With the confirmation that private landlords in Northern Ireland will now be allowed direct payment from housing benefits when applicable, landlords in the rest of the UK are asking why they can’t be treated the same.
It has long been a bone of contention for private landlords that they cannot be paid direct from housing benefit and it has led to many landlords refusing to take tenants who are on housing benefit fearing their clients will fall into arrears. Now that Lord Freud, the Welfare Minister, has allowed Northern Ireland’s assembly to approve the proposal the wedge is well and truly in the door.
Chris Town, vice-chairman of the Residential Landlords Association, said “With 9.1% of all rent in the private rental sector being in arrears, this is a situation which is simply not sustainable for either tenant or landlord. Both parties in the Coalition before the general election pledged to introduce direct payments to landlords. Organisations working with tenants including Shelter, Citizens Advice and the Money Advice Trust all support tenants having the choice to have their rent paid directly to landlords. The Government should get out of the way and trust tenants to know what is best for them. If it’s good enough for Northern Ireland it should be good enough for the rest of the country.”
It is the fear of mounting arrears that prevents many landlords from taking on welfare tenants and although some landlord insurance providers do provide cover for non-payment of rent it is a situation that all landlords will do almost anything to avoid. Most landlord organisations agree that direct payments would cut the housing waiting lists in many big cities at a stroke.
The forming of a major North East housing group; Vela, has been welcomed by local MPs, the Chairman of the NHF (National Housing Federation) and civic leaders. The merger means thousands of properties all covered by landlord insurance will soon be refurbished.
Vela brings together Tristar Homes & Housing Hartlepool and they are now a driving force behind not just housing, but community regeneration projects in the Stockton and Hartlepool areas as well. They are now the biggest social landlord in the Tees Valley area and are also in the top 50 in England. The good news for tenants is that Vela will have a yearly spending power of £65m from 2011 onwards.
Lord Taylor, who is the Chairman of the National Housing Federation, said “Congratulations to all involved in the launch of Vela Homes. I believe that it will make a huge difference to tenants of Housing Hartlepool and Tristar by enabling a huge investment in new homes, and improvements to the quality of the lives of so many tenants and the neighbourhoods and communities around them.”
The creation of Vela was celebrated at an official launch, attended by leading names from the social housing sector, developers and stakeholders. A video showcasing Vela was broadcast at the event. This was followed by a TV show style discussion on the future of social housing involving a Vela Group chief executive.
Vela plan to focus on improving the lives of residents by investing in home improvements, building new properties and enhancing the communities people live in. They are aware that the role of a social landlord goes much deeper than just the delivery of affordable, high quality housing. Residents will soon start to see and the benefits of having a group structure which include building of new homes, upgrading bathrooms and kitchens and fitting new windows and doors.
Even though there is an increase in demand for a rented home, the latest figures released show that over 40% do not meet standards required, according to damning figures released by the Coalition Government.
The private rented sector is booming because more and more would be buyers are finding it impossible to get a mortgage. Last year there were 3.4 million households living in a privately rented property which is covered by landlord insurance. This figure was up from 2.4 million in 2005, and means that one in six people are now living in privately rented accommodation.
However, 1.4 million properties in the PRS (private rented sector) have been branded as being “non-decent”, according to the Department of Communities and Local Government. This means that a property has failed three or more minimum standards required. The standards include: a kitchen less than 20 years old; a bathroom less than 30 years old; good insulation and energy-efficient features. In addition, the survey shows that there are serious damp problems in 15% of privately rented sector properties. Flats and houses managed by housing associations or local councils fare much better in all categories of the survey.
Steven Smith, who organises private tenants’ groups in Yorkshire, said “Privately rented homes have been ignored until now because they have been in a minority and tenants have been younger and considered able to fend for themselves. Now the PRS is growing and the tenants are all ages. There’s a need for action on property conditions and tenant rights, to make them equal with the social and owner sectors.”
There is now a huge shift in housing as a whole new generation are growing up and choosing to long term rent. Record levels of demand and a severe shortage of stock is an issue which will need addressing sooner rather than later.
Fresh plans to build almost one hundred new homes on an old mining estate have been submitted, and are just the first part of what is seen as a long term regeneration project for the area.
The developers are the Compendium Group and they hope to build the new properties on the Coalville estate in Weston Coyney, they have assured local villagers that there will also be a number of affordable houses built as part of the plan. A number of new homes have already been built in the area over the last 4 years and if the Compendium scheme gets the go ahead their properties would increase the number of new homes on the estate to over 450.
Chairman of the Coalville Residents’ Association, Ernie Clarke, has lived on the ex-National Coal Board housing estate for 56 years. The 63-year-old said “Having new homes is great news for all concerned. It’s going to be brilliant. This area once had a bad reputation but with the new homes that are being built and the money that is being invested it really has become an area which is on the up.”
