National Landlords Association

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Is this the end of the EPC?

greenhouseHanded down to the UK through the catchy-named European Union Directive 2002/91/EC, Energy Performance Certificates have been the cause of many a headache for landlords since their introduction through the infamous Home Information Packs in 2007.

In 2012 we saw the tightening on regulations mandating EPCs for the private rented sector, and just last year more regulations come into force forbidding Section 21 re-possessions if tenants had not received a valid EPC.

The Minimum Energy Efficiency Standards for the PRS are set to come into force in 2018, and by 2020 landlords will not be allowed to let out property with an EPC rating of F or G (exemptions apply). Tenants already have the right to request energy efficiency improvements.

But now with Brexit on the horizon, the scrapping of the Department for Energy & Climate Change, and a new PM in Number 10, are EPCs finally on the way out?

No.

Unfortunately it seems that the new Government has no plans to change the agenda. (Sorry for the click-bait headline).

So where now for PRS energy efficiency?

The energy efficiency of properties in the sector is far below those in the social or owner-occupier sectors. This can at least in part be attributed to the make-up of the sector, with 30% of PRS properties having been built pre-1919 – a far higher portion than in other tenures.

But even though the Green Deal failed, EPCs are unreliable, and the majority of tenants do not care about it when looking at properties, energy efficiency has continually improved in PRS stock over the past decade.

As a Parliamentary committee just reported, the Government needs to improve upon its so-far “blinkered” approach to energy efficiency. The minimum standards that are set to be introduced in 2018 will stop landlords from letting energy inefficiency properties. However there is an exemption that landlords will not need to cover any upfront costs. With the failure and close of Green Deal financing the policy effectively neuters itself.

To actually achieve anything, the Government seem to have two realistic options:

  • Pause the minimum standards set to be introduced in 2018, until a time that funding is actually available through a (thought-through and improved) successor to the Green Deal
  • Scrap entirely or relax the no-upfront-cost exemption so landlords will have to fork-out for necessary improvements.

The NLA obviously favours the first option, and has been continually lobbying on this position (even recently including it as part of our evidence to the Public Accounts Committee inquiry into the Green Deal). While there are other funding streams, such as the Energy Company Obligation (ECO), these have strict eligibility criteria and are harder for landlords and tenants to access.

With the imminent restrictions of mortgage interest relief, additional SDLT rates, the imposition of Right-to-Rent checks and more regulations set to be introduced from the Housing & Planning Act 2016, imposing extra financial burdens on landlords would be detrimental to the PRS, low-cost housing and affordable accommodation at the moment.

A new Government, with new Ministers, means new opportunities to set out the benefits of the PRS and we are impressing upon them the need to keep costs down for landlords.

We will be doing the same for energy efficiency measures to make sure that landlords get a good deal, and are not being punished for providing housing to meet the growing demand.

NLA Property Services can provide you with a free energy assessment and find any Government funding that is available to you.

 


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Who’s Who in Theresa May’s Cabinet

The dust is settling on May’s clear out of Cameron’s Cabinet, so let us have a look at the new people in post that could impact on landlords’ businesses.

Theresa May – Prime Minister

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She made landlords de-facto immigration officers by introducing Right to Rent immigration checks as the longest serving Conservative Home Secretary for over a century, and now the Conservative Party have made her the new Prime Minister.

State-schooled May began her career at the Bank of England, before holding posts at the Association for Payment Clearing Services. Her political life began after being elected councillor in the south London borough of Merton. In 1997 she won the newly created constituency of Maidenhead in Berkshire, which she has held ever since.

One of the first acts of the new Prime Minister has been to reshuffle the Cabinet, starting with the removal of George Osborne as Chancellor, to the delight of many landlords who have been in the line of fire of his recent Budgets.

 

Philip Hammond – Chancellor of the Exchequer

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Hammond was moved from his post of Foreign Secretary to take up residence in Number 11 Downing Street. Entering Parliament in 1997 after winning in the newly created seat of Runnymede & Weybridge, Hammond has held a number of high profile positions including Defence, Transport and Foreign Secretaries.

The independently wealthy landlord gives us some meagre hope that there will be a change of direction in current tax policies, most notably the Clause 24/Turnover Tax that will strip away mortgage interest relief.

We have already written to him to set out the case for a reversal of the most damaging of Osborne’s policies that also include the additional rate of SDLT and higher Capital Gains Tax for landlords.

With the uncertainties of Brexit still gripping the country and Whitehall, the new Chancellor has already today ruled out an emergency Budget. Hopefully this isn’t the only pre-Brexit policy/threat of Osborne’s that the new Chancellor will reverse…

 

Sajid Javid – Secretary of State for Communities & Local Government

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Former Business Secretary Sajid Javid MP now heads up the Department for Communities & Local Government and will take on overall responsibility for the implementation of the recently passed Housing & Planning Act.

