National Landlords Association

Encouraging renting


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Does anybody want the landlord vote?

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Landlords may have lost faith in the Conservative party, but where should they turn?

Thursday 5th May – the first electoral test for Cameron and Corbyn following 363 days of the first Conservative majority government since the ‘90s.

While the elections taking place are local in nature, recent polling of our members has thrown up some interesting results when compared with one carried out prior to the general election last year.

Prior to last year’s election, 57% of respondents to our quarterly members’ survey were intending to vote Conservative at the ballot box. Having endured almost a year to the day of a majority Conservative government, many landlords are now having a change of heart. The Chancellor’s numerous and sustained raids on landlords’ livelihoods seem to be taking their toll.

In our most recent survey, half of landlords’ voting intentions have changed since the general election as a result of the Government’s and opposition parties’ approach to the PRS. While Cameron may not lose much sleep over the lost support from landlords, it is interesting to see where that support has gone instead.

Of those landlords that have changed their mind, almost half of them simply no longer know for whom to vote. This doesn’t come as much as a surprise to us – we know first-hand that no political party is especially sympathetic to landlords.

London

The London Mayoral election has highlighted how each party views the PRS and its role in delivering homes to millions of people. Landlords don’t come away particularly well from any of the mayoral candidates’ proposals. You can read our breakdowns of the various manifestos here.

London landlord voting intention still favours the Conservatives at 33%, but this is just marginally higher than the 32% who are still unsure about which candidate will get their vote tomorrow. Prior to last year’s election, 63% of London landlords were intending to vote Conservative. A drastic fall in support in just under a year!

Scotland & Wales

For landlords, the situations in Scotland & Wales are looking even worse. Asked for their view on the impact of their respective Government’s PRS policies on business, respondents were clear in their answers: 61% of Scottish landlords are impacted negatively, with 55% of Welsh landlords impacted negatively.

Plenty has changed over the past year in both nations, which you can read about here for Scotland, and here for Wales.

The Conservatives again topped both polls, but only just. Scottish Tories were on 21%, slightly above the SNP’s 18%. In Wales, the “unsures” were only 2 percentage points below the Conservatives’ dismal 17%.

Conclusions?

It’s hard to reach much of a definitive conclusion from these polls, but the results are interesting nonetheless.

There is no natural party of support for landlords (which shouldn’t come as a surprise), but after one year of majority Government the Conservatives have been able to drive away more landlords than 5 years of Coalition Government ever did.

With 4 years left until the next general election, it remains to be seen if Cameron & Co. will begin to work with the landlord community to win back support, or continue with attacks against us.


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All Change! Scottish PRS in 2016

The Scottish private rented sector is in for a massive shake up in 2016, with an overhaul of tenancies and the (possible) introduction of rent controls. It is important for landlords with propertiesflag-of-scotland in Scotland to get to grips with the new legislation.

Private Housing (Tenancies)(Scotland) Act

One of the major changes that facing the Scottish PRS will be the coming into force of the Private Housing (Tenancies)(Scotland) Act, which will likely happen later this year.

The Scottish Government’s objective with this Act is to improve security of tenure for tenants, provide protection to tenants from “excessive” rent increases and provide rent predictability.

It will do this by creating a simplified and “modernised” statutory private residential tenancy and removing the no-fault ground for repossession.

In essence, this Act strives to make tenancies indefinite and at the discretion of the tenant for it to end.

The Act limits rent rises to a maximum of one every 12 months, and set out the procedure:

  • Written notice of intention to increase rents, minimum 3 months’ notice
  • If the tenant objects then they can refer the rise to a rent officer of Rent Service Scotland, who will review it and decide the “open-market rate” (which could be increase or decrease the rent)
  • If either tenant or landlord objects, they can appeal to the First-tier Tribunal who will review the officer’s order and make the final decision.

Rent Controls

It also introduces Rent Pressure Zones, for which Local Authorities can apply to the Minister for some or all of their area to become. In these zones the allowable maximum rent increase is strictly limited by regulations laid down by the Minister and passed by Holyrood. Regulations designating a rent pressure zone last a maximum of 5 years.

