, and almost half of those surveyed (46%) said tenants not paying rent, even after legal proceedings.

Seventy five percent of landlords expressed concerns about the safety of their money with letting agents and around 43% said they have stopped using agents to save money and avoid safety issues.

Access Legal say their survey indicates that 80% of landlords considered being a landlord as a “side job” and the top reasons given for becoming a landlord were:

As a long term investment (63%)
To provide extra income (47%)
To top up retirements funds (35%)
As a full time career (7%)
The five most common causes of damage to a property were:

Broken appliances (41%)
Damaged decorating (40%)
Damaged carpets (37%)
Lack of cleanliness (33.18%)
Cigarette burns (22%)
Worst areas in the UK for rent arrears include:

Cambridge
Newcastle
Oxford
York
Manchester
Worst areas in the UK for property damage include:

Manchester
London
Wrexham
Chelmsford
Birmingham
The Access Legal study also found that around half (40%) of landlords have had rent arrears problems and one-fifth (20%) of landlords have suffered vandalism.

Access Legal has produced a handy infographic to summarise the results of their survey.

*Access Legal claim that much of their data has been worked out based on national data consisting of 1.5 million Landlords in the UK (ONS data) x the average cost of damage and rent arrears from that study.

**Private Landlords’ Survey 2010

... LandlordZONE.

Article courtesy of LandlordZONE

Back to Articles

Media attacks on landlords continue...
Image3
09/09/2015

Campaigning groups which ran a concerted media campaigns before the May general election, have resumed their campaigns focussing on the private rented sector (PRS), pushing for rent controls and now claiming in the press that 125,000 tenants have suffered abusive behaviour from landlords in the past year.

Shelter also claims that nearly 17,000 people have called their helpline about problems with landlords.

Along with tenants’ campaigning group Generation Rent, Shelter has sent a stream of media releases to newspapers, broadcasters and on-line news sources, calling for changes to landlord-tenant laws and claiming among other things that tenants have had belongings burned while others have had utility services cut off in efforts to intimidate them.

Shelter says it conducted a survey of 3,792 renters and found 60 claimed their landlord or letting agent had been abusive towards them or another tenant in the last year. It appears the organisation, which relies on charitable donations from the public and other organisations, simply extrapolated their survey figures to the total landlord-tenant populations using the English Housing Survey and Census data to arrive at the figure of 125,000 tenants being abused.

Given that there are estimated to be around 9m private tenants, the housing charity is warning that a “small minority” of rogue landlords are making life “unbearable” for some tenants.

“Every day at Shelter we speak to people desperate for help because their lives are being made unbearable by a rogue landlord. No one should have to put up with a landlord who breaks the law and it’s so important to know your rights as a renter” says the charity’s spokesman Mark Cook.

“No one should have to put up with a landlord who breaks the law and it’s so important to know your rights as a renter. Shelter is here to help anyone having problems with their landlord.”

Shelter’s director of services, Alison Mohammed, has said:

“It’s shocking that a small minority of rogue landlords who are exploiting the housing crisis can cause so much havoc and misery in the lives of renters.

“The only way to fix the problem long-term is to make renting fit for purpose for the millions of ordinary families searching for a safe and stable home.”

However, the constant media attention given to often one-sided stories about tenant’s woes at the hands of their landlords appears to be taking its toll on the vast majority of responsible landlords who strive to give a good service: to quote one recent landlord comment:

I am currently a provider of affordable accommodation, but increasingly demanding tenants (whose dissatisfaction with perfectly decent properties is fuelled by anti-Landlord propaganda) combined with the imposition of ever more costly regulations, Local Authority licensing schemes and so on, are taking their toll on returns…my portfolio yield has fallen to 5%. This has led me to consider taking my properties out of the private rental sector and into holiday lets instead.

David Cox, managing director of the Association of Residential Letting Agents, said that Shelter’s research demonstrates that the majority of landlords are doing a good job, while a small minority are tarnishing the sector’s reputation.

Housing minister Brandon Lewis has said:

“The Government has introduced a range of powers to tackle rogue landlords, backed by £6.7 million of Government funding, which has resulted in nearly 40,000 property inspections and over 3,000 landlords facing further enforcement action or prosecution.

“We have made significant progress but we are determined to go even further. We are cracking down on those who rent out dangerous, dirty and overcrowded properties.

“We have published a discussion document that sets out our proposals, including a blacklist of rogue landlords and letting agents, tougher penalties for the worst offenders, the extension of rent repayment orders and the introduction of civil penalties.”

Recent research by Shoosmiths’ Access Legal service found that 9.9 billion GBP is lost to landlords every year through rent arrears and damage to their properties.