On top of this, we will be pushing for the Department to give its support to Bob Blackman MP’s Private Members’ Bill on homelessness reduction, which seeks to end the practice of local authorities advising tenants to ignore Section 21 notices.

One of the newer MPs in the Cabinet, the state-schooled son of a bus driver™ was only first elected in 2010 for the Bromsgrove constituency. A former Managing Director with Deutsche Bank AG, Javid has held a number of important roles since election including Financial Secretary to the Treasury, Secretary of State for Culture Media & Sport, and up until this week Business Secretary.

 

Damian Green – Secretary of State for Work & Pensions

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Veteran MP Damian Green has taken over from Stephen Crabb as Work & Pensions Secretary. The Welsh-born former journalist was first elected in 1997 for the constituency of Ashford. Green served in several shadow ministerial positions while in opposition before he had a 2-year stint as Minister of State for Policing and Criminal Justice after the 2010 election.

While the rolling out of Universal Credit continues, and LHA rates fail to keep up with rent increases, landlords have quite a bit of interest in the work of the new Secretary.

The Work & Pensions Select Committee published a report on the delivery of benefits and the Government has just responded to their recommendations. The Committee recommended that Alternative Payment Arrangements (such as direct payment to landlords) should be allowed to be made without the need for 2 months of rent arrears to have been built up first. It also recommended trialling an online “landlord portal” for the housing element of Universal Credit. However, the Department for Work & Pensions rejected both recommendations; maybe the new Secretary of State can be persuaded to reconsider…

 

Greg Clark – Secretary of State for Business, Energy & Industrial Strategy

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The old Business, Innovations & Skills department has been merged with the Energy & Climate Change department, with the new ministerial department being fronted by Greg Clark MP (former DCLG Secretary).

For landlords, the effect that Brexit has on energy efficiency regulations will be of most interest, with infamous EPCs having originated from Brussels policy. The deadlines for upgrading properties to at least an E rating are fast approaching but with no new Green Deal funding there is no real incentive for landlords to improve properties.

This will be an important hole that the new department and Secretary will need to dig themselves out of, and the real worry is that they will remove the protection that landlords will not need to fork out for any upfront costs.

His previous department was not as anti-landlord as the Treasury, so we will also be looking forward on engaging in more proactive work, such as changing how annual gas safety checks are carried out.

Gavin Barwell – Minister of State for Housing and Planning 

Gavin Barwell

The new Housing minister replaces long-serving Brandon Lewis, who has now moved to the Home Office as Minister of State for Policing and Fire Services.

Barwell entered Parliament in 2010, representing Croydon Central. Before his election he had held a number of positions within the Conservative party and was a Croydon borough councillor from 1998-2010.

As the new Minister of State for Housing, he will take on primary responsibility for the implementation of the recently passed Housing & Planning Act. Specifically, he will have to work on regulations surrounding electrical safety, client money protection, banning offences & orders, the rogue landlord database, civil penalties and rent repayment orders.

The NLA has worked with Barwell before, in campaigning against Croydon’s Labour council when they sought to bring in borough-wide selective licensing. At the time, he saw landlord licensing for what it is: a tax on tenants. We hope he will bring this same understanding of the private rented sector with him to his new position.

As well as congratulating him on his promotion, we have also requested a meeting to discuss the new Government’s plans for the sector.


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Supreme Court Rules on Edwards v Kumarasamy

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The Supreme Court has today (13 July 2016) given its judgment on the case of Edwards versus Kumarasamy – finding that the landlord, Mr Kumarasamy, was not liable for the disrepair which caused his tenant’s injury.

In this case, which had been subject to two earlier appeals, Mr Kumarasamy’s tenant, Mr Edwards, suffered minor injuries resulting from an accident sustained while taking rubbish from his flat to communal dustbins. While walking from his flat to the bin storage area Mr Edwards tripped over an uneven paving stone which formed part of a paved area used by residents to access the bins.

The landlord had previously been found liable for damages by a deputy district judge by virtue of the statutory repairing covenant enshrined by section 11 of the Landlord and Tenant Act 1985.

Prior to reaching the Supreme Court both Mr Edwards and Mr Kumarasamy have had appeals allowed.

Delivering this, final, judgment Lord Justice Neuberger found that:

  • Mr Kumarasamy was not liable for the disrepair which caused the injury.
  • He could only be liable if the paved area in question was “part of the exterior of the front hall” – which it was not.
  • He could only be liable if he had prior notice of the disrepair before the accident.

