Rogue landlord hit with £9k fine over safety issues
Brent Council inspected the property in Harlesden, North London, following reports of disrepair from a tenant. They discovered a range of potential safety problems, such as ventilation issues and a broken electric heater, and issued improvement notices to the landlord, Kevin McLoughlin of Hertfordshire.
These notices, issued in June 2023, mandated that essential repairs should be carried out by August 2023, but a follow-up inspection made clear that no action had been taken. In fact, further hazards were identified, in the form of a faulty fire control panel which officers determined posed a risk to residents in the event of a fire.
McLoughlin was ordered to repair the panel within a week, but a final inspection in September 2023 determined that all notices and instructions had been ignored, with none of the issues addressed.
He was taken to court, where he pleaded guilty for failing to comply with the requirements of an improvement notice. He was fined and ordered to pay costs, at a total of £9,212.50.
Councillor Promise Knight, the cabinet member for housing, homelessness and renters’ reform at Brent Council, said that despite repeated directives, McLoughlin had shown a “complete disregard for the safety and well-being” of his tenants.
She added: “Everyone deserves a safe and comfortable place to live. Rogue landlords in our borough will find themselves facing hefty fines and possibly a criminal conviction. We will use whatever powers we have to hold them to account.”
Bristol takes top spot as best city for buy-to-let investment
According to Aldermore’s buy-to-let (BTL) city tracker, Bristol has risen two spots and Manchester has fallen from first to second compared to last year.
Coventry has climbed seven spots to third, Brighton has grown 10 spots to fourth position, while London fell three spots to fifth.
Cambridge, Portsmouth, Glasgow, Basildon and Milton Keynes rounded out the top 10, with Portsmouth, Glasgow and Basildon both entering the ranking this year by jumping 16, nine and three spots respectively.
The tracker analyses average total rent, the best short-term returns through yield, long-term return through house price growth over the past decade, the lowest number of vacancies as a proportion of total housing stock, and the percentage of the city population in the rental market to indicate BTL desirability.
Bristol tops list due to good rental prospects, long-term renters and few vacant properties
Aldermore said that Bristol has “good rental prospects, a high proportion of long-term private renters available and low number of properties currently vacant”.
The report added the growth on returns was an “attractive lure for landlords” with an annual increase of 6.6 per cent.
However, short-term yields sit at 4.4 per cent.
Manchester fell from the top spot to second place this year, with the average rent per room lower at £461 and the proportion of vacancies in properties lower at 0.9 per cent compared to the national average of 1.2 per cent.
Long-term returns stand at 6.1 per cent, with a “healthy market of tenants” available at 31 per cent.
It is also the first time that a Scottish city has entered the top 10 since the report was launched five years ago, with Glasgow in eighth place.
Glasgow has good rental returns for landlords at £471 and offers one of the highest short-term returns of 8.6 per cent, higher than the average of five-and-a-half per cent.
Wales remains at the bottom of the leaderboard, with Newport and Swansea remaining in 49th and 50th place due to lower rent returns, but long-term yields are more “promising”.
Cardiff climbed to 40th place, helped by a proportion of private rents and fewer vacant properties.
Rents continue to rise
The report shows that the average rent per room has steadily grown to £455, which is up from £432 in 2022 and £423 in 2021.
Research also showed that nine out of 10 landlords increased the rent they charge in the last 12 months.
Just under three quarters of landlords have seen a rise in tenant demand for their properties in the last year.
Jon Cooper, head of mortgages at Aldermore, said: “Landlords have experienced an unprecedented year with rising interest rates, rising inflation, all while navigating their way through property legislation changes. Yet, the demand for rental accommodation has never been so high.
He said: “Landlords play an important role in the UK economy, providing homes for those who are yet to get on the housing ladder or want to rent.”
Cooper added: “Usually, a few regions dominate the leadership board, but this year we see for the first time a wider range of areas making it into the top 10. We can see that each region is made up of multiple smaller markets with their own unique conditions and challenges.
