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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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City investors plan to profit from UK social housing

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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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The billions of corrupt wealth fuelling London’s housing crisis

money laundering london housing

Around £4.2bn of suspicious money is believed to be laundered through the London property market. 

The report produced by the London-based anti-corruption organization Transparency International claims that the purchase of luxury properties by corrupt individuals is also exacerbating the housing crisis by driving up prices in the rest of the city.

High property prices in the capital are also believed to facilitate large-scale money laundering operations by allowing greater sums to be transferred from overseas jurisdictions.

While there are multiple causes of London’s housing crisis, Transparency International claims to have found evidence that overseas corruption and the purchase of luxury London properties is playing a ‘significant contributory role’.

The findings are based on an analysis of Land Registry data for 14 landmark luxury developments, consisting of 2,066 future homes.

The report published this month follows a highly publicized announcement in December by London’s mayor, Sadiq Khan, of an investigation into the role played by foreign property buyers in London’s housing crisis.

Transparency International claims up to 80 per cent of properties in luxury developments are bought by overseas investors. Around 40 per cent are sold to individuals from high corruption risk jurisdictions. Much of the remainder are bought by ‘anonymous’ companies registered in the UK’s Overseas Territories and Crown Dependencies.

London is an obvious destination for much of this money. Luxurious properties in the capital are in very high demand internationally. London prime real estate is renowned around the world as a symbol of wealth and respectability. The UK is also known as a safe-haven for corrupt individuals worldwide due to its political stability and robust legal system.

Money launderers can easily create offshore companies to hold wealth and assets and provide secrecy for the beneficial owners.

Transparency International claims that over 75% of the UK properties under criminal investigation for grand corruption use offshore corporate secrecy. For all criminal investigations analysed, every property that made use of a foreign company to hold property used a company from an offshore secrecy jurisdiction, rather than a major economy.

The organisation is now calling on the government to implement a public beneficial ownership register of overseas companies that own UK land titles. The creation of such a register was originally announced after the May 2016 Global Anti-Corruption Summit.

Poor International Enforcement

Transparancy International’s report comes following  the Public Accounts Committee’s admission that the UK performs poorly in tackling money laundering.

In 2013 only 26p out of every £100 of identified criminal gains was confiscated.  While the estimated loss to the economy through fraud last year stood at £52bn, enforcement agencies collected just £133m. According to the National Audit Office recovery of the money cost taxpayers an estimated £102m in administration costs.

The picture is similar internationally. In 2012 the UN Office on Drugs and Crime estimated that typical law enforcement detection levels for money laundering stand at around one per cent.

Reporting of suspicious activity in the property sector is particularly poor. Between October 2013 and September 2014, estate agents contributed to only 0.05% of all Suspicious Activity Reports (SARs).

As of July 2014, across the England and Wales, at least £122bn worth of property was held by companies registered in secrecy jurisdictions. Out of 91,248 foreign company-owned properties in England and Wales, nearly two thirds are held via the British Virgin Islands and Channel Island structures.

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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Seven disgraceful statistics about renting in London

Rent Costs London

1. London Renters spend 60% wages on rent

The English Housing Survey reports that Londoners spend an eye-watering 60% of their gross earnings on rent. Excluding housing benefit this figure rises to 72%.

Even more shockingly, 16-24-year-olds are forced to pay 88% of their income on rent in the capital. When housing benefit is included this falls to 81%. However this age group is particularly vulnerable to reductions in housing benefit.

2. It is cheaper to commute from Madrid each day than rent in Camden Town

Renting a flat in Camden Town and working in Liverpool street will cost a Londoner £2,128 monthly or £25,532 yearly.

If the same Londoner rented a flat in Madrid’s city centre and booked return flights from Madrid to Stansted from Monday to Thursday, he or she would spend £1,725 a month or £20,708 a year.

3. The average rent on a two-bedroom flat is £707 a week or £100 a day  

Figures from property investment firm London Central Portfolio (LCP) show that the average rent on a two-bedroom flat in central London is a whopping £707 a week.

Average rental prices of rooms in a flat-share in Paddington (Zone 1), can cost around £1100 a month.

Council taxes are also a significant  consideration. Areas like Richmond and Kingston tend to be the most expensive at around £1929 a year.  Cheaper areas include Wandsworth where council tax averages £823 a year.

