Landlords and property investors with an interest in empty property insurance and holiday home insurance will be alarmed at words emanating from Whitehall suggesting they may well incur some unforeseen extra costs within their property portfolios.
Landlords hit by two pronged attack
In a raft of what has been described as “discretionary measures”, Communities Minister Eric Pickles has proposed to give local authorities and councils the power to source their council tax collection more “creatively”. The measures have been introduced in response to the housing shortage that is evident in most areas of the UK at the moment and the two measures that will affect property investors most are the plans to scrap the council tax discount on empty homes and to put extra taxes on the owners of properties that have been vacant for over two years.
Housing shortage is the crux of the matter
With homeless charities claiming there are over half a million perfectly good homes lying empty, councils and the Government have been under pressure to ease the situation. The current plan to build hundreds of thousands of new homes in the next ten years will certainly help the problem in the long term, but won’t help the current dire situation faced by thousands of homeless families.
More stick than carrot
The Government believe scrapping council tax discounts will encourage landlords to keep their properties in use, and the rumours of a surcharge of up to 50% of council tax levies on properties that have been empty for over two years can be viewed as a threat rather than incentivisation.
Landlords worried that home improvements could fall foul of new rules
Of course no-one wants to see homes empty, but landlords who want to develop and improve their properties fear they may be penalised by the new system. It is certainly feasible that the purchase of a property and the subsequent change of use; for example from a large detached Victorian house to a purpose built set of apartments for disabled people could easily take two years. Would the owners of the property then fall foul of the new council tax measures? Certainly David Salusbury of the National Landlords Association is worried about such a scenario but Mr Pickles said councils would have the chance to judge each case on its merits. He stressed the measures would be introduced to help families find homes and to take the burden of debt off those who could least afford it.
Residential landlords in London and Glasgow, two of the UK’s largest cities, have been warned that local authorities are no longer prepared to put up with non compliance over registration schemes and that rogue landlords will be hunted down and brought before the courts.
Good relationships work best
Of course the great majority of landlords across the UK are highly respected businesspersons who look after their properties as one would expect. A costly investment needs protection, not only in the guise of landlord insurance but also in maintenance, and décor, something achieved best by having an excellent relationship with their tenant. Many local authorities encourage even better relationships between landlord and tenant by requiring property owners to register with them so they can ascertain they are fit and proper persons to rent out property. The schemes work well for landlords and tenants in many of Britain’s towns and cities.
Majority of landlords support council scheme
In Glasgow 80% of the cities private landlords have signed up to a scheme which requires them to register with the local council and provide tenants with a certain level of accommodation. The scheme has been in operation for over 6 years and although landlords who have signed up to the scheme have no problem with the scheme itself they have been concerned over the councils lack of action with the 6,000 landlords who have not signed up to a scheme that was supposed to be compulsory. At long last the council appear to have listened to landlord organisations and have stepped up their efforts to track down the illegal traders.
Fine increased ten fold
The council, with the support of the Scottish Landlords Association, have now upped the maximum fine for not registering with the scheme to £50,000, ten times higher than it was before. They are collating evidence of properties not already registered to the scheme and preparing to take the landlords to court.
Website will collect information on rogue landlords
Further south in London, Ken Livingstone a candidate for the upcoming Mayoral elections has pledged that private landlords who don’t offer acceptable levels of accommodation to their tenants will be looking for empty property insurance if he is elected. He has pledged to eradicate bad practice from the rented sector altogether saying Londoners deserve a better deal. Mr Livingstone has set up a website encouraging tenants to report the many “housing horror stories” he says he hears about constantly. He promises to closely monitor the 1 in 4 homes in London that are rented out via the private sector and says that too many people are paying exorbitant prices for accommodation that in many cases is not at an acceptable level.
As questions surrounding the “Green Deal” and its effect on property owners continue to be asked, news that a leading university has been awarded £350,000 to research the best ways to encourage public participation in the plan will raise eyebrows among many landlords who are still confused by the deal.
Research will last two years
The award to the University Of East Anglia (UEA) comes from the UK Energy Research Centre and will finance research over a two year period. The work will be centred on how the general public can be persuaded to embrace the energy efficient improvements to their homes the Green Deal offers, and national DIY chain B&Q are also to be involved in the project.
Landlord’s fears need to be addressed
The news will certainly interest property investors with landlord insurance, as the question of who will pay for improvements demanded by tenants on a home owned by someone else still has to be answered fully. The prospect of landlords having to buy empty property insurance because their rented properties don’t comply with the new regulations will be a worry for many small private landlords who do not have the capacity to splash out on major home improvements.
The answer to carbon emission problem?
The Government hope the Green Deal will massively change the energy efficiency of homes and businesses across the UK. It is the answer, they believe, to meeting the UK’s commitment on lowering carbon emissions to the required levels and will improve the housing stock of the country immensely. It will be the UEA’s job to come up with ideas that homeowners, businesses and tenants can easily identify with and incentivise them to make the changes.
Profit now, pay later
Most of the work will be centred on insulation with double glazed windows, cavity wall and loft insulation being the three most common improvements the scheme will look to promote. The Government says it has billions of pounds ready to be poured into the project and hopes big business will provide extra cash in the way of loans to ensure the work is done. The Government envisage a policy of “get the work done now and pay later” as the way forward and believe the conversion of UK homes into energy efficient capsules could create up to a quarter of a million new jobs.
Cornwall council has given notice to second home owners and landlords who are neglecting their properties that they will slap compulsory purchase orders on the homes if the owners don’t take action.
In a move that may well be imitated by councils across the country, Cornwall Council has identified 4000 homes that are not lived in and are being neglected by the owners. In some cases the houses have been let by absent landlords who have neglected to look for new tenants when the previous ones have left, and some second homes that are no longer used and have just been left to decay. In both cases the properties should have been covered by empty property insurance but it seems that the owners have lost all interest in the buildings.
Take up on first stage disappointing
With the housing shortage in Cornwall nearing crisis levels the council adapted an empty homes policy in 2010. The first stage of the policy involved the council tracing owners of empty properties and offering them incentives to renovate their homes, take out landlord insurance and provide rented accommodation for local families desperate to find a home. The policy worked to a certain extent as the council managed to get 131 properties brought back to life last year but that still leaves around 3,800 empty homes in a county with 19,000 on the housing list.
Council have public support
The initiative has the full backing of people in the county, especially those who live adjacent to the properties that have been left neglected and dilapidated. They say the houses attract anti-social elements and bring the tone of the neighbourhood down, which in turn of course devalues their own properties. The council have identified the properties they will target and homeowners will soon be getting notification of the council’s intentions.
Landlords will get the chance to buy
The compulsory purchase scheme will be funded by a £2 million government subsidy and may in fact give good professional landlords the opportunity to add to their portfolio. The council plan to buy the properties, renovate them and then sell them on again to buyers who will ensure families are ensconced in the homes immediately.