Tag Archives: wales

Landlords – Should we sell up or shut up? Landlord Crusader, Landlord News, Latest Articles, Property Investment News, Property News

Most landlords will have spent a lot of time and money on housing tenants, whether it’s in just one property or a massive portfolio. But, has the time come to give all of this up?

I don’t know whether we should sell up or shut up.

And here’s why.

Leaving aside the fact that house price growth is slowing, and houses are struggling to sell, there are some other issues that concern me.

Mortgage rates will be pushing up business costs

Firstly, increasing buy to let mortgage rates will be pushing up business costs and these costs, inevitably, are passed on to tenants by most landlords.

That’s not a practice I always agree with, but I’ve had a look at some of the new rates and the stricter lending criteria and I’m wondering whether it will be easier just to sell and leave.

In addition to stricter lending rules, lenders are also looking for higher deposits which means that there will be a lot of landlords looking to remortgage over the next few months that will struggle to find deals that make the idea of BTL work.

That will also mean they will sell up and remove their home from the private rental sector.

I know that we need to hold onto a property investment for the long term, I’ve been told at least 10 years, to really enjoy the effort you put into building a portfolio.

But if house prices do start falling, at what point does a landlord consider whether it is worth being a landlord?

Landlords who jumped onto the bandwagon

I suspect there are lots of landlords who jumped onto the bandwagon when interest rates were low, they didn’t need much of a deposit and the LTV was more beneficial than it is now.

Back then, it was a win-win situation with mortgages not hard to get hold of, houses were cheaper to buy and there was a long line of tenants keen to move in.

But since then, the ground has been shifted from under us and there’s no doubt that the government is stealthily aiming to reduce the number of homes to rent, while boosting the number of owner-occupiers.

Alongside this, the law reforms will bring more costs and hand more power to tenants which will also hit confidence in the sector.

No truck with criminal landlords

I have no truck with criminal landlords, they should not be operating, and tenants should be reporting them whenever they can, but the truth is the level of demand, particularly from those tenants in England who can’t prove they have a right to be here, is very strong. And that’s not going anywhere anytime soon.

But it’s this issue of getting back the property when someone is not paying rent, or when they are being a pain to neighbours.

The government has already said Section 21 will be abolished and will be replaced by some other legal setup. I doubt it’s going to be as effective.

And this week we see in Wales that the eviction notice has, at the stroke of a pen, been extended from two months to an incredible six months.

But, as the story on Property118 about the new rent laws in Wales makes clear, it’s likely that the eviction process will take closer to 12 months, if not longer.

And as Janet Finch-Saunders, the Shadow Minister for Climate Change, says, there will be no rent being paid during that period while landlords will have the pleasure of tenants playing the system so the eviction process is delayed still further. I hope I am overestimating here, that could be up to 18 or even 24 months to evict a tenant if the courts are overwhelmed with cases.

Energy efficiency rating of property

And then we have the question marks over the energy efficiency rating of property with lenders already trying to push landlords into having a minimum EPC rating of C to get funding.

There’s no doubt that this legislation will be tightened, and landlords will have to invest in double glazing, insulation, more efficient boilers, smart meters and lighting.

One mortgage broker I read in a report recently says this could cost landlords looking to improve a D rating to a C around £6,000. To me, that’s a figure that could be a make-or-break amount for many landlords or, at the very least, put a dent into their profits.

The comments on one of the stories this week on Property118 also makes clear that this work to be undertaken usually means moving the tenants out which will see the landlord having to deal with a void period or having to put tenants up in a hotel for a short time.

Empowering tenants to the detriment of landlords

We have no end of critics saying that landlords have exploited the property market but there’s a definite shift towards empowering tenants to the detriment of landlords.

On top of this, the Office for National Statistics has reported recently that nearly 40% of tenants are already struggling to pay rent. I’m sure this figure will rise over the winter months as tenants decide to pay energy bills, rather than rent.

So, what can we do?

I have mentioned in this column before about handing out section 21 notices on a given day and highlighted the opportunity of not listing empty properties to gain the attention of the media, the public, our critics, various organisations and, above everyone else, the government.

The only thing I can think of is that every landlord in the country can contact an estate agent to put their homes on the market on an agreed date which will, I’m sure, rattle the government and critics alike when faced with the prospect of rental homes being sold and removed from the PRS.

