All posts by National Renters Alliance

Ealing Council Award £65m Regeneration Project to Grenfell Tower Contractor

Ealing

Ealing Council approved the award of a large contract to Rydon, the main contractor on the Grenfell Tower development, weeks before the fire broke out.

According to Construction News, Ealing’s main cabinet approved Rydon as the development partner for the £65 million project to build 296 new housing units to replace the High Lane Estate in Hanwell.

The Council authorised the executive director of Regeneration and Housing to finalise the contract with Rydon at a meeting on 25 April. The minutes of the April meeting state that Rydon’s bid was the most “economically advantageous” of the three tenders, with a “very strong financial offer coupled with excellent construction delivery and programming”.

The deal will see the contractor finance, develop and submit a planning application for the new development, before demolishing the existing estate and replacing it with mixed-tenure housing, the majority of which will be affordable.

Rydon was the main contractor on last summer’s £8.7 upgrade of the Grenfell Tower in Kensington. To date 79 people are reported dead or missing following the fire last week and the exact cause of the fire has yet to be determined.

Rydon has insisted all its work on the refurbishment met all required building control, fire regulation and health and safety standards.

According to Construction News, although Rydon was selected as the preferred development partner for the Ealing project, no deal has yet been signed.

The latest High Lane Estates contract would be the second development partner deal between Rydon and Ealing Council on a major regeneration, after Rydon’s 50:50 joint venture with A2Dominion Regeneration won the £155m revamp of Green Man Lane Estate.

The government confirmed yesterday it had ordered councils and social housing providers to urgently check whether any panels on their new-build or refurbished buildings are clad with aluminium composite material (ACM), which is believed to have been installed at Grenfell Tower.

The Renters Alliance helps renters with bad landlords and letting agents. If you have a story you would like to share, please contact the National Renters Alliance through our website or email us at contact@nralliance.co.uk

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Three-quarters of UK social housing blocks ‘potentially unsafe in a fire’ according to 2011 Government report

grenfellA report from 2011 warned that almost three-quarters of UK social housing blocks were potentially unsafe in a fire.

Carried out when Grant Shapps was Housing and Local Government Minister, the 2011 survey revealed that 75 per cent of managers responsible for maintaining social housing buildings were not certain their blocks had undergone a proper fire risk assessment.

The latest revelations on government inaction over safety standards in social housing follows additional reports that a review of building regulations covering fire safety was promised by former Croydon Central MP Gavin Barwell last year but not published.

Mr Barwell, recently appointed chief of staff for Theresa May, told MPs in October that part B of the regulations would be reviewed following the investigation into the fatal 2009 Lakanal House fire in Camberwell which killed six people.

The review was never published and fire safety experts claimed the Government’s desire to cut red tape could have prevented ministers introducing new safety measures.

Mr Barwell, who was housing minister at the time, told the House Commons: “We have publicly committed ourselves to reviewing part B following the Lakanal House fire.”

Government drive to reduce regulation

Former chief fire officer Ronnie King, honorary secretary of the all-party parliamentary group on fire safety and rescue, said the regulations “badly need updating” and “three successive ministers have not done it”.

Speaking to the Press Association Mr King said: “It’s sad that we always have to go to stable-door legislation.

“Lakanal House wasn’t enough deaths to trigger off a major public inquiry. It just went to an inquest, there was no formal report on it.”

Mr King also suggested that a Government drive to cut red tape – by insisting that three regulations are removed for every new one created – should be reconsidered when it comes to fire safety.

Asked why he thought the review of building regulations had not been produced, he said: “My own thinking is there was the red tape challenge and they don’t really want to put regulation on to businesses, adding a burden.

“It’s one of those that if you bring in a new regulation, you have got to give three up to get it.”

Asked if he thought the red tape challenge was putting people at risk, he said: “I think where fire safety is concerned, it ought to be reconsidered, this ‘one in, three out’.”

“Buildings like the one today over 30 metres [Grenfell Tower], when they are new, would require fire suppression installed. But there are 4,000 older tower blocks in the UK that don’t have sprinklers.

“There are people who would argue that it’s too costly and there are other measures that could have been done but it’s a fact that people don’t die in sprinkler buildings.”

Labour MP Jim Fitzpatrick, chairman of the all-party parliamentary group, said the Government has resisted calls to install sprinkler systems in high-rise blocks.