Although Margaret Burgess, the Scottish Housing Minister, has so far not given an indication of when these changes would be implemented, a date in late 2016 would not come as a surprise.

Additional Homes Surcharge on LBTT

The Scottish Government followed George Osborne’s lead by introducing a Land & Buildings Transaction Tax (LBTT) supplement on the purchase of additional residential properties, aimed at buy-to-let properties. However, unlike Osborne’s Stamp Duty Land Tax (SDLT) additional rate in England & Wales, purchases of 6 or more dwellings at one time will be exempt from the 3% LBTT surcharge.

The new rates payable when purchasing an additional residential property are:

Band Existing LBTT Rates Including Additional Homes Supplement
£0-£40k 0% 0%
£40k-145k 0% 3%
£145,001k-£250k 2% 5%
£250,001k-£325k 5% 8%
£325,001-£750k 10% 13%
£750,001+ 12% 15%
The 3% supplement would be applied to the whole purchase price, and not just the proportion of the price above £40,000.

 May 2016 Holyrood Elections

On Thursday May 5th Scottish voters will be heading to the ballot box in the Holyrood elections. All polls are showing the SNP will be comfortably returned to Government, with the strong possibility of an increase in Holyrood seats. The same polls put Labour and Conservatives within touching distance of each other for second place.

SNP

Having already passed the legislation mentioned above, what next would the SNP have in store for the PRS?

Cursory glances at their manifesto suggest that they are quite content with the actions they have already taken to attack reform the PRS. However, they state that they would look to consult on two more major changes:

  • A national standard for property in the sector, and
  • Energy efficiency regulations in the PRS.

So get set for more burdensome regulations that will push up costs for tenants and decrease supply of rented properties.

On top of these consultations, they will “look into” the possibility of allowing Universal Credit to be paid to landlords direct, which would be a very minor victory although there is no firm promise of action.

The Opposition

It is important to note that none of the parties are calling for the scrapping of the recently passed Private Tenancies Act. However, other parties are proposing a number of additions.

Labour want to go further than the Private Tenancies Act and want to cap rent increases across the whole of Scotland and introduce a charter similar to the social sector to “drive up standards” in the PRS.

The Conservatives have proposed “rent-lock” schemes, whereby if the rent is guaranteed to be charged at “affordable” levels for a set period of time, the Government would:

  • Waive LBTT additional property rate for new buy-to-let investors, and
  • Provide grant funding for the construction of new homes for rent.

A proposed scheme would also guarantee a landlord mid-market rent in return for the use of the property for housing list allocations.

Lower down in the polls the Lib Dems want to enforce strict energy efficiency regulations so that no property with an EPC rating below C is let out. They would make landlords cough up to improve their properties because they “have the capital asset and resources to make the investment, whereas tenants do not”.

A lot of change is coming for the Scottish PRS in 2016. Whatever the result on Thursday 5th, more change for the sector is bound to follow.

 

 


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Wales – The PRS in 2016 and Beyond

Welsh-Government-logo

A lot of change is happening in Wales this year, and it is important that landlords stay up to date. Below are the main issues of which members with property in Wales should be aware.

Rent Smart Wales

Rent Smart Wales is the mandatory landlord and letting agent registration and licensing scheme launched on 23 November 2015 and it covers the whole of Wales.

Administered by Cardiff City Council, and brought in under the Housing (Wales) Act 2014, the scheme is mandatory throughout the country.

If you are a landlord with property in Wales you need to register, and may also need to become licensed if engaged in any letting or property management activities. This has to be done before 23 November this yearvisit the website here to apply.

Renting Homes (Wales) Act

The Renting Homes (Wales) Act 2016 was granted Royal Assent on 18th January 2016, although the provisions will come into force at a later date decided by the Welsh Government. This will likely occur later in the year.

One of the most significant pieces of legislation to be passed by the National Assembly for Wales, the Act will:

  • replace the majority of current tenancies and licences with just two types of contract – one for the private rented sector and one for social housing
  • require landlords to issue a written statement of the contract which clearly sets out the rights and responsibilities of both landlords and tenants
  • require landlords to carry out repairs and ensure rental properties are fit for human habitation. It will also help protect people from being evicted simply for complaining about the condition of a property
  • help to prevent people being made homeless when a joint tenant leaves a tenancy, thereby ending the tenancy for everyone else
  • do more to help victims of domestic abuse by enabling the person carrying out the abuse to be targeted for eviction
  • introduce a streamlined abandonment process so landlords can recover abandoned properties quicker.