It is thought some of the new properties will be bought by private landlords who will then cover the homes with landlord insurance and rent them out to local people. Residents are delighted to see so many nice new homes brightening up the estate and welcome the new plans as this can only benefit the area. Compendium are jointly owned by Lovell Partnerships and Riverside Group. Lovell has for a long time been one of the country’s biggest providers of social housing and Riverside housing is the third biggest registered social landlord. The houses will be made up of two, three and four bedroom homes.
A radio DJ from Manchester has been criticised for renting out 12 garages as bedrooms. Planning officials who visited the residence were horrified at the conditions in which tenants were living.
Property owner Darren Parks built a wall behind the garage doors and has been renting them as rooms for the last six years. One of his tenants claims they pay him £450 per month for a room and use of a shared kitchen in one house in Greater Manchester. Mr Parks claims he was told over the phone that planning permission was not needed to convert the garages to bedrooms. However, he has now been told to turn them all back into garages.
Mr Parks said “Being a DJ is my proper job and this property is an off-shoot of what I do. I’m being portrayed as a dodgy landlord and I’m not that person.
“I bought the houses off-plan and wanted to make the conversions before I’d purchased them. In a call with the planning officer I was told no planning permission would be needed to change the use from a garage into living accommodation.
“That was the advice we acted on in good faith. These are beautiful town houses and these rooms have never been used as garages. I have no choice but to go to the Planning Inspectorate and wait for the appeal. Hopefully common sense will prevail.”
Greater Manchester council’s planning committee were shocked at the amount of cash the tenants, who are a mix of students from the university and professionals, were paying to live in such conditions. They also find it difficult to believe that someone prepared to invest in six properties would not be aware of the rules which apply. After being told he was not allowed to use the garages as bedrooms he then applied for retrospective planning permission which was rejected and now says he will appeal.
The case illustrates the care landlords must take when converting properties and that landlord insurance and adherence to legislation is of paramount importance.
A pressure group representing local landlords claim moves by the local council to halt the spread of shared student properties in Bath is going to push up rents as well as cutting house prices.
The members of the Landlords’ Association are warning Bath and North East Somerset Council to cancel using the planning system to discourage converting family homes into student accommodation. However, politicians for the area where student accommodation dominates a large number of streets think the landlords association are just being alarmist.
Council officials are looking at whether it will be of benefit to the area to use planning legislation to make it harder to convert a property for what is an expanding university population. Councillors from both the coalition parties have backed the idea of investigating the use of Article 4 Direction. Implementation of this would mean landlords with landlord insurance will need to apply for planning permission for any conversion, even in houses where there is only between three and six tenants who are not related.
The Chairman of the Association, Alan Ward, said “Actions by the council to restrict the availability of much-needed housing for mainly young people will not only deny them the chance to live where they want, but will also drive up rents whilst at the same time significantly cutting house prices in the designated area. Experience elsewhere clearly demonstrates that where a house is no longer able to be used flexibly as a family property or a small HMO, its value faces falling by up to a third. Many owners will be worried at such a steep drop in the value of their single biggest asset.”
The association feel local authorities need to work with tenants, student unions, landlords and the police to educate tenants on being responsible in the community. But the local council argue they already do this via the Student Community Partnership.
A London property owner who was locked out of a house that she was trying to sell by a gang of eight Romanian squatters is now warning everyone of a bogus landlord. Gretel Malcolm, who had to cut off both the gas and electric in the property, won a battle to evict the eight after they unwittingly signed a fake lease offered by a conman pretending to be the owner. Gretel and her sister Minna used to check the property every day while it was on the market. But after returning from a four day break, they returned and were shocked to find the locks on the property had been changed and the eight strangers had moved in.
The squatters, all of them adults, said that they had paid a man £3,000 for three months rent after they had been approached in Tesco; the bogus landlord gave them a single page “short-term lease” for them to sign. At first Mrs Malcolm thought she had no other option but to go through the courts to have them evicted. This can take months and cost in excess of £2,000, if not covered on a landlord insurance policy, as many others every year know only too well. Luckily the police, who were patrolling nearby, helped settle the dispute and forced the eight squatters to leave.
Mrs Malcolm said: “I’m pleased it’s all over but it’s terrible this person is going around ripping people off. I can’t believe you can leave the house for a little while and someone else has moved in. People need to be aware that they must be careful if they own any property.”
This is not the first time residents in the same area as Mrs Malcolm, have been victims of bogus landlords. Recently a family of four came back from a holiday to find another group of Romanians had moved into their home. They were evicted but only after they had trashed the rooms and another family were forced to barricade themselves in one of the bedrooms when squatters refused to budge.
