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Discussion: Should tenants have the default right to keep pets?

Labour has today launched a new action plan on animal welfare, which includes a proposal to give tenants the default right to keep pets, unless there is evidence the animal is causing a nuisance.

You can read the NLA’s initial response here.

Under the 2015 Consumer Rights Act, a landlord should only be refusing permission if it is reasonable to do so, for instance on grounds of the animal’s size, the damage it could cause and its impact on future rental prospects.

Many tenancy agreements will be worded to reflect this position. For example, the NLA’s AST includes the clause:

Not to keep any animals, reptiles, insects, rodents or birds at the Property without our written permission (which will not be unreasonably withheld). For the avoidance of doubt, this clause does not apply in connection with registered guide and assistance dogs.

There are no actual policy details yet as Labour have only said they will consult with landlords on the proposal. The NLA very much welcomes this because there are issues that will need to be addressed to make it in any way a workable policy.

Ultimately what must be avoided is a one-size-fits-all approach that treats the whole private rented sector as a giant uniform monolith. Unfortunately, politicians of all persuasions have been guilty of this, not least Labour.

Damaging Costs

The first port of call for Labour’s consultation with landlords should be to try and reach an understanding of why some landlords are reluctant to allow pets in their properties. The policy could then, hopefully, include plans to solve this reluctance.

Luckily, the NLA has previously done some research on this with our members and the results will not surprise you.

This research showed that over half (55%) were unwilling to allow tenants to keep pets in their properties:

pets allow question

Of those that were unwilling to allow pets, 41% of landlords cited the main reason as potential property damage:

why not pets

The obvious answer to the risk of pet-related property damage is increase the security deposit taken. Alternatively, clauses could be inserted into the tenancy agreement such as one requiring the tenant to professionally clean the property on move-out. The Dogs Trust’s Lets with Petsscheme advises landlords to take these approaches.

However, these approaches will soon be outlawed by the ban of letting fees likely to come into force sometime in 2019. While deposits will be capped at 6 weeks’ rent under the draft Tenant Fees Bill, Labour would like to see this reduced to 4 weeks’ rent which we have already warned about. On top of that, the Bill would ban landlords and letting agents from requiring tenants to pay for third-party services, such as a professional cleaner.

This leaves no room for landlords to seek some extra financial protection against pet damage, which could see some unintended consequences. Perhaps landlords who currently supply furniture would stop, or decrease the amount or quality of the furniture or fittings provided.

While more costs for landlords does not automatically increase rent, it adds to the cumulative upwards pressure and could exacerbate the effects of Section 24 tax changes that are starting to impact on landlord finances.

Consequential?

 There are likely other consequences of a “default right” that need to be addressed by any consultation the Labour undertakes with landlords. While not an exhaustive list, here are just some issues that we hope are taken into account before any policy details are decided:

  • Landlords will likely face other increased costs as a result of the tenant’s “default right” to a pet. For example, landlord insurance premiums are already likely to rise if tenants have pets (if the policy even covers pet damage). What will the effect be in premiums if all tenants have the default right? What impact will this have of rents?
  • Some properties may not even be suitable for pets (depending on the animal and the property) such as high-rise flats, so would not automatically improve animal welfare,
  • In the case of many leasehold flats, permission for pets may not be within the gift of the landlords as the lease itself bans them. They would then need an exemption from the “default right”,
  • Houses in Multiple Occupation (HMOs) also need to be look at, so that sharers are not forced to live with pets they do not want to live with, or possibly to which they are allergic,
  • How could landlords evidence that a pet is, or would cause a nuisance, and what legal routes would be open to landlords to rectify the problem or seek redress?

We welcome Labour’s promise to consult with landlords on the development on this policy, and while we may not agree on its necessity, we will endeavour to work constructively to ensure any outcome is workable and more than just another financial burden on landlords.

 

Discussion: Should tenants have the default right to keep pets?

Private Landlords in England need to be prepared for increasing regulation

A specialist commercial property lawyer has warned that private landlords in England need to be prepared for increasing regulation following the publication of a Government consultation.