Other regulations, such as mandatory electrical safety checks, are also likely to be made later in the year. A full briefing can be found here.

HMO Planning Permission

On February 25th new secondary legislation came into force that created a new use class (C4) for HMOs occupied by not more than six residents. This will mean that anyone wanting to create a new HMO for between three and six unrelated individuals in Wales will now have to apply for planning permission, paying the (recently increased) application fee with no guarantee of success.

The same policy was introduced in England just before the 2010 General Election. However, it was subsequently amended by the incoming Coalition Government who granted permitted development rights to changes from a dwelling house (C3) to HMO (C4), unless an Article 4 direction was in place.

It is possible that such a change could be brought in for Wales following the election in May, depending on the make-up of the Assembly.

So, what next?

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On Thursday May 5th Welsh voters will be heading to the ballot box in the Welsh Assembly Elections.

Interestingly, neither the Labour, Conservative or UKIP manifestos spare any space for the PRS in Wales. The current Labour Government, having already introduced all the policies mentioned above, most likely see the job as having been completed for now.

Other parties, however, want to go even further. Rent controls are a theme running through the manifestos of the Liberal Democrats, Plaid Cymru and the Green Party.

On top of this, the Lib Dems want to set letting agent charges and introduce a HMO business rate. Plaid want to legislate further on enforcing higher standards for PRS properties, as well as set up a database of all complaints made about landlords. The Greens are promising a new “Right to Rent” law to “strengthen tenants’ rights”.

Ultimately, the nature of the PRS in Wales over the coming years will come down to how the Welsh people vote, and the make-up of the Government they return to the Senedd in less than two weeks’ time.


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The Housing Bill: Landlords out of the cross-hairs?

It would appear that the Department for Communities and Local Government (DCLG) didn’t get Osborne’s memo about shafting landlords to the hilt.

The Housing & Planning Bill that is currently working its way through the House of Lords actually includes some positive policies for landlords (and their tenants) as well as some tame, unobjectionable fluff for the wider PRS.

Abandonment

An issue that the NLA has been lobbying on for quite a while is the recovery of abandoned properties. Currently, landlords faced with a tenant scarpering will need to fork out for a costly court procedure to recover their property – a cost that is enhanced by the staggering time it takes and the long void period it creates.

However, the Housing & Planning Bill shows that the Government has finally accepted that this is a problem that merits an adequate response.

As this nifty flowchart shows, the new procedure would allow a landlord to recover their property in as little as 8 weeks, if the “unpaid rent condition” has been met.

Landlords will have a greater confidence in their ability to reclaim possession of an abandoned property without the hassle and cost of going to court while mortgage payments stack up.

While only 1750 tenancies are estimated to be abandoned each year, that in no way minimises the financial hardship each case could cause the landlord. The inclusion of this new procedure in the Bill has been welcome news (especially after a similar procedure has been introduced in Wales), and we fully support it.

Electrical Safety

Just last week the Government tabled an amendment that would allow the Secretary of State to introduce the requirement for all landlords to undertake regular electrical safety checks.

Because it’s just an enabling power (allowing the Government to make regulations about it later) there is no details yet about the exact requirements. However, Ministers have set out their intention to consult with the sector before making regulations, and we’ll be there to ensure they are not too onerous on landlords.

The NLA already recommends getting an electrical safety inspection done every 5 years, with annual an annual PAT and visible wiring check on each tenancy change. There are also requirements for licensable HMO properties to inspect every 5 years already in place.

Enshrining this best practice in law, if done correctly, would not be too bad for landlords on the whole.

Standards & Enforcement

The Labour Party, in the Lords and the Commons, have made several unsuccessful attempts to include a clause in the Bill to ensure rented properties are “fit for human habitation”.