As with most cases which reach the Supreme Court, the argument has become very technical and somewhat complex.

The full judgment may be found here: https://www.supremecourt.uk/cases/docs/uksc-2015-0095-judgment.pdf

However, in summary it appears that common-sense has prevailed. The landlord in question was found not liable for the injury to his tenant on the basis that the defect was not directly part of the property let by him and that he was not made aware of the defect in order to seek a solution.


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McDonald vs. McDonald: Eviction orders still stand

 

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The possession process is rarely pleasant. This much is a given, as the procedure for gaining possession of a property costs time, money, and is entered into usually as the very last resort.

 

Section 21 notices

For landlords, the most common way to regain possession of a property in England and Wales is by serving a Section 21 notice, as introduced in the 1988 Housing Act.

However, the legitimacy of the Section 21 was thrown into question recently by the Supreme Court case of McDonald vs. McDonald, which raised the issue of whether a tenant can appeal to the European Court of Human Rights (ECHR) when faced with eviction on the grounds that it contravenes their human rights.

 

The case details – McDonald vs. McDonald

The case is extremely unfortunate. The tenant in question has a history of serious mental health difficulties, and after failing to be placed in social property, her parents’ recourse was to buy a home for her to rent. However, her parents were unable to keep up with mortgage payments and receivers were brought in. Subsequently, a Section 21 notice was served, and proceedings for possession commenced.

 

Invoking Article 8: The Right to Privacy

The tenant appealed her eviction (in this case by the receivers) by arguing that it went against her human right to respect for privacy. Article 8 provides two stipulations:

Firstly, that ‘everyone has the right to respect for his private and family life, his home and correspondence’ and secondly that ‘there shall be no interference by a public authority with the exercise of this right.

It was argued that Ms McDonald’s forced removal from the property by the receivers constituted a breach of her right to privacy, and the ECHR was used as a defence that the eviction was therefore unlawful. However, the judge dismissed the appeal on the basis that Article 8 was intended to protect citizens from having their rights infringed by the state. The landlord (the receivers in this case) could not be construed as a public authority to that extent.

 

Conclusion

The Supreme Court has resolved this issue by taking the opinion that Courts are not permitted to entertain Article 8 defences in the face of mandatory right to possession, as is provided by Section 21 of the Housing Act.

It is difficult to see how the Supreme Court would have been able to resolve the issue without undoing Section 21 altogether, which would have removed the only way to guarantee repossession of a property for private landlords. In that sense, the ruling provides a great deal of relief for landlords and the sector at large.

Ultimately, while the rights of tenants and landlords must be respected, so too must the process of delivering an eviction notice.

 

If you need advice on the possession process, the NLA Advice Line is here to help. NLA Full Members can call the team on 020 7840 8939 or you can buy call credits online. Visit the NLA website for more information.

 


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68,000 landlords can’t be wrong…

New to Buy-to-Let?

The business and practice of letting property can seem daunting for the first-timer. From changes in legislation, requirements and, of course, risks, the world of buy-to-let is not always straight-forward, and that goes for everyone – novice to veteran, small-time to full-time.

Whether you are planning for retirement, looking for an investment option with competitive returns or simply establishing a legacy for your children, there are plenty of reasons why being a private landlord can be highly rewarding.

  • Profitability

Over 8 in 10 landlords reported that they either made a profitable full-time living from their lettings income or that it helped supplement their regular earnings.

  • Quality Investment

7 in 10 landlords say that letting out property is better than other investment options.

  • Stable Yields

On average, landlords receive 5.7% in net rental income return over costs.

However, there are still many issues to be aware of, particularly when it comes financial planning and especially when it comes to the law. Staying abreast of legislation and budgetary considerations can often seem overwhelming. To get the most out of your lettings business and to avoid the pitfalls, it is important that you have the right guidance, support and resources at your disposal.

Get started as a landlord with the NLA

The best place to start is through membership of the National Landlords Association (NLA). The NLA is the UK’s largest landlord association, working with almost 68,000 landlords nationwide, helping them through their landlord journey, and representation at all levels of media and politics to help landlords achieve the very best.

As an NLA Full member, you will receive exclusive discounts and offers to our products, services, and training courses. You will also  be given the opportunity to voice your opinions on the issues that matter to you as a landlord, helping us to better represent you in how we communicate and influence media and policy. <can we plug in something on accreditation – may be just a sentence>

Ultimately, full membership of the NLA will enable you to gain a greater understanding of your rights and responsibilities, enjoy substantial savings, help us strengthen our voice and influence, and gain a competitive edge as a private landlord.

For more information on the NLA and how to become a member please visit the website here.

