Tag Archives: housing crisis

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.

 

 

 

Share this article

Private landlords receive £9.3bn in housing benefit

 

housing_benefit

Private landlords received £9.3bn in housing benefit payments, almost double the amount a decade ago according to a study published by the National Housing Federation.

This situation is set to deteriorate with the decades long trend of decrease home ownership exemplified by a House of Commons research report published earlier this year which reported that 48 per cent of 25-34 year-olds in England now rent,  up from 21 per cent in 2003-04.

The National Housing Federation report found an increase of 42% in the the number of households using housing benefit to pay rent to private landlords since 2008.  Housing benefit is paid to households that cannot afford to cover rental costs in addition to essentials such as food, clothes, heating and lighting.

This situation has been exacerbated by stagnation in real middle-income household earnings with the greatest increase in housing benefit claims coming from households with net incomes between £20,000 to £28,000 per year.  Furthermore, in 2008 around a quarter of private sector tenants in receipt of housing benefit were in employment, a figure which has risen to almost a half today.

In order to address the crisis in property ownership in the UK both parties have adopted standard policy positions.  The Conservatives  have signaled a preference for supply-side solutions to improve housing affordability with little detail on easing planning restrictions and tackling construction sector skills shortages.  Labour on the other hand have suggested a combination of rent-controls and investment in social housing with few details on the practicability of such proposals.

The National Housing Federation claims that if all those housed in the private rented sector lived in affordable housing, taxpayers would save £1.5bn a year in housing benefit payments. The federation’s chief executive, David Orr has said, “It is madness to spend £9bn of taxpayers’ money lining the pockets of private landlords, rather than investing in affordable homes. Housing associations want to build the homes the nation needs. By loosening restrictions on existing funding, the government can free up housing associations to build more affordable housing at better value to the taxpayer and directly address the housing crisis.”

Share this article

London renters trying to move to flat shares to save money ‘pay £2,000 in fees’

generation-rent

New research has shown that London renters looking to save money by moving into shared accommodation are paying an average of £2,000 in agency fees. The figure, mostly made up of up-front deposits and letting agent fees is almost £1,000 more than the national average.  On average London renters moving into a flat-shares  have to pay £2,043 on top of their deposit compared with the national figure of  £1,175. Around 20% of these fees are paid to letting agents according to the flat-sharing website Spare room.

A further impediment to moving also includes a six-week deposit which is now normal across large parts of the UK, up from an average of a four week deposit a decade ago. Often tenant cash-flow problems may be exacerbated by deposit disputes between landlords and tenants despite the introduction of deposit protection dispute resolution schemes in 2007.

Foreign tenants are at a particular disadvantage also in this regard with many reporting being required to pay a holding deposit in addition to paying six months’ rent in advance.  The National Renters Alliance is particularly concerned that this may encourage letting agent intimidation of tenants who have sometimes committed the equivalent of 8 month’s rent and substantial agency fees before occupying a new rental property.

Despite calls to ban or impose tighter regulation of letting agent fees as in Scotland, the government has been unwilling to impose new legislation in this area.  Letting agent charges can include drafting and amending tenancy agreements, credit checks, references and administration costs.  Across the UK 95% of people who used a letting agent paid fees. Many letting agents also charge prospective tenants holding fees for reserving rooms in shared houses.

The issue of letting agent fees is leading to more tenants to look for properties managed directly by landlords.  However, this might be a luxury for some with many areas particularly in places with high student populations where managed properties dominate the rental housing stock.

 

 

 

Share this article

Letting Agent MP Backs Buy-To-Let Capital Gains Tax Cut

hollinrake

The founder of the Hunters Estate agency and Conservative MP for Thirsk and Malton Kevin Hollinrake has backed a campaign by the  Residential Landlords’ Association (RLA) to reduce Capital Gains Tax paid by landlords when selling their rented home to sitting tenants.

The proposal involves an amendment to the Finance Bill currently before Parliament. Currently Clause 72 of the Bill  seeks to reduce Capital Gains Tax from 28 per cent to 20 per cent except for the sale of residential property where the rate will remain unchanged.

According to the RLA, Hollinrake is tabling an amendment to the Bill which will extend the tax cut to private landlords selling a rental property to a sitting tenant.  “Given the recent attack on the Private Rented Sector by Chancellor George Osborne…more and more landlords will want to exit the market as renting [sic] becomes financially unsustainable for them” the RLA said.

The RLA further purports that 77 per cent of private landlords would consider selling their property to tenants if the tax liability were reduced.

Hollinrake claims that the amendment will support the government’s wider home ownership agenda while at the same time offering landlords a route out of the sector minimizing their financial hit.  According to the RLA, the amendment  includes safeguards to prevent such a tax change being abused.

 

Share this article

Will Brexit Be Good for Renters?

Despite the pessimism of most young people who voted to remain in the EU in June, there have been some suggestions that Brexit may be good for British renters.

Whether brexit is good or bad for renters depends fundamentally on whether house prices fall relative to the earnings of renters.