4. London professionals are being forced to live “12 to a house”

According to Ealing Central and Acton MP Rupa Huq, London professionals are being forced to live “12 to a house”, thanks to the soaring rents.

In a House of Commons debate Huq said: “Renting is no longer just a transitory thing for those who are in their twenties. It’s becoming routine for people further up the age scale.

“Many in my constituency in their 30s on good money find themselves sometimes 12 to a house with shared sitting room and kitchen.

“At that age, ‘who stole my cheese?’ should not be a way of life.”

5. By 2025, more than half of people under 40 will be living in property owned by private landlords

Over half of 20 to 39-year-olds will be renting from private landlords by 2025, according to accountancy firm Price Waterhouse Coopers.

PwC economists state that: “For 20-39 year olds, we would expect over half to be renting by 2025, implying a continuing rise in the size of ‘Generation Rent’.

The report suggests that home ownership levels will continue declining to dramatic new levels, dropping below 60% by 2025, as the rise of ‘tenant nation’ looms.

6. The UK has the highest private rents in Europe

A study by British Housing Federation found that rents in the UK are the highest in Europe.

In countries like Germany and Holland, private rents are around 50% cheaper than in the UK.

David Orr, chief executive at the National Housing Federation, said: “British renters get a raw deal in comparison to their continental counterparts. Not only do they face crippling rents, but renters in the UK have almost no certainty about whether they will be able to stay in their home from one year to the next.”

7. One in three rented homes are “not fit to live in”

One in three British three homes do not meet the government’s decent home minimum standard, according to 2014/15 English Housing Survey.

A Parliament report published last year admitted that there have been no minimum property standards for private rented housing in England since 2006.

Furthermore, more than 170 tenants are being evicted every day according to 2015 Ministry of Justice figures.  In total 42,728 evictions recorded in England and Wales in 2015.

According to Gillian Guy, CEO of Citizens Advice, “It’s hard to feel at home in the private rented sector. People can struggle to lead a normal life when their home is in a state of disrepair and they could be told to leave at any time. But many feel powerless to speak out.”

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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Top Civil Servant in Charge of Housing Says Housing Crisis Will Continue Under Current Government Policies

generation-rent

One of the Government’s most senior housing civil servants has admitted that new government policies will not end the housing crisis and that homelessness will continue to rise.

Questioned by MPs about why the Government is failing to build enough homes, the Permanent Secretary to the Department for Local Government Melanie Dawes admitted that Theresa May’s new policies will not stop the country’s housing crisis from continuing “as it has done for decades.” Miss Dawes added that she was “simply being honest” when she revealed that houses prices are set to stay out of reach of those who cannot offered a property and that homelessness will continue to rise.

The revelation  comes less than one month after after ministers launched a new White Paper “Fixing our broken housing market” which promised radical policies to solve the housing crisis and increase the supply of new homes.

When asked whether the housing crisis will ever resolve itself, Miss Dawes claimed that “It will continue as it has done for decades, I agree, and that will show itself primarily in affordability and in some places in homelessness”

Revelations about the UK’s inability to tackle the housing crisis comes as average house prices have surpassed ten times the average salary in some parts of the country. In November 2016, data published by the research firm Hometrack showed that with house prices in London are now 14.2 times the average salary. Cambridge, Oxford and Bristol  were also identified as highly unaffordable cities with house price-income multiples close to those in the capital. At the same time the number of households made homeless has risen to more than 50,000 per year.

Commenting on the comments made before the public accounts committee, Labour’s shadow housing minister, John Healey, claimed that Miss Dawes’ appearance confirmed the Government’s policies were not working. “It’s clear that the Government’s housing plans have failed, are failing and will continue to fail.”
“Since 2010, home-ownership has fallen, homelessness has more than doubled and affordable house-building fell last year to the lowest level in 24 years.
“After seven years in Government, there’s now a huge gap between the rhetoric and record of Tory Ministers on housing. We need less hot air and more homes from Ministers to fix this housing crisis.”

During the presentation of the Government White Paper in Parliament, the Communities Secretary Sajid Javid, said: “The housing market in this country is broken and the solution means building many more houses in the places that people want to live.”

