Renters Reform Bill: What You Need to Know
You may have noticed in the news that the Government has released its Rental Reform Bill White
Paper – so just how will it have an impact on you as a landlord?
The white paper, entitled ‘A Fairer Private Rented Sector’ will be introduced by the Government in a
bid to level up housing for tenants in the private rented sector (PRS).
As a landlord you will no doubt have questions about how this could affect your property and
tenancies.
Over recent years there have been many changes to the PRS including the Tenant Fee Ban, EICR
regulations and more. Rest assured our team at Homesite are well versed on the issues and we
always obtain the most up-to-date legal guidance and advice to ensure all clients are kept informed.
Below is a brief overview of some of the proposals outlined in the white paper:
Section 21 ‘no fault’ eviction notices will be abolished and replaced with a ‘modern tenancy
system’ – this means that landlords will only be able evict for reasonable circumstances such
as wanting to move back in, selling the property or if the tenant is in breach of their
contract.
Tenants will be given the right to request a pet in the property which the landlord must
consider and ‘cannot unreasonably’ refuse. As a side to this, the Tenant Fee Acts 2018 will
be amended so landlords can request tenants buy pet insurance.
It will be illegal for landlords or agents to have blanket bans on renting to families with
children or those in receipt of benefits. The government will also improve support to
landlords who let to people on benefits.
Introducing the ‘Decent Homes Standard’ to the PRS as part of its mission to halve the
number of non-decent rented homes by 2030.
A new property portal will be introduced to for all – but significantly landlords will have
access to information about their responsibilities and compliance.
The changes will bring in a new Ombudsman to help settle disputes between tenants and
landlords without the need to court action.
We must stress this is all in the early stages and no set dates have been given at this point, but we
will ensure we will keep current and future clients up to date.
Full details of the bill are available here: https://www.gov.uk/government/publications/a-fairer-
private-rented-sector
Doing building work on a leasehold property
Most owners pay little attention to the finer points of the ownership and title deeds of their properties. After all, that's what solicitors are for. However, if you’ve bought a flat for rent, for example, and are planning on making some improvements, it’s very important you check the lease documents first.
On very rare occasions, leases can even prevent you from making any alterations or improvements at all. A few more will have nothing to say on the subject, and in those circumstances, the leaseholder will not need to ask the landlord for permission before commencing work. Mostly, however, a lease will contain restrictions on the extent of any alterations or improvements that can be made without the landlord or freeholder’s permission. These generally include things like moving or removing walls, moving or installing a bathroom or kitchen in another part of the property or making any kind of structural alterations. They don’t normally include painting or redecorating, although installing hard flooring and/or removing carpets can often be restricted.
Requesting a landlord’s consent is not just a matter of making a phone call or writing an email. If the work is extensive, the landlord may employ their own surveyors and/or structural engineers and solicitors. If the work is structural, those surveyors may also be tasked with preparing a schedule of condition for the other flats in the block. For any such work, plans would almost certainly need to be submitted and then approved by the landlord; the permission subject to compliance with building regulations and planning control, including special obligations for conservation areas and listed buildings. There may also be a requirement to adhere to Party Wall legislation and to consider whether anyone’s rights are affected (either under their lease or, for example, rights to light). A landlord, naturally, will want to minimise his exposure to a claim by any other lessees or neighbours. They may also seek the payment of a premium.
If permission was not sought before the work was carried out, the leaseholder usually has very little leverage to negotiate retrospective consent without higher legal fees and, potentially, the payment of a premium to the landlord as well as his costs. They will also be in breach of their lease and, there is the possibility this could result in a costly Leasehold Valuation Tribunal and/or Court proceedings. In extreme cases, this can even result in the forfeiture of the lease.
Mostly, though, owners are blissfully unaware they have breached the terms of their lease by making simple improvements or alterations to their property. The only time they find out is when they try to sell it. What usually happens is that the owner puts it on the market, finds a buyer and then instructs solicitors. It is only then it emerges alterations or improvements have been made without the landlord’s consent. As a consequence, the sale gets delayed, and the vendor has to go back to the landlord to ask for retrospective consent, which he does not have to give and can prove costly. If the situation is not resolved, the flat will probably have to be sold for a lower price.
So, if you’re not sure if your proposed work qualifies for consent under the lease, just ask your solicitor. It won’t take five minutes to ping them an email and it will be a whole lot cheaper and easier than dealing with the consequences of failing to get the right permissions.
If you’re thinking of buying a new home or are looking for an investment opportunity, why not speak to us today.
The information we provide is our personal opinion and should not be relied upon for legal advice. Should you need legal advice or guidance please contact an appropriate professional.
What’s going on in the housing market?