“Landlords continue to do their research, working with their brokers to review their portfolios and ensure they are getting the best value for their properties, whatever obstacles may come their way.”
Almost three-quarters of landlords in process of or planning to grow portfolio
According to the Landlord Leaders survey from OSB Group, which recently made changes to its leadership team, approximately 42 per cent of landlords say they are optimistic about their future and one in five landlords say they are very optimistic.
Around 65 per cent say they are looking at or have already transitioned to becoming limited companies or incorporated entities.
Over two-thirds say they plan to invest in order to “stay ahead of legislative changes”, with 58 per cent having grown or planning to grow their headcount and 68 per cent spending more time thinking about the tenant experience.
The primary reasons for being a landlord are cited as earning potential, ability to pass down wealth and inheritance to future generations, investing in a fixed asset and having a positive experience on tenants’ lives.
Around three-quarters say they plan to engage with tenants to better understand their needs and foster good relationships, and a quarter want to positively impact their tenants’ lives.
Landlords play a ‘critical role in society’
Jon Hall (pictured), group managing director of mortgages and savings at OSB Group, said: “Landlords play a critical role in society, and this research clearly demonstrates that they are optimistic and committed to the future of the sector.
“The actions landlords are taking, such as future financial planning, investing in the growth of their businesses, and building better tenant relationships, are a clear sign of their drive to improve the private rented sector (PRS) for the long term despite the many headwinds. We hope to see this continue over the next 12 months and longer.”
Hall continued: “This latest research reinforces OSB Group’s view that the journey to professionalisation is one that many landlords are committed to. We will continue to support our landlord and broker clients and the Landlord Leaders Community members to ensure this optimism and action is replicated and recognised.”
‘Why would anyone be a landlord?’ ‒ Star Letter 16/02/2024
This week’s first comments come from the piece: No fault evictions to be banned by next election, Gove says
Arron190 said: “So, the ‘small minority of unscrupulous landlords’ are responsible for legislation to support a much larger minority of bad tenants causing many good landlords to leave the market?
“A client was renting to an awful family that screamed and swore throughout the night. Both mother and father were thugs, and the neighbours were terrified. Under the current law, they found the owner, who simply said they were not renewing their tenancy.
“Under the new law, they would have to put their names on the record against two thugs and hope the court case is heard in weeks and not months. Why would anyone be a landlord?”
Boris added: “They want to increase housing supply; but they have waged war on landlords. This on top of taxing rental income on turnover, instead of net profit. Truly bizarre how far to the left these Conservative governments have drifted. I never thought I would see a Liberal government in my lifetime; but here we are.”
‘Lack of infrastructure’ reason brownfields undeveloped
This week’s next comment is in response to the piece: Councils ordered to make it easier to build on brownfield land
Arron190 said: “The reason many councils resist is because of lack of infrastructure. Developers have been building for years and either defer infrastructure to post-completion of the housing or pass over cash. However, the areas can suffer problems with congested roads, lack of school places and no local doctor.”
Stamp duty is ‘iniquitous form of taxation’
The final set of comments come from the piece: Appropriate homes will move dallying downsizers, not a stamp duty giveaway – Wilson
John Emmett said: “Stamp duty is an iniquitous form of taxation and a barrier to mobility in the job market and downsizing. If the thresholds were increased, or the tax even dispensed with, there would be an increase in turnover in the selling and purchase markets, which would benefit all.
“Downsizing was an option 10 to 15 years ago, but no longer. In this part of the world, near the sea and New Forest, when a bungalow comes onto the market, invariably, they are purchased by developers.
He continued: “Next, it is stripped, with one wall left standing and then rebuilt with bedrooms on a new first floor and the ground floor converted into an open plan living space. The property then goes back on the market. The price is often more than double the price originally paid, and given the location near the sea, sold within days. These properties are more expensive than established detached houses just further back inland.
“Large old houses are pulled down and apartments built. Again, these are very expensive and not much cheaper than houses. Car parking is restricted to one space or, if lucky, a garage per apartment. Not all retirees want to give up their cars.”