Tim Miles, a Partner with national firm Clarke Willmott LLP, says the consultation on electrical safety will have a significant impact on private landlords and the buy to let sector in England.

The consultation proposes to compel private landlords to undertake mandatory electrical installation safety checks every five years, on all private rented properties within their portfolio.

Following similar obligtions in Scotland, the consultation proposes a fine of between £5,000 and £30,000 for failure to comply, which should provide a costly deterrent. Although, unlike Scottish regulations, the consultation falls short of proposing checks on electrical appliances such as white goods supplied by landlords, it will still have a significant impact.

Additionally, landlords also need to be aware that in line with current gas safety requirements, the consultation proposes preventing landlords from being able to evict tenants under a Section 21 notice unless they have provided the tenant a copy of electrical installation safety documentation.

If approved, regulations from the Secretary of State for Housing Communities and Local Government are likely to follow later this year.

Tim said: “Private landlords in England need to be prepared for increasing regulation and should not view the consultation as a stand-alone act, but as part of a wider package of action.

Another consultation has been released in the same week proposing that private landlords will be required to sign up to a new private housing obudsmen and the Government’s support for The Homes (Fitness of Human Habitation) Bill.

These consultations are part of the Government’s clear intent to protect tenants post-Grenfall.

Additionally landlords need to be aware that the five year mandatory suggestion is only a suggestion and there is the potential that (dependent on the consultation to ensure that a wide range of views are considered.”

http://www.propertyreporter.co.uk/landlords/private-landlords-in-england-need-to-be-prepared-for-increasing-regulation.html?utm_source=Email+Campaign&utm_medium=email&utm_campaign=21136-249688-Campaign+-+22%2F02%2F2018+MT

 

 

4m Renters Risk Homelessness

The latest research from Scottish Widows has found that UK renters are putting themselves at risk of homelessness by failing to have a financial safety net in place.

According to the findings, 38% of private renters admit that they’d not be financially secure if their household lost its main income. And nearly four in 10  – amounting to 4.14 million people – say that if they fell seriously ill and were unable to pay their rent, they would have no idea where they would go or could be left homeless.

Yet only 4% of private renters have critical illness cover and 22% have life insurance, leaving them at risk of eviction and financial hardship due to lack of a back-up plan if the unexpected were to happen.
skint 2
Renters’ worries fail to prompt action
The research reveals that more than half (51%) of renters worry about unexpectedly being unable to pay rent, a bigger concern for them than the prospect of living in a substandard property with serious issues like electrical problems or mould (36%), or having a difficult landlord (39%).
Regardless of their worries, however, almost a quarter (24%) admit they’ve never thought about what they’d do if they became ill and couldn’t afford the rent. And of those who have thought about it, over two fifths (44%) say they’d have to ask their parents to cover their payments, and two-fifths (41%) would have to move back into the parental home.
Renters are also failing to insure against common mishaps, such as theft, fire or flood. Only 32% of private renters say they pay attention to insuring their home contents against these eventualities, and just 10% of renters say they have home insurance that covers both their property and contents.

Renters still have financial obligations to protect
Renters may not be prompted by a house purchase to look at how they and their families would manage financially if they were to die or become seriously ill. But while they don’t have a mortgage to pay, they still have financial obligations, not least the monthly rent and regular household bills.
When asked about how they’d cope should they or their partner not be able to work for six months, a third (33%) of renters say they’d dip into their savings, and almost as many (31%) say they’d rely on state benefits. Their savings, however, are unlikely to cover all their outgoings and living costs for too long, with those in rented accommodation having just £9,260 put aside, compared with an average of £21,152 among mortgage holders.
Although many renters assume they can rely on benefits, working-age welfare reforms – both made and in plan – mean that fewer of them would get their rent paid in full if their circumstances changed without warning. This is particularly the case with freezes in income replacement, income top-up, and local housing allowance.
Renters’ lack of protection also points to a larger financial struggle, as almost half (46%) say they’re stuck in rented accommodation because they can’t afford to buy. A third (34%) also admit they are not saving at all, and 60% say they’re not saving for the long term because they can’t afford to.