Mr Javid also claimed that relative to population size, Britain has had Western Europe’s lowest rate of house-building for 3 decades. The Communities Minister claimed that the Government would honour its 2015 manifesto promise to preserve the green belt yet remove the Government’s role in land-banking and free up more public sector land more quickly. Furthermore, in a reversal of decades of housing proposals, the white paper indicated that new homes will be built to rent rather than for first-time buyers.

The extent of the housing crisis comes as data show that private sector rented housing is the most expensive and has the lowest standards of any housing type.  According to Parliament reports, private renters now spend an average of 49% of their income on rent despite nearly one-in-three privately rented houses failing to meet minimum government housing standards.

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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Renters in shared housing to gain from increased protection

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Around a million renters living in HMOs (Houses in Multiple Occupation) will soon benefit from extra protection from rogue landlords being planned by the government.

HMOs, familiar to many students and flat sharers, are defined as properties shared by more than one unrelated persons. Typically these may be groups of friends such as is common for student accommodation or by strangers.  Typically the house sharers will have their own bedrooms but will share communal areas such as bathrooms or kitchens.

Under the government’s proposals, tenants living in a HMO may soon benefit from:

  • minimum room size standards (6.52m2 for one person rooms and 10.32m2 for double rooms)
  • improved waste disposal facilities
  • tackling rogue landlords through the introduction of a fit and proper person test for HMO landlords

Most significant is the proposed extension of the HMO licensing regime to include small HMOs which are currently exempt from mandatory licensing.

To date only large HMOs (3 stories or more) require mandatory licensing. The government seeks to extend HMO licensing to all properties irrespective of size and will push all HMOs with five occupants or more from two different households into the mandatory HMO licensing regime (with the exception of purpose built flats).

Due to the higher risk of poor quality housing in HMOs complex licensing regimes exist which may vary significantly across the UK. The move to license all HMOs will also help reduce such  regional variation in licensing regimes and housing standards. These extra renter protections will enhance currently existing license checks for properties which currently include minimum building quality standards (gas/fire safety) and the payment of a license fee.

Currently landlords operating an unlicensed HMO which requires licensing are liable for criminal prosecution and may be subject to an unlimited fine. Under such circumstances tenants may apply for a Rent Repayment Order to receive  refund of up to 12 months’ rent on the property.

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Buy to let landlords exploiting tax loophole to invest in property

landlords-continue-fight-against-george-osborne-rental-tax-changes

Increasing numbers of landlords are using a tax loophole to avoid buy-to-let tax changes announced by former Chancellor George Osborne in 2015.  Under the rules set to be introduced next year, private landlords face restrictions on their ability to offset mortgage  interest payments against tax bills.

However, the new rules will not apply to landlords who invest through a company rather than as an individual.  Accordingly in anticipation of the changes, 63 per cent of applications for landlord loans are now being made through limited companies, up from 21 per cent before the announcement was made. Many landlords are also setting up companies and selling their existing properties to them.

According to Chief Operating Officer Steve Olejnik of the mortgage brokering firm, Mortgages for Business, the number of landlords using limited companies will rise since it will be  “more tax efficient for the majority to buy property.”  Investors who hold properties in limited companies will continue to benefit from tax relief and will be able to write off all costs of running buy-to-let properties (including mortgages) as  ‘allowable expenses.’ Incorporation would therefore effectively circumvent the rate relief restrictions.

Furthermore, despite having to pay stamp duty at the increased rate, incorporated landlords would be eligible to pay just 20 per cent corporation tax on profit as opposed to up to 45 per cent income tax if the buy-to-let were operated by an individual.  Incorporated landlords would also benefit from more relaxed affordability checks compared with individual landlords since since lenders will take into account the fact they will still benefit from tax relief.

The increase in landlords registering as companies comes following the successive failure of legal and Parliamentary challenges against former Chancellor George Osborne’s restrictions on the amount of tax relief private landlords will be able to claim on mortgage interest outlined in last year’s summer budget.

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Buy-to-let landlord group represented by Cherie Blair loses court tax challenge

Cherie Blair Royal Court Justice landlord group

A landlord lobby group represented by Cherie Blair have seen a legal challenge to restrictions on buy-to-let tax relief dismissed at the Royal Courts of Justice today.

The landlord coalition called “Axe the Tenant Tax” was refused permission by a senior judge to seek a judicial review of tax changes announced by former Chancellor George Osborne in 2015 which are set to be introduced in April 2017. Under the proposed tax changes (Section 24 of the Finance (No 2) Act 2015) individual landlords with mortgages will be required to pay tax on turnover rather than the profit.