According to Halifax, despite the recent increases in the base rate, last month, house prices went up by 1.1% - their tenth consecutive monthly rise. That’s the longest period of sustained growth since 2016. It means the value of the average house has risen by £47,568 in just two years. Rightmove’s April index has also produced record figures, with the largest ever quarterly jump in the value of the average home (+£19,000) and 53% of properties selling above their asking prices.
As we have been reporting for some time, there are two main drivers of this activity; the desire for more space that built during lockdown and the growing imbalance between supply and demand. Zoopla’s figures show just how big that imbalance has become - in the 4 weeks to 24th April, demand was up by a massive 58% when compared to previous years and yet supply levels only increased by 3%. It means there is now a 40% shortfall in stock for sale. The majority of that demand is concentrated in the more affordable areas, such as Wales and the South West and is for family homes rather than apartments. In London, although price rises have been more modest, with workers and the international community returning, buyers and investors are starting to see the potential for growth.
Sooner or later, though, the base rate rises will begin having an impact. Until now, most homeowners have been able to absorb the relatively small increases, especially since 80% of borrowers are on fixed-rate mortgages. Even those on tracker mortgages are only paying, on average, an extra £25.22 per month after the most recent rise. This month’s increase, however, is the fourth since December 2021 and comes just as a raft of headlines have begun appearing in the press about rising inflation and the cost of living. Public sentiment is now shifting as it is becoming clear there are some serious economic headwinds to be faced over the next couple of years. Fortunately for the housing market, supply shortages and historically low levels of unemployment will continue to support prices but stretched affordability and increasing pressure on household budgets mean price rises are likely to come down to more sustainable levels.
As Robert Gardner, Nationwide's Chief Economist, says:
“We continue to expect the housing market to slow in the quarters ahead. The squeeze on household incomes is set to intensify with inflation expected to rise further, perhaps reaching double digits in the quarters ahead if global energy prices remain high. Moreover, assuming that labour market conditions remain strong, the Bank of England is likely to raise interest rates further, which will also exert a drag on the market if this feeds through to mortgage rates.”
It’s first-time buyers that are expected to feel the impact of the base rate rises most keenly. Their mortgage deals will keep on rising just as their ability to save for a deposit is reduced by their rising living costs. And, as drivers of the market, that will have a knock-on effect across all the other sectors.
BUY-TO-LET
As with the sales market, supply shortfalls are driving up prices. The latest data from Propertymark shows the average number of available properties per branch was just 8, while the average number of new applicants per branch per month was 93. The huge discrepancy between supply and demand has seen unprecedented levels of competition between prospective tenants and 71% of Propertymark’s agents are reporting rent rises. In response, tenants have been staying longer in order to avoid the cost and stress of a move. This, in turn, is further exacerbating stock shortages.
Homelet’s data paints a very similar picture, with rents and demand continuing to rise in every region of the UK. According to them, the average UK rent is now £1,091 PCM, up by 9.5% when compared to this time last year. In London, rents climbed even higher - in April they were up by 1.9% to £1,804 PCM, and by 14.2% on an annual basis. If, as seems likely, first-time buyers find it increasingly difficult to get a foot on the housing ladder, they are likely to remain in the rental market, pushing demand and prices up even higher.
Commenting on the latest data, Andy Halstead, HomeLet & Let Alliance Chief Executive Officer, says:
“A broader analysis of the Rental Index data confirms that the demand for rental properties is continuing to outweigh supply massively, which will surely lead to continued price rises to differing extents across the country.”
For our BTL investors, rising rents and house prices are good news - pushing up both your income and your asset’s value, although, if you need a mortgage, you should act quickly if you want to lock in the best deals.
What’s happening to interest rates?
Inflation (and the cost of living) is expected to rise markedly over the next six months. In response, back in March, the Bank of England’s Monetary Policy Committee (MPC) voted by 8 to 1 to raise the UK’s base rate to 0.75%. At the same time, they warned that further rises "might be appropriate in the coming months".
In an historic context, 0.75% is still a very low figure. A 0.25% rise will only add around £26 a month to the average tracker mortgage or £16 to the average variable rate. The inflationary climate, however, is making lenders behave more cautiously and, even before the announcement, mortgage rates had already been on the increase. Since October of last year, the average two-year fixed-rate mortgage went up from 0.89% to 1.89% and the average five-year rate from 1.05% to 1.97%. The pace of change was such that many of the best deals were being pulled after just a few weeks, to be replaced with more expensive ones. At the same time, the number of available mortgage products shrank by around 10% (500). Just before the B of E’s base rate move, many of the best 5-year fixed-rate mortgages had crept over 2.1%.
Although it’s fairly typical for mortgage costs to rise in anticipation of an increase in the base rate, they normally settle down soon afterwards. This time around, however, they have continued edging upwards, although only in small increments. That’s because lenders are expecting several more base rate rises over the next twelve months. Inflation has now reached 6.2% against a target of 2% and is predicted to continue climbing to as high as 8% before it finally peaks. The Bank of England will therefore be forced to continue raising the base rate as it tries to get inflation under control.