Johnny Timpson, protection specialist at Scottish Widows, said: “It’s important for people living in rental accommodation to understand the risks of signing a tenancy contract without any financial back-up in place, particularly if they don’t have much in the way of savings.
Our research demonstrates how critical it is to think ahead, and while no-one wants to think about the worst happening, having a safety net in place will provide peace of mind about avoiding eviction and being able to keep up with regular outgoings such as household bills.”

David Rochester, Head of Underwriting, Home Insurance, Lloyds Banking Group, said: “While it’s critical that renters think ahead about covering their rent in case they’re unable to work, they also need to think about bracing for other eventualities, such as damage to their possessions.
Renters may not want to think about the possibility of theft, fire or flood, but having insurance in place will help protect them and their property in such an event. Industry research tells us that an astonishing 60% of private renters between the ages of 20-30 don’t have contents insurance***. This is a significant figure, and indicates how young renters in particular risk leaving themselves financially exposed, should the worst happen and they need to replace any item of worth in their home.”

http://www.propertyreporter.co.uk/landlords/4m-renters-risk-homelessness-by-not-having-a-financial-safety-net.html?utm_source=Email+Campaign&utm_medium=email&utm_campaign=21136-245284-Campaign+-+25%2F01%2F2018+MT

Are government policies going to affect rent prices?

Dorian Gonsalves, CEO of Belvoir, warns that government interference in the rental sector is likely to result in a rise in rents throughout 2018 and into 2019.

 

Dorian had this to say: “As 2018 progresses, landlords and tenants will find themselves shouldered with an extra burden of cost due to continued government interference in the rental market, which includes a decision to ban tenant fees and the implementation of punitive tax changes.
Image result for rent
Belvoir’s Q3 rental index revealed that, on average, rents increased by just £3 a month compared to the same period last year, which demonstrates that the rental market is working well for most landlords and tenants across the country. However, as a consequence of the impact of government policies we believe that during 2018 many landlords will inevitably be forced to review rents across their entire portfolio. This is a real shame, as in our experience many landlords have resisted increasing rents when they have a tenant in situ, but this is likely to change during 2018 and 2019 when the impact of some of the government’s policies become more apparent.

We have not seen evidence of smaller landlords choosing to exit the sector. With all the uncertainty surrounding Brexit, we believe that property remains a simple, unsophisticated and reliable investment for over two million UK landlords. We are, however, noticing that those new landlords who are entering the sector, are doing so with lower borrowing, and they are looking for a stronger return on their cash. To many of the UK’s smaller investors, property represents a relatively strong investment, and more importantly, it is an asset that they can touch, see and pass on to family members in the future. We predict that this is unlikely to change for a very long time.”

Continue reading “Are government policies going to affect rent prices?”

Rent Increases

The latest data and analysis from HomeLet has revealed that the private rental market ended 2017 with rental price inflation moving marginally higher.

According to the report, rents in the UK rose by an annualised average of 1.7% during December, reaching £907 compared to £892 in the same month of last year.

Rental price inflation was much more stable over the course of 2017; by contrast, rents in 2016 regularly rose at an annual rate of more than 4% in the first half of the year, before rental price inflation dropped back in the second half.

Rental price inflation remains modest by recent standards. In December 2015, rents were up 3.7% on the same month of 2014, in a year when rental price inflation never fell below 3.5%.

The data for December 2017 also means it is likely that rents rose at a slower rate than general inflation in every month of last year, with inflation on the consumer price index measure running at 3.1% in November, the most recent period for which official statistics are available. The last time that average rents rose more quickly than inflation was December 2016, when the HomeLet Rental Index recorded an increase of 1.7% compared to a CPI reading of 1.6%.

The East Midlands recorded the highest rate of rental price inflation last month, with rents that were, on average, 4.6% higher in December 2017 than in the same month of 2016. Rents in the East Midlands now average £611 a month, remaining lower than most regions of the country other than Wales, and the North East. Rental price inflation exceeded 3% in three other regions last month: the South-West, the North-East and Northern Ireland.

By contrast, the South-East of England was the only region to register a fall in rents last month, with average rents in December down 1% on last year; rents in the South-East fell on an annualised basis in every month of 2017. Rents in Wales were completely flat last month, with every other region of the country seeing at least some increase.