Represented by Omnia Strategy LLP,  the law firm  founded chaired by Cherie Blair in 2011, the group claimed that the tax changes were “unlawful, unreasonable and discriminatory” because they did not also apply to corporate landlords.

Mrs. Blair has previously claimed that the proposed tax changes would be challenged since they would “discriminate against landlords according to the European Convention on Human rights.” Speaking during today’s hearing, Mrs. Blair stated that the tax proposals would “unfairly result in cuts in income for ‘hard-working members of the public’ who had bought properties to rent in order to supplement their savings at a time when interest rates were low.”

Mr Justice Dingemans ruled that the legal challenge would fail rejecting claims that the changes would be contrary to EU legislation and anti-discrimination laws.  The judge added that the extent to which corporate bodies should be treated differently to individuals when it came to tax laws “raises political and economic questions, but not in this instance a legal one.”

In response to today’s court defeat, the landlord group remained defiant. In a joint statement lead claimants Steve Bolton, founder of Platinum Property Partners, and fellow landlord Chris Cooper claimed that the extra costs incurred by landlord due to the tax changes would be passed on to tenants through higher rents.

“We are outraged by the court’s decision. It has completely missed the opportunity to protect tenants, landlords and the housing market from the disastrous consequences of Section 24. From April 2017 the negative impact of this previously failed tax experiment from Ireland, where rents increased by 50% over a three year period, will be felt far and wide. Sadly it will be tenants who are hit hardest; they are set to see unprecedented rent increases over the coming months and years, which will be a very clear and direct consequence of this ludicrous legislation.”

Despite the failure of a previous Parliamentary petition and today’s defeat, Mrs. Blair said that the coalition would fight on and “engage with the Government” more directly over the issue.

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170 tenants evicted per day as evictions rise 53% in five years

Eviction Notice
Evictions up 53% in 5 years

More than 170 tenants are being evicted every day according to 2015 Ministry of Justice figures.  

More than half of the 42,728 evictions recorded in England and Wales last year were attributable to private landlords with rent arrears being cited as one of the most common factors.  Retaliatory evictions of tenants who complain about poor property standards was also a factor in a significant number of the eviction cases.  Many such evictions may have been brought forward in anticipation of laws against revenge evictions which entered into force on 1st October 2015.

It is believed that a significant fraction of the rise in evictions originated from the private rather than the social rental sector.  Ministry of Justice figures show that the majority of evictions in 2015 resulted from a section 21 accelerated procedure which are usually a feature of private landlord evictions.

This situation is set to deteriorate as increasing numbers of people are forced into the rental sector due to the housing affordability crisis.  According to information from the Association of Residential Letting Agents (ARLA), home ownership is expected to be permanently out of reach of around a fifth of people in the UK.  Property unaffordability is exacerbated by rising rents with an average renter in the North East and London estimated to spend around £31,300 and £68,300 respectively on rent over a decade.  To compound this situation further, rents are forecast to climb at a faster rate than house prices in future.

 

 

 

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Buy-to-let landlord court date set for 6th October

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Buy-to-let Landlords taking the government to court to challenge tax relief restrictions will have their hearing at the Royal Courts of Justice on Thursday 6th October.

The group, led by the founder and chairman of Platinum Property Partners, Steve Bolton, and landlord Chris Cooper, seek to overturn former chancellor George Osborne’s decision to restrict the amount of tax relief a landlord will be able to claim on mortgage interest outlined in last year’s summer Budget.

The judicial review of Osborne’s proposals was financed by a crowdfunding campaign which followed a failed parliamentary petition to challenge the proposed tax changes.

Over £100,000 was raised by the pair who hired Omnia Strategy LLP,  the law firm  founded chaired by Cherie Blair in 2011, to act for them. At the landlord conference named the “Tenant Tax Summit” held in June to discuss the case,  Blair claimed that the former Chancellor’s tax changes warrant a judicial review since they “discriminate against landlords according to the European Convention on Human rights.”  Also speaking at the event was the Conservative Life Peer and former MP Lord Howard Flight who had written a letter to the Government “Why the Government is wrong to attack buy-to-let.”

Unless the legal challenge is successful, the government’s tax changes will come into effect in April 2017.

 

 

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