The bogus landlord scam has increased due to the emergence of free property websites and students are often the victims. This scam is often targeted at students who respond to an advert for a place to rent, the bogus landlord asks for proof that the student can afford the rent. And the student will give a month’s deposit plus another month’s rent in advance.
Landlords in York are up in arms about plans to impose yet more red tape around their businesses. York Council is considering proposals to make all private landlords apply for planning permission if they wish to change a property into a house of multiple occupation (HMO). Landlords in the area say the council are imposing draconian measures to deal with a problem that doesn’t exist.
The plan to introduce the measures stems from complaints by local residents who claim the increase in houses of multiple occupation and in particularly student lets, is now starting to damage the community. They say problems such as increased noise, difficulty finding a parking space near to their homes and the increase in rubbish has all coincided with the increase of students in the area.
Private landlords with landlord insurance have now joined together to raise a legal riposte to the proposals, and have so far managed to get over 500 signatures on a petition which they are going to use in the challenge. The petition claims that the council has sufficient powers already to tackle any problems caused by a tiny number of irresponsible landlords who are giving them all a bad name, and that there is no concrete evidence that houses of multiple occupations have a detrimental effect on the area. They also claim that the proposal will cause serious long term damage to the private rented sector and the economy of York. Most landlords feel they should not be punished for the few who are the root of the problem.
Niall McTurk, chairman of York Residential Landlords Association, stated “The association have instructed solicitors to start a legal challenge with the council. These “unfair” changes will not only affect students, but also people on benefits, who are going to find it even harder to get good rented accommodation. And of course they will harshly affect private landlords.”
As the political turmoil created by the shenanigans of the political parties comes to a head this week in the Republic of Ireland. The social aspect of the new financial measures delivered by a party that seems to be imploding is being felt all around the country. Few people have come off worse than the small-time residential landlord.
The swathing cuts in the emergency budget has left a small group of buy-to-let investors, the sort of people who own one rental property to provide a pension, wondering whether they will have enough money left to pay their landlord insurance never mind their mortgages. The December emergency budget decreed that all property- based legacy tax relief was to be gradually eroded.
It came as a bitter blow to many landlords in Ireland and the fact that it is now being put back to 2012 is only a temporary relief. The Property Owners Association (POA) belief the new measures will see many of their members become bankrupt within years of the introduction of the scheme. They believe the Irish Government is hoping the people of the country still hold the concept of a landlord as some kind of manipulating bully who deserves all the misfortune he gets. They point out that big developers and multi property owning landlords will not even suffer.
Why is it so bad for 1 and 2 property landlords?
One member of the POA explained that the controversy surrounded section 23, which relates to rented homes in tax-designated areas. They stated “The main attraction of this type of property for investors was the ability to offset over three quarters of the purchase price against all of their Irish rental income, thereby cutting their tax bill.
“The budget proposal now means relief can only be offset against rental income from a Section 23 property, as opposed to rental income from the investor’s entire Irish portfolio.”
As the rents on Section 23 properties tend to be low, and borrowings high, little or no taxable income arises on such properties. If the tax relief becomes ring-fenced in this way, then it won’t apply to the small-time investor.”
A body representing small businesses across the UK has warned that a change in the law could drastically affect landlords of empty commercial properties and have pinpointed the city of Liverpool has a prime example.
Thousands of landlords across the UK pay their annual fees to the Federation of Small Businesses (FSB) in much the same manner as they pay their landlord insurance, and the organisation has come out fighting on their behalf.
The FSB is concerned that new legislation due to start in the spring of this year will impact heavily and adversely on many small firms and landlords across the UK. The new legislation concerns the paying of business rates on empty properties. At the moment small companies do not pay business rates on empty properties with a rateable value lower than £18,000. In April 2011 the rateable value threshold will drop to a meagre £2,600 meaning many owners and leaseholders of properties no longer generating cash will become liable for paying rates on the buildings nevertheless. To make matters worse the previous legislation included a 50% rate relief clause, this will not be available either after April and the new edict could well see some landlords paying more rates on an empty property than those who are running thriving businesses from theirs.
The FSB are trying to drum up support from MP’s and get questions asked about the situation in the House of Commons. Liverpool MP Bob Neil has been approached and Merseyside Chairman of the FSB, John Allen, said “The government has said that small businesses have a vital role in driving economic growth and getting the recovery on a firm footing, yet for some businesses this additional tax could tip the balance and force them into insolvency.
“All over this region there are properties standing empty through no fault of the landlords that own them.
“The result of this cut in the threshold without restoring the 50 per cent relief will make small business owners worse off than they were prior the 2009 change and significantly more so then they were in 2009 and 2010.
“We urge the government to look closely at this matter and, at the very least, allow the business to claim Small Business Rate Relief.”