The study also revealed that 1 in 5 landlords fear they will be out of business within the next 12 months. The Shoosmiths’ report was compiled by surveying 2,000 landlords through OnePoll in August 2015.

The Press motto is “Nihil utile quod non honestum”, translated as “Nothing is useful unless it is honest”

... LandlordZONE.

Has anybody seen this?

https://www.urbansalesandlettings.co.uk/blog/post/The-Big-Squeeze-Buy-to-let-mortgages-set-to-change.aspx

If it is true it would mean that none of us can re-mortgage if we don't have a separate income and even then, practically no-one could be a BTL landlord. I don't want to scare-monger; I just can't believe what the article says. Maybe someone knows more about this?

I actually do have enough in savings to pay off one mortgage, so maybe I could do a domino system - get a new mortgage based on the savings; then I'd have the money back again, so could remortgage again!

>Ros

I think urban is jumping the gun a bit there. That additional powers will be given to the BoE re BTL lending has been announced.

The nature of those powers has not. Quite what the BoE will do with its new powers remains unknown.

Of anything actually announced so far that will affect BTL lending, Basel III is the DADDY!

I doubt the BoE could / would do anything that takes that crown (I could be wrong on that, but I do doubt it)

Reply to the comment left by "Jon Pipllman" at "01/11/2015 - 09:13":

The buy to let market as we know it is dead there's something going on behind scenes that we are not privy to sell what u can before the market is flooded individual portfolio landlords are no longer wanted end of story

Reply to the comment left by "Barry Fitzpatrick" at "30/10/2015 - 11:01":

Barry,
I share everyone's anger at the narrow minded responses of Government representatives or anyone else who favours Clause 24. One of the comical phrases that keeps being repeated in their model response transcripts is their view that 'finance costs are different to other expenses as having a mortgage allows you to buy a more expensive property and incur larger gains'. In fact it's one of the only reasons they keep reciting for the amendment to be brought in.

They are missing the fact that if, and I say IF, this is strategy is used by an investor, then greater tax will be paid on the larger gains that are incurred so all dues will be covered anyway. Also greater fees and expenses will have been shelled out by the investor creating further taxable income from those providing services.
The majority of BTL investors who are trying to save for the future and take the burden of relying on the state in our retirement ages may lend at moderate LTV rates of 75% and have marginal profits already that will now be wiped out by the proposals.

Reply to the comment left by "Sean G" at "01/11/2015 - 11:54":

It was the same argument often used for a "graduate tax". Getting degree means you earn more so you should pay for the privilege - but if you earn more, you pay more tax anyway ...

More people with selective cognition - or just GCSE maths failures.

Reply to the comment left by "Jon Pipllman" at "01/11/2015 - 09:13":

Jon,

One of the powers, I have heard is that, going forward they (BOE) will tell banks to lend money to BTL landlords, based on their earned income from employment same as OO.

I believe, this strategy will be bizzare as there are several landlords who do not have employment income but rely purely on BTL income.

Second strategy they are likely to follow is that, make Income Rental Multiples much more stringent such as base rental income on default rate of 6% plus 25% i.e 125% of 6%, currently lenders work on typical default rate of 5% plus 25% i.e. 125% of 5%.

Either strategy is going to hit, BTL massively, if the followed former then significant number of landlords will be caught out especially who rely solely on rental income and if latter was followed then people with high LTV and low yields will be crucified as they will have to remain on their current lender's SVR which will sting!

BOE Governor is more evil than you may think. He is not concerned about BTL ,he wants to kill it.

Reply to the comment left by "Sean G" at "01/11/2015 - 11:54":

"One of the comical phrases that keeps being repeated in their model response transcripts is their view that ‘finance costs are different to other expenses as having a mortgage allows you to buy a more expensive property and incur larger gains’"

Sean, the money is lent by Banks to BTL landlords not government so if we make larger gains then Bank could ask the slice of gains not government...so if lenders who lend do not ask slice why the f*** they want a bite of cherry?

On the flip side of coin, market does not always rise, so if market takes downturn would government cover our losses? If we get repossessed, due to non-payments, would government rescue us from reposession?

If we can't afford to make mortgage payment, can Government make mortgage payment on our behalf?

If the answer is NO then they can't be our shareholders for nothing.

I am a full time landlord and all my income comes from BTL but will be switching to short term lets soon.So basically I will become a mortgage prisoner as I wont be able to refinance my properties.

Even if you have another income outside BTL how will that help if you have many properties?

Looks like I will be heading for Portugal after all.I'm sick and tired of constantly being threatened by my own Country.I would like peace of mind but it's hard to find in this industry.

The tax man wants to take my income and now the Gov wants to destroy my finance.