December’s 1.0% increase in rents in London means the capital saw positive rental price inflation compared to December 2016, despite registering falling rents in five months of the year. The average tenancy agreed in London last month cost £1,524, compared to £1,509 a year previously. Stripping out the effect of London rents from the national picture, rental price inflation across the UK would have been 1.9% last month rather than 1.7%.

Martin Totty, HomeLet’s Chief Executive Officer, had this to say: “2017 was a year in which rental price inflation was modest; we actually saw average rents across the country fall during May and June, and while this was not repeated during the second half of the year, we remain some way off the much higher levels of rental price inflation that prevailed in 2015 and much of 2016.

We continue to see a very mixed picture regionally: in areas of the country where rents rose less quickly in 2015 and 2016, rental price inflation was much higher last year; by contrast, those areas where rents were previously rising fastest have been seeing much more modest increases.”

Rental growth accelerates by a third in 2017

 

Rental growth accelerates by a third in 2017

The latest data and analysis from Countrywide has revealed that rental growth across Great Britain increased in 2017 to 2.4%, up from from 1.8% in 2016.

According to the figures, the average rent ended the year at £960 per month, up by £23 a month from the start of the year.  While rents rose a third faster than they did in 2016, rental growth was still behind than in both 2015 (3.2%) and 2014 (4.9%). Forty-six per cent of landlords increased the rent when re-letting their home, up from 37% in 2016.

In a reversal of 2016 when London had the slowest rate of rental growth in England, last year it had the fastest. Over the course of 2017 rents in London rose 3.2%, reversing the 0.8% fall recorded in 2016. Scotland (3.3%) was the only region in Great Britain where rental growth outstripped the capital.  2017 also saw Yorkshire and Humber replace Wales as the sixth most expensive region of Great Britain to rent a home.

Last year also saw a drop in the number of homes bought by Landlords.  In 2017 landlords bought 12.5% of homes sold in Great Britain, down from 14.7% in 2016, 16.3% in 2015. This represents a nine year low.  Between 2016 and 2017 the proportion of homes sold to landlords fell in every region, nowhere more so than in London. This means in the capital 5,400 fewer homes were bought by a landlord in 2017 than in 2016.

The falling number of landlord purchases has meant the number of homes on the rental market has dropped.  In December 2017 there were 4% fewer homes to rent across Great Britain than in December 2016, with London recording a 21% fall, the largest of any region. Despite the stamp duty hike induced fall in stock, there were 5% more homes available to rent than there were two years ago. However in London the number of homes on the market has dropped by a third.

Johnny Morris, Research Director at Countrywide, said: “Last year saw the rate of rental growth pick up to get closer to its long-term average.  Most of the rise comes from a pickup in rental growth in London, after falls in 2016.  Rents rose across every region of Great Britain last year, although the north of England saw rents rise at a slower rate than they did in 2016.
 Rental growth has been supported by a fall in the number of homes on the rental market, with the biggest fall in London.  It looks like increased competition between tenants for rental homes will drive faster rental growth in 2018.”

Could adding rent payments to credit scores help tenants become future buyers?

The growing movement to ensure that rental payments are added to credit scores as a mandatory requirement could provide a huge incentive for the next generation of home buyers.Automated rental payment provider PayProp says this measure, combined with the recent stamp duty cut for first-time buyers, means tenants could soon be in their best position in years to get on the property ladder.
Benefits for tenants, landlords and letting agents
Currently, credit agencies do not, as a matter of course, include tenants’ rent payment histories when calculating credit scores – missing an opportunity to make mortgage funding accessible for some tenants.

Neil Cobbold, chief operating officer of PayProp in the UK, had this to say: “Many tenants have been paying rent on time for years, if not decades. The fact that this does not carry the same weight as a mortgage payment is hard to believe.Thanks to the rapid growth of the private rental sector, more tenants are paying higher rents. Taking cognisance of rent payments would therefore make perfect sense, encouraging the next generation of property buyers.”