The comments here are from our readers and do not necessarily reflect the views of Mortgage Solutions and Specialist Lending Solutions.
Landlord confidence grows in Q4 2023
Research from Foundation Home Loans, which interviewed 398 online interviews with landlords, shows that landlord confidence in their lettings business has stayed stable, while rental yield confidence has fallen slightly quarter-on-quarter.
The fall in rental yield confidence comes from the “perception that tenant demand” has fallen for the first time since Q2 2022.
Around 63 per cent of landlords have said that tenant demand has gone up in the last three months, a decrease of eight per cent on the previous quarter. This was driven by a higher proportion saying they are unsure and only four per cent are saying demand has gone down.
‘More cautious landlord community’
The report said that the results show a “more cautious landlord community” and those with larger portfolios are more likely to make full-time profitable living from properties, which goes up with the size of the portfolio.
Landlords with only one property have the least confidence in terms of rental yields and the PRS.
Planned divestments are lower than those reported in the first half of the year, and those planning to buy have gone up by three per cent.
Landlords with the largest properties are more likely to buy at 19 per cent.
Majority of landlords think EPC legislation will return
Approximately 64 per cent of all landlords said they were satisfied that the government had put off mandatory Energy Performance Certificate (EPC) levels of C or above for the PRS by 2028.
This goes up to 80 per cent for those who own 11-plus properties.
Around three out of four landlords expect the legislation to be introduced in the future, on average, and expect this to be done in three-and-a-half years.
Grant Hendry (pictured), director of sales at Foundation Home Loans, said there was a “renewed sense of calm and stability from these latest set of landlord results, and while it’s clear there are still some considerable concerns for active participants in the PRS, it’s positive to see confidence generally rising across most of the metrics”.
“After a very challenging year in 2023, it’s perhaps not surprising to see landlords being somewhat cautious about what the future might bring, particularly in terms of ongoing finance, but also tenant demand, rental yield, and capital increases.
“Clearly, tenant demand has been running at very high levels and, coupled with the supply situation and the need for landlords to cover larger mortgage costs, has meant rents have risen significantly in many areas over the past 12 months,” he added.
Hendry said that those fundamentals were not changing, but have “clearly steadied somewhat” and there will “continue to be a large number of landlord borrowers coming off their deals throughout 2024 and beyond”.
He continued that as the rate environment has “shifted”, this will hopefully allow them to meet affordability criteria, secure the loans they need and keep mortgage payment increases down.
Hendry added that it was unsurprising that portfolio landlords were “more inclined to be active with their properties”, whether in terms of divestment or acquisition, and smaller landlords were less inclined to act and wanted to wait things out.
He said that it was interesting to hear that many landlords expect minimum EPC levels to be introduced by the government.
“That will require work, and funding to carry out this work, and it therefore looks likely landlords will be seeking options in the green space to allow them to improve their properties, and to benefit from the lower rates that are now available for greener PRS properties,” Hendry said.
Estate agent struck off by RICS over serious misconduct
E W Estates and its director Emma Walker, based in Ashington in the North East faced more than a dozen charges covering dishonesty and financial mismanagement.
For example, Walker was found to have been dishonest about her qualifications and experience when applying for membership of RICS, as well as providing faked tenancy agreements relating to a property, with the intention of duping the property owner.
In addition, the firm did not have adequate professional indemnity cover in place, while loans were taken out on false pretenses. Walker was found to have failed to ensure that surveys were carried out by competent and qualified individuals.
Ousted from RICS
As a result of the findings of the disciplinary panel, Walker has been expelled from RICS membership, while the firm has been removed from its register of regulated firms.
RICS said that it was working with the Standards and Regulation Board to review the lessons learned from this case, and to look at how it can strengthen regulation and trust in the industry.
It is also reviewing its entry and assessment processes to ensure they are “fit for purpose”.
“The vast majority of RICS members are professional and the number of RICS members who are subject to disciplinary proceedings is very small,” RICS said in a statement.
“In a number of situations, as we did extensively on this specific case, we provide detailed guidance and advice to complainants and consumers helping to identify and signpost the appropriate avenues and agencies to pursue redress and gain support.”