Prior warnings

Astoundingly despite an all-parliamentary group’s recommendation that sprinklers be fitted to older buildings this appears not to have been acted on. Following the Lakanal House fire, the coroner,Judge Frances Kirkham, wrote to the government recommending that it “encourage providers of housing in high-rise residential buildings” to “consider the retrofitting of sprinkler systems”.

Mr Fitzpatrick, who was a firefighter for 20 years, told LBC: “We’ve been pressing for fire sprinkler systems in buildings where we think it’s appropriate – certainly over a height level and in places where there is vulnerability, care homes and in schools – and Government has been resisting that for some time.”

Many fire safety experts have warned that chronic under-investment in social housing over several decades has left hundreds of blocks of flats unsafe, with councils and other housing suppliers unable to afford the hundreds of millions of pounds it would take to bring them up to standard.

 

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City investors plan to profit from UK social housing

londonstockexchang_634

Increasing numbers of fund managers are looking to profit from social housing and other niche sectors as income investments from the property market continue to stagnate.

Residential Secure Income, a new investment group targetting social housing, is set to float on London Stock Exchange in July. The company plans to raise £300m as part of its initial public offering.

RSI, managed by ReSI Capital Management, plans to acquire homes and lease them back to local authorities and housing associations.  The company claims that it will provide inflation-linked income returns and targeting a dividend yield of 5 per cent.

Residential Secure Income’s announcements means that it will become only the second UK-listed fund dedicated exclusively to social housing investments. Its planned launch follows that of Civitas Social Housing in November last year which raised £350m to acquire properties around London, the Midlands and the south of England to lease back to housing associations. Civitas also targets a dividend yield of 5 per cent.

Increasing private sector involvement

The social housing sector is increasingly attracting private sector money. Pension funds and insurance companies — including Legal & General and Pension Insurance Corp — have been lending to housing associations for several years.

GCP Capital Partners — which runs the GCP Infrastructure fund — said it already holds some social housing and is looking to increase its exposure to the asset class through lending to housing associations.

GCP fund manager Stephen Ellis said: “We’ve got £100m plus and a pipeline of £50m at the moment

“We lend against the acquisition or development of properties by housing associations.”

Mr Ellis added that with 750 housing associations there “ought to be rampant opportunities”, and that retail funds’ small size allowed them to strike deals that bigger players — such as insurers and pension funds — were uninterested in.

Housing associations were also good borrowers, Mr Ellis continued. “Not one housing association has ever defaulted.”

The exemption of housing benefit reductions is a further bonus for investment in supported accommodation.

“Essentially what we’re looking to do is attract public sector-backed cash flows, as long-dated as possible, and wherever possible with inflation linkage,” Ellis said.

However, Andrew Summers, head of research at Investec Wealth, warned that even for private investors there remained risks, notably the possibility of negative press coverage in the event of homes being repossessed. “Housing is a political hot potato,” he said. “There’s a lot of headline risk in [the potential story of] people being thrown out of their homes to fund City investors.”

The Renters Alliance helps renters with bad landlords and letting agents. If you have a story you would like to share, please contact the National Renters Alliance through our website or email us at contact@nralliance.co.uk

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Majority of councils failing to police letting agent fee rules

Letting Agent Fees

New research has shown that 93% of local authorities have failed to issue financial penalties against landlords and letting agents for failing to disclose lettings fees.

Despite the introduction of the requirement for letting agents to publicize fees in May 2015, only three penalty notices have been issued by councils against letting agents. Even more astoundingly only one of the penalties has been paid in full.

The survey of council enforcement of letting agent fee rules was carried out by London Property Licensing on behalf of the National Approved Letting Scheme (NALS).

Under the Consumer Rights Act 2015, letting agents must prominently display a list of their fees at each of their offices as well as on their website.

Almost two thirds of councils surveyed admitted they do not consider enforcement of letting agent fee rules as a high priority and 45% of councils said they only undertake reactive enforcement measures.

Lack of resources is the biggest problem cited by local authorities for their failure to enforce letting agency fee rules. Thirty-three percent of councils said they had allocated no staffing resources to this work in 2016/17. A further 62% said they do not anticipate any change in the level of staffing they can allocate to enforcement in 2017/18.