Having said that, I think the government would only see the CGT register going ‘kerching’ to leave them licking their lips and even encouraging such a move!

Or, I could just sit this one out. There are lots of landlords who weather the storms, take the flak and deal with the nonsense from councils.

But I’m not sure that’s what landlords should do because, possibly for the first time, we can’t look to the future and say that everything is going to be OK.

There are so many issues affecting landlords that if I shut up, I can’t complain when things turn sour. And if I sell up, I get hit with CGT and tenants have nowhere to live.

Are we as landlords really damned if we do, and damned if we don’t sell?

Until next time,

The Landlord Crusader

Labour supports ‘Right to buy’ – but not in Wales Buy to Let News, Landlord News, Latest Articles, Lettings & Management, Property News, Wales

In an interview with iNews, the Shadow Housing Secretary Lisa Nandy says Labour supports a council house tenant’s right to buy their home.

She said: “Under former leader Jeremy Corbyn, Labour had pledged to end the right to buy scheme. But, under Sir Keir Starmer’s stewardship, that’s no longer the case.

“Labour supports the principle of council and social tenants being able to buy the homes they’ve lived in for years and considers it a sustainable policy if the homes are replaced like-for-like.”

Ms Nandy also highlighted that Labour would, if they came into power, introduce a legally binding Decent Homes Standard and a Private Renters’ Charter.

Both policies would be up and running within 100 days of moving into office.

Tenant’s right to buy their council house

However, Ms Nandy’s call for supporting a tenant’s right to buy their council house led to a strong reaction from the Conservatives in Wales.

They say that while the UK Labour Party has changed its stance on right to buy, that puts it at odds with the Labour government in Cardiff Bay who banned the practice in 2019.

The party points out that leader Mark Drakeford and the Labour Party in Wales – with Plaid Cymru support – passed a bill in 2018 outlawing the practice.

‘Have a word with the socialist-in-chief’

Janet Finch-Saunders MS, the Welsh Conservative Shadow Minister responsible for housing, said: “It is good to see the UK Labour Party repent for trying to stop social housing tenants trying to buy their own home, but maybe they should have a word with the socialist-in-chief in Cardiff Bay.

“The Labour government banned the right-to-buy in Wales – with help from their nationalist sidekicks – because they despise aspiration and blamed the ambition of those who wanted to buy their own property for their own housing policy failures.”

She added: “Just like they are doing with second homes and holiday properties, Labour and Plaid got rid of right-to-buy because it is easier for them to demonise those who have worked hard to get their property than hit their housebuilding targets.

“If Keir Starmer wants to show people how he would help the whole of the UK, he could start by standing up to the First Minister and telling him to scrap this ridiculous law that bans aspiration.”

EXCLUSIVE: New renting laws in Wales are a ‘disaster’ for landlords Buy to Let News, Landlord News, Latest Articles, Lettings & Management, Property News, Wales

From today, landlords in Wales will see the biggest change to housing legislation in decades coming into force with the rules affecting both landlords and tenants.

But the new laws have been slammed as a ‘disaster’ for landlords by Janet Finch-Saunders, the Shadow Minister for Climate Change in the Senedd.

The Conservative MS told Property118: “This law is already a disaster for landlords.

“The fear of it coming in has already precipitated a number of Section 21 notices being served.

“And when I speak to landlords, they just say ‘We’ve had enough’, all this burdensome regulation, all this risk.”

Landlords in Wales are worried about eviction notices

Ms Finch-Saunders also warns that landlords in Wales are worried about eviction notices being extended from two months to six months – and that the court process will make this longer.

She said: “In real terms, a six-month eviction could end up taking almost a year and nine times out of ten, landlords won’t see any rent coming in, so they’re not prepared to risk on an asset.

“They’re either going to move over into holiday lets or sell up.”

Ms Finch-Saunders continued: “I’ve always said there has to be a balance. All that a private sector landlord wants is for someone to look after their property and pay their rent.

“But the law now is skewed heavily in favour of the tenant.”

Renting Homes (Wales) Act 2016

The Renting Homes (Wales) Act 2016 will now change the way that landlords rent their properties.