Luckily in this instance the Government recognises that creating new hoops for landlords to jump through by imposing unnecessary red tape and expensive bureaucracy will just raise the rents for tenants, especially when standards are constantly improving. Maybe someone at DCLG should express that viewpoint to the Home Office over their right-to-rent policy.

Local authorities already have substantial powers to enforce standards on landlords and punish those that let out dangerous properties. As well as extending rent repayment orders, this Bill will allow local authorities to fine “rogue” landlords up to £30,000 per infraction – a fine that local authorities get to keep in order to fund their enforcement activities.

This could hopefully mean enforcement actions will no longer be funded by the vast majority of good landlords (and their tenants) through unnecessary and expensive licensing schemes.

Constructive Engagement

Overall, we’re reservedly supportive of the PRS measures in this Bill. The one main criticism we have is that a great deal of detail is not included in the Bill itself, but will come about later through regulations.

This means that we have to continue engaging the Government to introduce balanced rules for the PRS.

At the moment that’s looking at least a little promising.


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What do you think of private rental market statistics?

By Gary Trent, PRS Stakeholder Lead, Valuation Office Agency.

Statistics on the Private Rented Sector (PRS) can be an invaluable resource.  They give a real insight into sector trends and the wider market beyond our own experience. However, it’s not often there’s the chance to influence their development. however, an online survey running until the 20 April does just that.

The Valuation Office Agency (VOA) is running a user engagement exercise on the future design of our Private Rental Market Statistics (PRMS) for England.  We’d like to know what you currently use the PRMS for, and what changes are most important to you. If you’ve not seen the current PRMS then a good place to start is the PRM maps published on Gov.uk. They show median rent levels for studios, 1, 2, 3 and 4+ bedroomed properties by local authority area. A Statistical Summary  explains how we produce them, and what their current limitations are.

The PRMS are based on the rents from around 500,000 new, renewal and statutory periodic tenancies in England. All this rental information is provided on a voluntary, goodwill basis by thousands of letting agents, management companies and landlords; it’s like pulling together the pieces of a giant jigsaw puzzle. We’re always keen to hear from anyone who would like to contribute rental information – every single piece of information we receive enriches the data we use to produce the PRMS.

The survey is open until 20 April 2016; you can view it here https://www.smartsurvey.co.uk/s/NJZG6/. Get involved and let us know what improvements would make the biggest difference to you. Once the results are in, we’ll publish a high level summary of them on our Statistics webpage later in the year.

You can also find out more about VOA Rent Officers and the Valuation Office Agency on the VOA website.

 


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Deposits at risk: Green and Lib Dem tackle the PRS in London

This week saw the launch of two more manifestos from London Mayoral hopefuls: Lib Dem Caroline Pidgeon AM, and the Greens’ Sian Berry. Time to delve in to the PRS policies of some more (albeit less likely) contenders.

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Catch the Pidgeon

Compared to the other candidates, some of Caroline Pidgeon’s policies are quite tame. She wants to:

  • encourage landlords to offer longer tenancies as opposed to mandating them,
  • encourage landlords to sign up to the London Rental Standard, and
  • ensure landlords abide by Tenants’ Deposit Protection Scheme rules.

Pidgeon also recognises the extensive powers that local authorities already have over the PRS. To make best use of this she wants to set up a central unit to prosecute rogue landlords, promote effective registration of landlords and will mandate councils to actually enforce HHSRS provisions to up the standards of properties.

So far, not so bad. However, where there is real room for worry is the Lib Dem position on landlord licensing. As part of powers that councils already have, Pidgeon will be looking to drastically increase the number of selective licensing schemes across the capital.

While not in the manifesto, the London Lib Dems are already on record as wanting to abolish selective licensing restrictions and have even called for powers to introduce Londonwide mandatory licensing of landlords.

So, while there are tamer policies that most people could get behind, there is a worrying stance on the licensing of landlords. The added costs to landlords will mean added costs to tenants, leaving renters picking up the tab for the policing of rogue landlords.

Surely Pidgeon could’ve come up with something a bit more liberal? Oh well, with around 4% in the polls we’ll likely never find out anyway.

You can read the Lib Dem manifesto here.

Berry Berry Frightening!