Letting fee ban

NALS says it is concerned about the disconnect between the government’s aspirations and the reality of delivery of enforcement. This is likely to deteriorate further with the introduction of bans on letting agent fees charged to tenants announced in the Chancellor’s Autumn Statement.

Sixty-four percent of councils surveyed said they are yet to assess the likely impact on enforcement when the proposed ban on up-front letting agent fees charged to tenants is introduced.

Isobel Thomson, NALS chief executive, asks: “We recognise Trading Standards teams are underfunded and under-resourced, but if local authorities aren’t enforcing the current legislation what will make things different when the fee ban is implemented?”

“Without sufficient robust and coherent enforcement action, we will never stop the criminal element in the PRS,” she says.

“They will continue to operate knowing they won’t face any penalty and it’s the consumer who will continue to suffer. We believe now is the time to start a constructive dialogue with the Chartered Trading Standards Institute and its members on how we can work together to stamp out the rogues.”

Leon Livermore, chief executive of the Chartered Trading Standards Institute (CTSI), adds: “[We] welcome the research produced by NALS and believe that it highlights the issues of the robust enforcement needed for existing regulation that can deliver for the consumer.”

“We look forward to further engagement with NALS.”

CTSI has sent open letters to the political parties underlining that it believes that the current model of trading standards is ‘broken’ and needs to be fixed.

The group claims that under-resourcing and a postcode lottery for protection, alongside a vast remit, means that the model of 192 separate services needs to be changed.

The Renters Alliance helps renters with bad landlords and letting agents. If you have a story you would like to share, please contact the National Renters Alliance through our website or email us at contact@nralliance.co.uk

Full list of local authorities surveyed: Buckinghamshire, Cornwall, Cumbria, Devon & Somerset, East Sussex, Hertfordshire, Lancashire, North Yorkshire, Nottinghamshire, Suffolk, Warwickshire, Worcestershire, Bolton, Manchester, Oldham, Stockport, Trafford, St Helens, Wirral, Barnsley, Rotherham, Sunderland, South Tyneside, Wolverhampton, Sandwell, Walsall, West Yorkshire Joint Services (includes Calderdale), Barnet, Brent, Croydon, Kensington & Chelsea, Richmond upon Thames, Redbridge, Southwark, Bath & North East Somerset, Brighton & Hove, Durham, Herefordshire, Middlesbrough, Nottingham, Redcar & Cleveland and South Gloucestershire.

No response received from: Bexley, Birmingham, Gloucestershire, Lincolnshire, Liverpool, Torbay and Wokingham.

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London landlords deserting capital in search of higher profits following sixth month of rent falls

for_saleBuy-to-let landlords are buying more properties outside London following the 6th consecutive month of rent falls in the capital according to the UK’s largest estate agent, Countrywide.

Fifty-per-cent of London buy-to-let landlords are looking to buy properties outside London this year according to Countrywide’s new figures. In 2016, London landlords purchased over 22,000 homes outside of the capital – a seven-fold increase on the 3,311 recorded in 2010 when Countrywide first began keeping records.

In April, just 12 per cent of London homes were sold to buy-to-let landlords which is close to a record low.

Countrywide says that London landlords are increasingly looking to northern England for buy-to-let properties with Liverpool becoming a particular hot-spot in the buy-to-let sector.

Landlords looking further afield hope to benefit from better yields and lower stamp duty. Average stamp duty currently stands at £40,000 in the capital which falls to £6,300 outside of London.

Around 9 per cent of buy-to-let properties in the north were sold to London landlords and 26 per cent of London landlords picked up property in the East of England.

Johnny Morris, Countrywide’s research director, said: “In response to slower price growth and government tax hikes, London landlords are looking further than ever to find a return.

“Lower entry costs and higher yields outside of the capital are enticing investors to look further afield than they have previously.

“Rental growth remains low across Great Britain. Mostly driven by London where rents have fallen for the sixth consecutive month.

“The repercussions of the stamp duty rush are still playing out in the rental market as stock levels continue to remain high.

“But with fewer investors buying in the capital we will likely see stock levels fall, driving future rental growth.”