Cobbold says the prospect of a better credit score will give tenants even more incentive to pay their rent on time each month, something which would benefit the cash flow of landlords and letting agents, and contribute towards reducing rental arrears. In addition, landlords and agents referencing tenants would benefit from having a better idea of prospective renters’ payment history and financial situation.

 Could adding rent payments to credit scores help tenants become future buyers?

Industry campaigning again makes a difference

The move towards including rent payments in credit scores has gathered significant momentum over the last year. Following regular campaigning by several industry organisations, an online petition attracting over 140,000 signatures forced MPs to debate the issue in Parliament in October.

After the debate, Lord John Bird – the founder of the Big Issue – launched the Creditworthiness Assessment Bill which pledges to ensure that tenants’ rental payment records count towards credit ratings.

The Bill passed its Second Reading in the House of Lords at the end of November and will now have to pass a Report Stage and Third Reading before passing through the House of Commons.

Despite still having to pass through several Parliamentary requirements before receiving Royal Assent, the Bill has gained significant cross-party support and is thought likely to formally become law at some point during 2018.

Government embraces PropTech with Rent Recognition Challenge

The campaign for adding rental payment history to credit scores was further bolstered by an announcement made in the recent Autumn Budget. The government has put aside £2 million for technology entrepreneurs working to develop an application that can allow the relevant data to be recorded and processed.

The Rent Recognition Challenge will provide funding to the six best proposals to help develop them into workable products.

Cobbold adds: “Recording and counting rent payments towards credit scores is a modern phenomenon and therefore it needs a modern solution. That’s why this is a fantastic idea and one that shows the government is keen to embrace the PropTech revolution.”

A bright future for the rental payments industry

Cobbold says this timely development represents another step forward for the growing rental payments industry.

http://www.propertyreporter.co.uk/landlords/could-adding-rent-payments-to-credit-scores-help-tenants-become-future-buyers.html?utm_source=Email+Campaign&utm_medium=email&utm_campaign=21136-242404-Campaign+-+04%2F01%2F2018+eMoov

Government announce tough new powers to tackle rogue landlords.

Government announce tough new powers to tackle rogue landlords

Rogue landlords have been put on notice as the government announced a raft of new measures to crack down on bad practices, stamp out overcrowding and improve standards for those renting in the private sector.

Housing Minister Alok Sharma has set out how, subject to parliamentary clearance, landlords renting properties in England occupied by 5 or more people, from 2 or more separate households will need to be licensed.

The move, affecting around 160,000 houses, will mean councils can take further action to crack down on unscrupulous landlords renting sub-standard and overcrowded homes.

Government has also set out details of criminal offences which will automatically ban someone from being a landlord. From April next year, someone convicted of offences such as burglary and stalking can be added to the database of rogue landlords and be barred from renting properties.

These latest measures build on government action to date to drive up safety and standards in the private rented sector. This includes bringing in fines of up to £30,000 for dodgy landlords, protections for tenants from revenge evictions and £12 million funding for councils to take enforcement action in hotspot areas.

 Alok Sharma, Housing and Planning Minister, said: “Every tenant has a right to a safe, secure and decent home. But far too many are being exploited by unscrupulous landlords who profit from providing overcrowded, squalid and sometimes dangerous homes. Enough is enough and so I’m putting these rogue landlords on notice – shape up or ship out of the rental business. Through a raft of new powers we are giving councils the further tools they need to crack down these rogue landlords and kick them out of the business for good.”

The move will also benefit wider communities fed up with living near shoddily maintained properties without proper bins, dumped rubbish and anti social behaviour. Landlords will be held responsible for making sure the council’s rules on refuse and recycling are followed.

New rules will also come into force setting minimum size requirements for bedrooms in houses of multiple occupation to prevent overcrowding. As part of the licencing requirements, local councils will be able to make sure only rooms meeting the standard are used for sleeping.

http://www.propertyreporter.co.uk/landlords/government-announce-tough-new-powers-to-tackle-rogue-landlords.html

 

Warnings on the perils of hosting a Christmas party at home

According to new research from Sainsbury’s Bank Home Insurance, 37% of people plan to host a Christmas or New Year’s Eve Party this year.