The legislation was postponed in July to allow the Welsh housing market time after recovering from the coronavirus pandemic.

Landlords will see the act affecting how properties are managed and rented. The law changes for tenants include:

All tenants and licensees will now be known as ‘contract-holders’
Tenancy agreements are replaced with ‘occupation contracts’
Tenants will be given a written contract setting out their rights and responsibilities
The ‘no fault’ notice period is extended from two to six months
There’s more protection for tenants from eviction.

Changes affecting landlords

Among other changes affecting landlords is an improvement in succession rights which sets out who has a right to continue living in a property, for example, should the current tenant die.

It is also easier to add or remove joint contract-holders and there are two types of contract:

‘Secure’ contracts are for the social rented sector
‘Standard’ contracts are for the Welsh private rented sector.

The new law also makes clear that rental properties must be fit for human habitation (FFHH) and landlords will need to carry out electrical safety testing and have working carbon monoxide detectors and smoke alarms.

Also, an abandoned property can be repossessed without a court order.

New laws will help to make renting simpler

Julie James, the climate change minister, says the new laws will help to make renting ‘simpler and more transparent’.

Kerry Barber, the head of compliance at Goodlord, said: “This is really significant legislation and the implications for landlords and their agents are myriad.

“There’s a lot to get to grips with. Those who haven’t prepared for the changes must move quickly to ensure their house is in order and they don’t fall foul of the new regulations.”

Agents can access new model Occupation Contracts ahead of Welsh renting law change Landlord News, Latest Articles, Lettings & Management, Wales

One organisation is providing its letting agent members with access to new model Occupation Contracts ahead of the introduction of the Renting Homes (Wales) Act 2016.

That’s when agents, landlords and tenants will see the biggest change to Welsh housing law for decades.

It is almost seven years since the Act gained Royal Assent and it will be implemented on 1 December 2022, bringing in significant changes to the way homes are rented, managed and lived in.

Now Propertymark is offering six model Occupation Contracts to its depending on the deposit scheme being used and whether they are being used to convert existing contracts into fixed-term or periodic contracts.

Contracts have been reviewed by Rent Smart Wales

The contracts have been written by Dutton Gregory Solicitors which runs the ARLA Propertymark legal helpline and can be used by agents with added confidence as they have been reviewed by Rent Smart Wales, the body that will ensure compliance with the new legislation.

Propertymark’s policy team has also produced a series of downloadable factsheets that will explain all the changes the Renting Homes (Wales) Act will introduce.

Topics covered include the new Occupation Contracts; Written Statements; succession rights; joint contracts and joint landlords; ending a contract; Fitness of Homes for Human Habitation and repair obligations; break clauses; retaliatory evictions.

As part of the ongoing support it has been providing to members and non-members, there’s also a recording of a webinar that was hosted with Simon White, the head of housing strategy for the Welsh Government, and who is in charge of implementing the changes.

‘It is essential agents understand the impact’

Tim Thomas, Propertymark’s policy and campaigns officer, said: “The Renting Homes (Wales) Act updates and brings together a number of complex pieces of legislation into a single framework and it is essential agents understand the impact themselves and help their landlords to do so too.

“One of the key elements is the new Occupation Contracts.

“They are crucial to ensuring agents comply with the new legislation and the different versions we are making available to all of our members can be used with the additional confidence of having been reviewed by Rent Smart Wales.”

The model Occupation Contracts can be downloaded by members along with the other resources from Propertymark’s dedicated Renting Homes (Wales) Act website page.

Welsh Government unveils a social housing rent cap Buy to Let News, Landlord News, Latest Articles, Property News, Wales

Social housing landlords in Wales will face a rent cap of 6.5% from next year – and there’s an eviction ban on tenants who engage with their social housing landlord.

Climate change minister Julie James has confirmed the cap for social rents for the next financial year, along with a package of support for tenants.

The minister outlined a series of commitments she had secured with social landlords including ‘no evictions due to financial hardship for the term of the rent settlement in 2023-24’ where tenants engage with their landlords.

‘Need to set rents for the next financial year’

Ms James explained: “I have been clear that no social tenant will experience any change in their rent until April 2023, but I do need to set rents for the next financial year now to give the sector time to plan.