Andrew Wishart of Capital Economics believes the base rate could therefore reach 1.25% by the end of this year and 2% sometime in 2023. That would mean the typical mortgage could end up around 3%, although that’s still a long way below the long-term average. Even so, it has come as a bit of a shock, as borrowers have become so used to low rates that many have forgotten that, in the years before the financial crash (2008), fixed-rate mortgages tended to hover between 5% and 6%.
The rises have led, unsurprisingly, to large numbers of borrowers rushing to fix their mortgages. Of those, quite a few have even elected to pay early exit fees rather than risking rates rising any further. The good news is that it is having very little effect on the housing market, with supply shortfalls ensuring prices continue to rise. And, if you are a landlord, as many of our customers are at Homesite, rising mortgage costs tend to increase tenant numbers, as they put off buying, which, in turn, pushes up demand and rents.
Below is a selection of this month’s best buys from Moneyfacts.co.uk:
Two-year fixed rates: 1.94% from Barclays. Product fee £999. 60% LTV.
2.09% from HSBC. Product fee £995. 60% LTV.
Three-year fixed rates: 2.17% from Barclays. Product fee £999. 60% LTV.
2.24% from HSBC. Product fee £999. 75% LTV.
Five-year fixed rates: 2.09% from Barclays. Product fee £999. 60% LTV.
2.14% from First Direct. Product fee £490. 60% LTV.
Discounted variable: 1.00% For 2 years. From Stafford Railway BS. Product fee £0. 80% LTV.
1.15% For 2 years. From Stafford Railway BS. Product fee £0. 80% LTV.
BUY-TO-LET (BTL)
Best two-year fixed rate: 1.59% from The Mortgage Works. Arrangement 2.00% Advance. 65% LTV.
Five-year fixed rate: 2.14% from The Mortgage Works. Arrangement 2.00% Advance. 65% LTV
Best Discounted variable: 1.59% for 2 years. from Accord Mortgages. Completion £995. 60% LTV.
The information we provide is our personal opinion and should not be relied upon for financial advice. Should you need financial advice or guidance please contact an appropriate professional.
How To Keep Your Home Safe When You Go On Holiday
How To Keep Your Home Safe When You Go On Holiday
It's the time of year for holidays and long weekends, but what happens if you have to go away?
- Install a security system
- Keep your home clean and tidy
- Leave lights on and set an alarm timer to turn off after 30 minutes
- Lock up all windows before leaving for your trip
- Keep your spare key hidden
You can't take your dog with you or get anyone else to look after him. What should you do? This article will give you some tips on keeping your home safe when someone is going on holiday.
Install a Security System
An excellent way to keep your home safe when you go on holiday is by installing a security system. It will monitor your house for any intruders and notify the police if there's trouble. Also, ensure that every door in your home has a lock installed and locked with a key or code.
Lock up any medications or other items that an intruder can abuse. Leave significant numbers with people who live nearby in case of emergencies.
Install Security Cameras in Your Home
Security cameras are an excellent way to keep track of what's going on while you're out. It will give you peace of mind and can be used as evidence if there is a break-in or some other kind of crime committed against your property. Install motion detectors too, which will detect if there are any intruders in the house.
Install Security Lights and Alarm Systems on Windows and Doors
Security lights will scare criminals away, as well as making your home more secure by lighting up the exterior at night. Of course, you should also install alarms, which you can set to go off with just a touch of an app on your phone.
Keep Your Home Clean and Tidy
To keep a cleaner house, consider hiring professionals to come once in a while you're away. It will decrease the chances of someone breaking in as it will not look deserted.
Leave Lights On and Set an Alarm Timer To Turn Off After 30 Minutes
You can hire a professional to switch on lights to create an impression as if someone's home while you're away. It can deter would-be burglars simply because they'll think that somebody is at home and awake - when in reality, it could be a timer or motion detector set out by your security system.
Lock Up All Windows Before Leaving for Your Trip
Make sure that all the windows in your house are locked before you go away on holiday. It is essential if it's a ground-floor property, as criminals could break one window and access others with ease - which would lead to them getting into any room they wanted. Please don't leave anything valuable out in plain sight either, as it might tempt thieves to break in.
Keep Your Spare Key Hidden
The best way to keep your home safe while you’re away is by keeping a spare key hidden somewhere. Criminals know where people hide their keys - so they'll try the obvious places first, such as under the mat or in a flowerpot outside of your house. So keep it well-hidden and make sure that only someone trustworthy knows about its whereabouts.
You can use these steps to keep your home safe when you leave for a holiday.