However, their data suggests that over the past five years as many as 18% of party hosts have had an item damaged at their home – with 7% claiming belongings were stolen.

The bank is urging those planning to host parties this festive season, to make sure items are safe and if necessary moved to protect them from being damaged or stolen. It also says valuable belongings should be locked away.

What’s more, Sainsbury’s Bank cautions that contents which are damaged or stolen by invited ‘guests’ will not necessarily be covered by home insurance policies, and is urging  party hosts to be mindful of their property and all items of value when planning a party.

Bank's warnings on the perils of hosting a Christmas party at home

Home insurance is there to protect your home and possessions against the unforeseen, for example, theft, loss and accidental damage. It requires homeowners to take care of their properties and may not cover every eventuality. People should take the time to familiarise themselves with their policy so that they understand what it covers.

The bank’s research reveals that the average cost of stolen items during a party is higher than those damaged (£565 vs £192.20). Of those who said items had been stolen during a party in the last five years, eight per cent have had items worth over £1,000 go missing following the gathering.

One of the main reasons for items being stolen or damaged at parties could be uninvited guests. Some 10% of people claim unwanted guests have turned up to their parties after they or their partner posted details of them on social media or messaging apps, and this has happened to eight per cent of people when their children did this.

Karen Hogg, Head of Insurances at Sainsbury’s Bank, said: “Our research shows those throwing Christmas and New Year’s house parties must be vigilant to protect their homes and belongings. It’s important to be on guard to stop people they don’t know gate-crashing their celebrations.

If you plan to have a Christmas or New Year’s party, it’s worth checking with your home insurance provider to find out what you are covered for.  If items are stolen by ‘guests’ you won’t be covered, and any damage caused during a party will also be scrutinised by most home insurers.”

http://www.propertyreporter.co.uk/household/banks-warnings-on-the-perils-of-hosting-a-christmas-party-at-home.html?utm_source=Email+Campaign&utm_medium=email&utm_campaign=21136-240869-Campaign+-+19%2F12%2F2017+eMoov

Why is it so difficult for some to downsize?

According to a new survey of 205 IFAs, emotional ties to their family home is the single biggest barrier to retirees downsizing.

The research, from more 2 life, found that 87% of their clients cite this as the most common reason for not moving, with over half (52%) saying they can’t find another suitable property to move into.

Other explanations retired clients gave for not downsizing included moving costs being too high (35%), leaving it too late to move (29%), and the level of stamp duty they would be required to pay being too high (20%).

73% of IFAs have had clients ask for advice on downsizing and 4 out of 5 IFAs said they would sometimes recommend equity release as an alternative option to downsizing, but only if it was appropriate to the situation. Only a small proportion (9%) would always recommend it to their clients as an alternative.

As such, more 2 life is calling for more advisers to raise the topic of equity release as a viable solution for clients who are unwilling or unable to downsize. Additionally, for any clients who may have plans to downsize in the future, the lender is stressing the importance of discussing modern features such as downsizing protection with them to help avoid unnecessary exit fees on their loans.

Stuart Wilson, Channel Marketing Director at more 2 life, commented: “This new research shows that, understandably, many retired individuals are reluctant to move out of their homes and leave behind the memories and connections they have made there. However, for retirees who still require extra wealth for whatever reason, whether that be to repay an existing mortgage, supplement their current retirement income or pay for a once in a lifetime holiday, equity release is an extremely viable alternative option. Equally, where downsizing is very much part of a client’s plans, advisers should be making them aware of products that can help them make that transition without incurring early repayment fees.

There are a wide range of products available in the retirement lending market which can help meet customers’ needs. Advisers have a crucial role to play in raising awareness among their clients, of both the features and benefits of equity release products. At more 2 life, we understand the importance of advisers in the later life lending process and encourage them to think outside the box when having retirement planning discussions with their clients. By highlighting product features which clients may be unaware of, they may be able to potentially make equity release a solution to helping retirees find extra funds without having to leave their family homes.”

http://www.propertyreporter.co.uk/property/why-is-it-so-difficult-for-some-to-downsize.html