Following the referendum result, Zoopla predicted that house prices may fall up to eighteen per cent. KPMG envisages a more modest decline of  5 per cent with London hit harder than the rest of the country.  Both cite possible limited future access to the European market which might make British property less attractive to overseas buyers.  Others speculate that there will be no house price fall since demand has far outstripped supply over the past few decades.  However one ought to bear in mind that over optimism in the Housing market is a constant feature of house price predictions in the UK. Few for example predicted the 2007 sub-prime mortgage crisis and subsequent recession.

The devaluation of sterling might also offset any reduction in the attractiveness of UK property due to exclusion from the single market for international investors.

On the side of earnings; before the referendum, the Treasury warned that Brexit would cut economic growth by 3% to 6%.  The TUC also warned that leaving the EU could reduce average earnings by £1976 per year by 2030.  However, it is still too early to say whether wage decreases offset house price falls.

Fundamentally the most important cause of Britain’s housing crisis is British government policy, not international investors or the EU.  The remedy, liberalization of planning laws and regulation of the letting sector, is opposed by most English and Welsh MPs.  It is therefore unlikely that Britain’s decision to leave the EU will improve or worsen the lot of private sector renters.

 

Share this article

Almost Half of 25-34 Year-Olds Now Rent

generation-rent

Almost half of 25-34 year-olds in England now rent according to a recent House of Commons research report.  The briefing assessing Government initiatives to extend home ownership claims that 48 per cent of the 25-34 year old age group now rent their homes up from 21 per cent in 2003-04.  However, given the choice, the report states that 86 per cent of this age category would prefer to own their own homes rather than rent.

London Centrism

The housing crisis is particularly acute in London. According to Alan Holmans of the Cambridge Center for Housing and Planning, the house-price-differential between London and the rest of the UK has climbed to a post-war peak and is currently 85 per cent higher than the UK average.  However, the differential between average London household incomes and the rest of the United Kingdom, is only around 32 per cent higher.

Chancellor intervenes

The scale of the housing crisis has lead to a series of proposals in recent years including Chancellor George Osborne’s announcement of a “Five Point Plan to increase home ownership”  in his 2015 Autumn Statement and Spending Review. This included  a commitment to build 400,000 affordable houses by 2020-21 among other measures. This was soon followed by the launch of the “Help to Buy London” scheme in February 2016 in recognition of higher housing costs in the capital.

Buy-to-let effect

The effect of buy-to-let landlords was also highlighted by the Chancellor as a potential exacerbating factor in house price inflation.  Accordingly in his Summer 2015 Budget, the chancellor announced plans to restrict tax relief on landlords’ mortgage costs. This decision is currently being challenged by landlord’s organizations which have hired to the legal firm Omina Strategy, which was founded and chaired by Cherie Blair.

Moreover, in order not to penalize buy-to-let landlords with mortgages against those who buy additional properties in cash through restrictions in mortgage interest rate relief, the Chancellor also announced that a 3% increase in stamp duty which will be levied against purchases of additional properties.  The Chancellor argued that the buy to let sector had had a disproportionate impact on the housing market as a whole, and that many buyers had not been affected by earlier tax changes, announced in the 2015 Summer Budget.

 

Share this article

More than 26% of London homes are now rented privately

london-housing

The private rented sector in London has grown from 17% of all homes to 26% over the last decade according to a London Housing Committee

However despite the rapid growth in private renting in the capital, the rules governing the sector remain largely unchanged since the 1980s. According to the report which represents the view of the majority of the London housing commitee, the Mayor of London should:

  • Stimulate the build to let sector by getting government help for landlords competing to develop land;
  • Set up a London-wide register of landlords to help the boroughs enforce existing legislation and better protect tenants; and
  • Support London’s low-income renters by lobbying government to review the freeze imposed on Local Housing Allowance levels in London until 2020.

In addition to its consumer protection role, the National Renters Alliance is always open to ideas to present to government. If you have any suggestions to better protect and improve the situation of renting in London and across the rest of the United Kingdom please send us our thoughts.

 

Share this article

Petition Started to Regulate Letting Agent Fees

petitions-page

A petition to regulate estate agency fees has been launched on the Parliamentary Petitions website.  The motion started by Nigel Whitley requires 10,000 signatures to obtain a government response and 100,000 signatures to be considered for debate in Parliament.

Titled “Regulate agency housing fees” the petition calls for regulation of estate agency and private landlord fees and the full refund of tenants’ money if a prospective tenant fails the vetting criteria.

The deadline to achieve this goal is 16th July 2016 and follows in the wake of other campaigns to regulate the private letting sector.   Mr Whitney claims that many private letting agencies and landlords perform costed background checks knowing in advance that they have no intention to leasing the property to an applicant, often charging disproportionate sums for the said reference checks. Mr Whitney claims that in many cases ten or more people are invited to apply for a single property with many being deliberately failed and charged by letting agents.

Letting agent fees are currently subject of much debate in parliament with some members of Parliament attempting to introduce private members bills to regulate the sector.

Share this article