The Renters Alliance helps renters with bad landlords and letting agents. If you have a story you would like to share, please contact the National Renters Alliance through our website or email us at contact@nralliance.co.uk

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Tony Blair sets up buy-to-let company to avoid tax rises on £33 million property empire

Former Prime Minister Tony Blair
Former Prime Minister Tony Blair

Former Prime Minister Tony Blair has set up a company to manage his £33 million property empire, joining a growing number of landlords who are opting for incorporation to beat tax rises on buy-to-let operations.

Blair, along with wife Cherie and eldest son Euan, are believed to own a total of 38 properties. The families’ property portfolio includes flats in north-west England which Mrs Blair and their son let out via an existing company, Oldbury Residential Ltd, which holds investments worth £2.4m in the year ending April 2016.

The family has reportedly banked at least £1.7m in profits from buying and selling nine properties, and they also have an extensive portfolio of private homes, including a £9m five-storey Georgian townhouse which they purchased in 2004 and a £10m Grade I-listed Buckinghamshire manor house.

Now Mr and Mrs Blair have set up another company, Harcourt Ventures Ltd, to let and manage properties, with Tony Blair owning half of the shares and his wife named as the sole director.

Landlords incorporating to reduce tax liabilities

Setting up a limited company is one of several ways in which private landlords have responded to recent tax changes within the private rented sector. These changes include increases in stamp duty and cuts to mortgage tax relief introduced in April which no longer allow landlords to offset mortgage interest from their rental income.

The reduction of Mortgage Interest Relief, first proposed by former Chancellor George Osborne in the 2015 Summer Budget, eliminated landlords operating as sole traders from deducting mortgage interest payments from their rental income to reduce their tax liabilities.

Cherie Blair Law Firm Hired By Landlord Group

Landlord groups have fought several failed campaigns against the tax changes via petitions and talking their case to the High Court hiring Cherie Blair’s law firm, Omnia strategy, to argue that the tax changes breach landlord’s human rights.

Speaking after the landlords lost a high court review in October last year Mrs Blair said: “We know the case has been supported and followed with interest by a large number of individual landlords. Many of these landlords now face challenging times ahead.

“From the outset, the legal process was just one aspect of our clients’ fight against this unfair measure. Together with their impressive and growing coalition, they will continue to engage with the government, and the legal team wishes them every success.”

Landlord Fight-back

Buy-to-let landlords are now incorporating their lettings operations as limited companies to avoid the tax changes and to secure additional finances to buy more properties according to industry statistics.

The proportion of homes available for rent in the UK, owned by a company landlord, reached 20 per cent in the first quarter of 2017 – the highest number since records began in 2010.

Landlords incorporating their businesses to avoid the tax changes would have to pay stamp duty land tax on the transaction, which now stands at 3 per cent. Capital gains charged on the transfer to the company may be deferred until it is sold again and profits are taxed at 20 per cent, though this is set to reduce to 18 per cent by 2020.

The deferment of capital gains tax is called incorporation relief, but in order to qualify landlords must demonstrate that the property is part of an actual business rather than just a passive investment. Some landlords are now claiming to provide additional services such as cleaning or gardening in order to lower their tax liability.

Incorporated landlords can claim £5,000 per year as a tax-free dividend but any income over this amount will be charged at 7.5 per cent for basic-rate taxpayers, 32.5 per cent for higher-rate payers and 38.1 per cent for additional-rate payers.

However, most financial experts advise that the statutory obligations and costs involved in running a company outweigh any tax savings for most landlords unless they have a sizeable property portfolio.

The Renters Alliance helps renters with bad landlords and letting agents. If you have a story you would like to share, please contact the National Renters Alliance through our website or email us at contact@nralliance.co.uk

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Rogue landlords who stuffed 31 people into four-bedroom Wembley house found guilty

Garden shed: The only woman at the address was housed in the shack (Brent Council)
Garden shed: The only woman at the address was housed in the shack (Brent Council)

A family of rogue landlords have been convicted of breaching landlord licensing rules after they were caught cramming 31 people into a four bedroom property in Wembley.

Mother and daughter Harsha and Chandani Shah, and Mrs Harsha Shah’s brother, Sanjay Shah, were caught following enforcement action taken by Brent Council at the property on Napier Road during a raid in July last year.

Officers found a woman  living in a lean-to shed in the back garden.  The shack had no lighting or heating and was made out of wood offcuts, pallets and tarpaulin.