“From April 2023, the maximum limit which social rents can charge will be 6.5% – an increase well below the rate of inflation.

“This is the maximum any landlord can charge across all of their properties.”

‘Landlords will carefully consider affordability’

She added: “No landlord is required to charge the maximum and I know all landlords will carefully consider affordability and set rents as appropriate across their housing stock.

“Within the overall settlement, landlords may freeze, lower or raise individual rents based on a number of local factors of which affordability is a key consideration. The rate is a maximum, not a requirement or a target.

“We know that any increase in social rent may impact those social tenants who pay all or part of their own rent.

“These tenants, in particular, need to be protected from being placed into financial hardship through trying to cover the costs of keeping a roof over their heads.”

‘Builds on existing engagement with tenants in rent-setting decision’

She continued: “Finally, our agreement with social landlords builds on existing engagement with tenants in rent-setting decisions, including explaining how income from rent is invested and spent.

“Working in partnership with tenants, the Welsh Government, funders and other partners will develop a consistent approach to assessing affordability across the social housing sector in Wales.”

In Wales, approximately three-quarters of social tenants have all or part of their rents covered by benefits – so any increase in rent will be covered by benefits paid by the UK government.

‘A direct result of the Labour-made housing crisis’

In response, the Conservative party says the Welsh government rent cap on social housing is ‘a direct result of the Labour-made housing crisis’.

The Welsh Conservative shadow minister for housing, Janet Finch-Saunders, said: “It is incredibly disappointing that Labour ministers are having to resort to rent caps in Wales to combat rent rises which are a direct result of the Labour-made housing crisis.

“As a result of Labour’s failures, only 6,000 houses are being built per year, less than half of what we need.

“If Labour ministers spent half the time addressing the shocking shortage of housing across Wales as they did planning on putting more politicians in Cardiff Bay, a lot more could get done.”

Propertymark slams extension to no-fault notice periods in Wales Buy to Let News, Landlord News, Latest Articles, Lettings & Management, Wales

All new tenancies in Wales from 1 December will have a statutory six-month no-fault notice period, while existing tenancies that convert to occupation contracts will see the extension under the Renting Homes (Wales) Act 2016 take effect from 1 June next year.

The move follows a consultation that led to 1,400 responses and 90% of those were from landlords and letting agents – and the majority of those stated they were against the extension of six month notice periods.

Those views have been ignored.

Instead, the Welsh housing minister Julie James says that all tenants and tenant representative bodies were in favour of the extension – and most of them said it should be applied from 1 December, rather than 1 June 2023.

The National Residential Landlords Association had urged for the extension to be delayed by up to two years.

‘Extension of the six-month no-fault notice period’

Ms James said: “The proposed extension of the six-month no-fault notice period was always going to generate highly contrasting views.

“Whilst noting the views of those landlords and agents that responded, I have decided that the societal and individual benefits accruing from the extension outweigh the negative impact on individual landlords, particularly in view of shorter notice periods of one month or less applying where there is a breach of contract.”

She also said that landlords will need the extra time to plan for the change as this would offer a ‘reasonable balance between the rights of tenants and those of landlords’.

The effect it will have on landlords

However, Propertymark says that the move fails to take into account the effect it will have on landlords.

Tim Thomas, the organisation’s policy and campaigns officer said: “Letting agents and their landlords showed great flexibility at the outset of the pandemic in their support of extended notice periods, but again we have a government pursuing permanent changes to what were supposed to be temporary measures.

“The Welsh Government says extending notice periods for existing tenancies from June is necessary to bring down the rising cost to taxpayers of temporary accommodation.

“What it fails to understand is the knock-on effect this strengthening of tenants’ rights will have on the confidence of landlords. New tenancies will also have to comply by 1 December.”

‘Need to know they can regain possession of their property’

He added: “The private landlords our member agents represent have become important housing providers, but they need to know they can regain possession of their property when they need to do so.

“The best way to support tenants is to focus on policies that can increase the supply of housing rather than those that will constrain it.”

Propertymark is hosting a FREE webinar about the Renting Homes (Wales) Act at 12pm on 23 November when Simon White, the head of housing strategy for the Welsh Government, will explain the biggest shake-up of Welsh housing law in detail and take questions.

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