Rent controls, mandatory longer tenancies and mandatory licensing.

These are the radical reforms that Sian Berry wants to see in London and she will set up a Renters Union to campaign for the powers to impose them on the capital.

Although adamant about the need for such powers there is a distinct lack of detail surrounding the policies, with no mention of what form the rent controls will take, what length tenancies should be, or how a license scheme would work.

While this union will be funded by City Hall, it will operate completely independently of the GLA, which it will also need to lobby and influence…

With this funding the union will also provide advice to renters taking legal action against private landlord, or signpost them to charities that also already provide advice to renters such as Shelter or Citizens’ Advice Bureau.

Moving on from this seemingly redundant, tax-payer funded vanity project, Berry also envisions a Londonwide landlord register being set up. To achieve this she will work with accreditation schemes, borough licensing schemes and tenants to establish this database.

Interestingly, this database could also include a blacklist of rogue landlords. This could differ from the Government’s proposed database of rogue landlords (currently being debated in Parliament), but again there is little detail.

It’s not too much of a surprise that the Green Party are no fan of landlords or the free market. Luckily for landlords then, and tenants who would ultimately have to bear the costs of these policies, Ms Berry is circling around 3% in polls.

You can read the Green Party manifesto here.

 

CAVEAT: Although the NLA is unashamedly pro-landlord, it remains politically neutral. You can view our previous appraisal of Sadiq Khan’s manifesto here and Zac Goldsmith’s here.


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Tenants’ Right to Request Energy Efficiency Improvements

greenhouseFrom today (April 1st), where a tenant requests their landlord’s consent to make energy efficiency improvements, the landlord may not unreasonably refuse consent.

This is part of the drive to make the PRS more energy efficient, and is the precursor to regulations dictating an EPC minimum rating of E for new tenancies (2018) and for all tenancies (2020).

This is a quick guide that covers your new obligations and responsibilities.

No Upfront Costs

Before we go through the request process, it is important to note that landlords are not required to contribute funding for any energy efficiency measures requested by the tenants.

It is the sole responsibility of the tenant making the request to organise funding, and tenants should ensure that suitable funding is available before they make a request.

We successfully lobbied the Government to ensure that there are no upfront costs for landlords. A landlord can choose to fund or part-fund efficiency improvements, but this is entirely at their discretion.

Submitting a Request

Before submitting a request, the tenant must first identify what improvements they want to make (from a list of approved measures) as well as the necessary funding for those improvements. This funding may come from:

  • The Energy Company Obligation (ECO)
  • Central Government or local authority funding, or third party funding such as a grant,
  • A Green Deal Finance Plan (or future equivalent as the Green Deal is currently closed)
  • Tenant funding where they pay the upfront costs themselves (either fully or in combination with another source of funding above).

A tenants’ request for improvements is not valid without these two things.

Once/if these have been identified, then the request must be made to the landlord in writing with the relevant information.

Responding to a Request

First, you should check that the request is a valid one (as described above). You must respond in writing within one month, either confirming your consent to some/all of the measures requested or providing reasons for your refusal.

You may also offer a counter-proposal to the tenant regarding energy efficiency improvements, but an initial response to the tenants’ request must still be given in writing within a month and it must state that you intend to provide a counter proposal.

You will be under a statutory duty not to “unreasonably refuse consent”, so if the request is valid there are only certain grounds on which consent can be refused:

  • Previous request from any tenant in same property within the last six months that has been dealt with
  • Relevant HHSRS notice on the property
  • Expert advises improvement may damage fabric or structure of the property (for wall insulation request only)
  • Tenant refused consent for same improvements within the last six months
  • Third party consent is required for the requested improvements but this consent cannot be obtained (e.g. planning permission or consent from mortgage lender)
  • The improvements will result in a reduction of the market value of the property of more than 5%

After Refusal

If you have a refused consent for some or all of the tenants’ requested improvements, it is then up to the tenant to consider your response.

If they are not content with your response and believe you have unreasonably refused consent then the tenant can apply for the First-Tier Tribunal to consider the application.

The Tribunal can then decide that the landlord must give consent, or rejects the tenants appeal.

Full detailed guidance is available here.

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