Inside the house, officers found some residents hot-bunking with occupants sharing a single bed with night workers swapping sleeping shifts with those who worked during the day.

Four beds were discovered piled into the front room and three in each bedroom. The tenants are all migrants, who said they could not afford to live anywhere else. One of the residents, Bagharad, revealed he lived in the house on Napier Road because he worked as a carer for the elderly and was only paid £30 a day.

The family earned around £112,000 a year from the tenants and were found guilty of breaching landlord licensing rules.

Jaydipkumar Valand, who collected the rent for the Shah family, pleaded guilty at trial in December last year.

Judgement

Spencer Randolph, head of private housing services at Brent Council, said: “This judgement sends out a clear message that Brent has a zero tolerance policy towards landlords who break the law and exploit vulnerable tenants.

“The lean-to shack we found in the back garden of the property in July last year looked like something you would expect to find in a Hollywood depiction of a shanty town.

“We will prosecute any landlord or agent we find housing tenants in cramped or hazardous conditions.

“Brent’s aim is to help renters by ensuring decent living conditions within the borough.”

On Tuesday 23rd May, the judge at Willesden Magistrates Court said: “This trial has revealed how people desperate for accommodation in London can be exploited and have paid to live in grossly overcrowded, unhygienic and unsafe conditions.”

The judge also ordered the defendants to pay Brent Council £35,000 in costs. The four defendants will be sentenced at a crown court at a later date.

The Renters Alliance helps renters with bad landlords and letting agents. If you have a story you would like to share, please contact the National Renters Alliance through our website or email us at contact@nralliance.co.uk

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Majority of London renters spend over half of salary on rent

Most single tenants renting privately in London are now paying more than half of their monthly salary on average to rent a one-bedroom property.

Research undertaken by the property website Sellhousefast.uk which analysed the latest data from the Office of National Statistics (ONS) found that the average rent for a one-bedroom property in London is now almost £1,330 per month.

Percentage of salary spent on rent by London borough
Percentage of salary spent on rent by London borough

Despite having the highest costs of any housing type, the private rented sector has the worst property standards. In February 2016, it was reported that 60% of London renters are forced to live in unacceptable conditions. Private renters are also one of the most deprived groups with almost 25% of households at risk of fuel poverty.

ONS data revealed that single tenants in 25 of London’s 32 boroughs are spending more than half of their monthly salary – after income and council tax deductions – on rent for a one-bedroom property.

Unsurprisingly, housing affordability is worst in prime areas of the capital, with those renting a one-bedroom property in Kensington and Chelsea paying  the equivalent of 85% of the average London monthly salary on rent.

The cheapest accommodation for single tenants was in the boroughs of Bromleywell and Havering with the average rental cost for a one-bedroom home coming in at 42% of monthly salary.

Robby Du Toit, managing director of Sell House Fast commented: “As demand has consistently exceeded supply over the last few years, Londoners have unfortunately been caught up in a very competitive property market where prices haven’t always reflected fair value. This notion is demonstrated through this research whereby private rental prices in London are certainly overstretching single tenants; to the extent they must sacrifice over half their monthly salary.

“For those single tenants with ambitions to climb up the property ladder – their intentions are painfully jeopardised, as they can’t set aside a sufficient amount each month to save up for a deposit or explore better alternatives. It’s not only distressing for them but worrying for the property market as a whole – where the ‘generation rent’ notion is truly continuing too spiral further.”

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Landlord investigated for banning “colored people” because they smell of curry says insurance needed to deal with curry smell in rented homes

Fergus Wilson and his wife Judith CREDIT: REX FEATURES
Fergus Wilson and his wife Judith CREDIT: REX FEATURES

One of Britain’s biggest landlords, Fergus Wilson,  under investigation by the Equality and Human Rights Commission for banning “colored people” whom he claims leave his properties “smelling of curry” is in the news once again.

Wilson has suggested a specialist insurance company should be set up to deal with cases where tenants leave homes smelling of curry. The property tycoon, who lives in Boughton Kent, is currently facing legal action from a public body after banning Indian and Pakistani tenants from renting his properties because he claimed they left a bad smell.