For an introduction to the world of private letting, the NLA’s advice hub Getting Started as a Landlord has a wide range of informative guidance and advice on various aspects of letting property, such as making the right investment, managing tenancies and cashflow, and expanding your business portfolio.


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Politics be damned … life goes on

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The momentous decision on 23rd June has altered British politics not just in the membership of the European Union, but also the existence of the United Kingdom of Great Britain and Northern Ireland.

At time of writing three political parties are discussing new leaders, the nationalists in Scotland are trying to work out wither they would win a second referendum, if they called one. Sinn Fein is calling for unification of Ireland, even Leanne Wood in Wales is putting independence on the agenda.

The possibility of a general election in the next 12 months is being openly talked about.

Britain as we know it is being stretched to breaking point.

The political map has been redrawn with the decision to exit the European Union.

The next few months are set to be marked by political parties looking inwards, talking to themselves or (arguably) committing regicide.

The priority for the Government is survival until a new leader can be elected and a new agenda will then be set in place. A general election could then take place!

What this means for the private rented sector is unknown. The government does not have much goodwill or time to spend on legislation that is not around the renegotiation of treaties and the exit from the European Union.

All these shenanigans make it seem more like an episode of Game of Thrones than a modern democracy, but hopefully with less bloodshed.

What we do know is that while the future of the United Kingdom is largely beyond our direct control – insert debate about democratic mandates, campaign slogans and the will of the people – we may have a little more control over the immediate future of the private-rented sector.

The fascinating thing about property investment is that it tends to be categorised by long-term stability and a seemingly contradictory trend towards incredible short-term volatility. At the moment we are in danger of feeding that volatility and talking ourselves into a dramatic downturn, which needn’t be inevitable.

We know the market is nervous, domestic buyers are reluctant to commit – and that is understandable. However, perhaps counter-intuitively given what is happening elsewhere, demand from overseas is strong for property in high demand areas, partly in response to the weak Pound and partly because UK property is still seen as a good long-term bet. Likewise uncertainty offers opportunities to those with a long-term plan and superhuman resolve.

Overall there remains (just) enough interest to keep the market afloat, as long as we don’t allow our own actions, or lack there-of,  to bring it down

So what now? There aren’t many certainties, but we can draw hope from one or two.

Firstly, whatever happens we will have a new Prime Minister in a few months’ time and almost certainly a new Chancellor. There are no guarantees that this will be an improvement, but few landlords will shed a tear to see the end of Osborne’s reign of terror.

Secondly, the machinery of government in the UK is set to make itself very, very busy for the foreseeable future.

Most importantly whatever happens people will still need somewhere to live. And if the market makes it difficult for landlords to borrow and buy, we can be fairly confident it will be even worse for first-time buyers – meaning there will continue to be a place for private landlords for some time to come.

 

At this time of complete uncertainty, please help us to keep up to date with landlords’ views and experience by taking part in our quarterly survey by CLICKING HERE.

It takes about 10 minutes to complete, and landlords completing the questionnaire may enter a prize draw for the chance to win a Fortnum and Mason hamper worth £150.


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EU Referendum: Making your mind up!

 

With two days to go before the polls open it is make your mind up time on Britain’s future relationship with the EU.

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NLA Public Affairs Officer, Matt Oliver talks us through the NLA’s referendum polling (with a little help from Cheryl and the gang)

As you know the NLA is a non-politically aligned membership organisation. We are therefore not taking a position on whether the United Kingdom should remain a member or leave the European Union as it would be inappropriate to do so.

We are therefore also not advising members how to vote, but we did poll them to see what they were thinking.

For the more apathetic of voters however, when polled, a key reason to vote is (believe it or not) the possibility that the UK could be thrown out of Eurovision.

That there comes a timefor making your mind up. 

According to our research, landlords are evenly split, with 35 per cent intending to vote leave and 35 per cent intending to vote to remain.  The news comes just days before the referendum, taking place on June 23, which will decide whether the United Kingdom will remain or leave the European Union.

And try to look as if you don’t care less 

One in three (30 per cent) landlords are still undecided about whether they will vote to leave or remain in the upcoming referendum on the European Union (EU).  It is perhaps hardly surprising our members are having trouble making their minds up given all the conflicting advice and claims from each of the respective campaigns.

And run for your money and take a chanceAnd it’ll turn out right 

Landlords were also divided about whether EU membership would be beneficial to their future business prospects, with 53 per cent believing that EU membership would be beneficial, and 47 per cent believing it would be harmful.

As our future participation in Eurovision is (apparently) so crucial in this debate, we looked for guidance in the lyrics.  Whilst least said perhaps about not letting your indecision taking you from behind, the composers were probably right when they wrote that “trust your inner vision, don’t let others change your mind.”

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