The Equality and Human Rights Commission (EHRC) has recently applied for an injunction at Central London County Court against Wilson over his controversial lettings policy. Mr Wilson who denies accusations of racism, insists his decision is purely economical after spending thousands of pounds removing the smell of curry from one of his properties.

Speaking to Kent News, Wilson has called for an insurance policy to be in place to cover him in such situations in the future. “If someone punches a wall and leaves a dent, you can take a photograph to prove it,” he said.

“How do you prove there is a smell? It’s impossible to prove because they might have got so used to the smell that they don’t notice it.

“The thing is, a curry smell is not malicious damage – we are insured for someone smashing the house up but not for that.

“If they are cooking curry they are not doing it maliciously but they are ‘injuring’ the house. If the EHRC set up their own insurance company to underwrite claims there would be no problem. If that had been in place I would not have made those comments.

“These are all economic judgments. It costs as much for a new carpet as you are achieving in rent for six months.”

Battered wife ban

Wilson is no stranger to controversy. In January this year it emerged that he banned “battered wives” from his properties claiming he does not want to risk ex-husbands or boyfriends returning to destroy his houses.

Also included on the list of proscribed tenants were children under 18, single adults, battered wives, tenants without a rent guarantee, people on housing benefit, low income workers, zero hours workers, plumbers, smokers and pet owners.

Wilson, who at one point owned 1,000 homes in Maidstone and Ashford, was unrepentant when challenged about the latest ban.

“To be honest, we’re getting overloaded with coloured people.”

“It is a problem with certain types of coloured people — those who consume curry — it sticks to the carpet.

In the same year he sent eviction notices to over 200 of his tenants, many from low income backgrounds, claiming that he was “sending battered wives back to their partners to be beaten up again”. He was also convicted in the same year for assaulting an estate agent over a broken boiler which he denied, claiming that he was “too fat to punch anybody or even tie his own shoelaces”.

Wilson admits there was an element of discrimination in his “no-coloreds” policy, but insisted it was legal and fair because car insurance companies impose higher premiums on “high-risk” drivers.

“I live in rural Kent and you do not get an awful lot of people making an application from that ethic group,” he said.

“However, no one, but no one has done more for black tenants in Ashford than I have – I have bent over backwards to help them.”

The Renters Alliance helps renters with bad landlords and letting agents. If you have a story you would like to share, please contact the National Renters Alliance through our website or email us at contact@nralliance.co.uk

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North East councils prosecute only one landlord following 6,297 private rental complaints

Complaints_boxA campaigning letting agent has discovered that only one landlord has been successfully prosecuted by North East councils following a tenant complaint between 2014 and 2016.

The shocking statistic was discovered by Ajay Jagota, the director of the letting agency KIS using Freedom of Information requests submitted to Tyne and Wear local authorities.
Mr Jagota found that a total of 6,297 complaints about the condition of privately rented properties or the behaviour of landlords were received in the years 2014, 2015 and 2016 yet only Sunderland council has brought a successful prosecution against a landlord during the period.

Newcastle recorded the highest number of complaints which rose from 1,007 in 2014 to 1,127 in 2016 – a rise of eight per cent. Sunderland saw claims fall from 509 in 2014 to 2090 last year. Gateshead and North Tyneside both saw complaint numbers fall from 2014 to 2015 but rising again in 2016.

South Tyneside council refused to supply the information, claiming that although it holds the information it would take an officer 18 hours to retrieve it, what the authority describes as “substantial effort and disproportionate exercise of trawling”.

“To put these figures into context, every day in every local authority in Tyne and Wear at least one person complains about the condition of their rented home– yet only one rogue landlord has been convicted in three years” says Jagota, who is also founder of deposit replacement insurance product Dlighted.

“A large amount of these complaints will of course be vexatious, unreasonable or more effectively resolved informally, but nonetheless no-one can look at these figures and say the system works” he says.

“With a General Election under way, all the main political parties are making a pitch to voters who rent but despite my own affiliations I have a sense that the proposed policies are just tinkering around the edges when more profound reform is needed.

“It’s critical for all good operators in the private rented sector that the rogues are brought to task and the only way that can happen is that the local authority execute the powers invested in them and ensure they take action when complaints are made.”

The Renters Alliance helps renters with bad landlords and letting agents. If you have a story you would like to share, please contact the National Renters Alliance through our website or email us at contact@nralliance.co.uk

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