Higher illegal immigrant Right to Rent fines introduced
Right to Rent was introduced by the government as a way of cracking down on illegal migration, and requires landlords and letting agents to carry out certain checks on potential tenants before they are permitted to rent to them.
The fines for failing to carry out these checks are increasing dramatically. Previously failing to carry out checks on a lodger meant an £80 fine, while for an occupier there was a £1,000 fine.
However, these are jumping to £5,000 and £10,000 respectively.
There will also be further fines for repeat breaches of £10,000 per lodger and £20,000 per occupier.
On top of the punishing fines, failure to carry out sufficient checks come with the risk of imprisonment.
Lauren Hughes, head of customer success at tenant-referencing firm Vouch, said that putting off compliance with the Right to Rent measures was a “sure fire way to land yourself in hot water” with the authorities.
She added: “Agents should be making sure their landlords are covered and that their processes aren’t set up to fail. With the advent of digital identity document validation technology (IDVT), which the government approved use of in 2022, it’s now much easier to stay compliant. The flip side is that agents who fall foul of the rules will struggle to explain why.”
Two-thirds of landlords seeing uptick in tenant demand ‒ NRLA
According to the National Residential Landlords Association (NRLA), in Q4 2023, 63 per cent of landlords said that they had seen heightened demand from tenants.
This is higher than just a quarter of landlords who reported increased tenant demand in Q4 2019.
NRLA said that demand for private housing will continue to rise, with UCAS projections indicating that there could be a million applicants for higher education in 2030, which would have ramifications for student lets.
Net migration flows are likely to settle at 245,000 per year by 2026 to 2027, based on the Office for Budget Responsibility, as migrants are three times more likely to be in private rented accommodation than the UK-born population.
Landlords more likely to sell than invest
The research also shows that landlords are far more likely to sell rather than invest in new properties to rent, with 11 per cent planning to grow the number of homes they let and 30 per cent planning to reduce the number they rent.
However, last year, the majority of residential buy-to-let (BTL) landlords grew their property portfolios.
The NRLA is calling on the Chancellor to “scrap damaging tax hikes that cause misery for tenants”.
This includes an end to the three per cent stamp duty levy on the purchase of homes to let, and this could lead to almost 900,000 new private rented homes being made available across the UK in the next 10 years, according to Capital Economics.
The cut would also lead to a £10bn boost to Treasury revenue through increased income and corporation tax receipts.
Ben Beadle, chief executive of the NRLA, said: “The demand for private rented housing is only set to grow. As it does, would-be tenants will face the reality that there are not enough homes to meet their needs. This is a result of deliberate efforts using the tax system to dampen supply.
“The country needs more of every type of housing, and that has to include new homes for private rent. The quicker the government takes this into account, the sooner we can relieve the struggles renters face when finding a place to call home.”
Six in 10 landlords report high tenant demand in Q4
According to research by Paragon Bank, 37 per cent said demand from tenants increased significantly during the three months to the end of December, while a further 26 per cent experienced slight increases.
Approximately 16 per cent reported no change in demand and only four per cent felt it had decreased.
Looking at it from a regional perspective, tenant demand was strongest in the North West, with three-quarters of landlords reporting increases in tenant demand for the period. This was followed by Yorkshire and the Humber at 74 per cent, and East Midlands at 71 per cent.
Rental inflation link
The report added that there was a link between heightened tenant demand and rental inflation, with rent increases more likely to be reported by landlords in the areas with the highest tenant demand, with the exception of the East of England.
In the North West, Yorkshire and the Humber and East Midlands, around nine in 10 landlords said rents were rising, compared to around eight in 10 for regions like the South West and Outer London.
More than half of landlords are planning to up rents in their own portfolios in the next six months, with 70 per cent pointing to the increased costs.
Around 62 per cent pointed to being in line with market rents and 40 per cent pointed to mortgage costs, although this is eight per cent down on the prior quarter.
‘Chronic’ supply-demand imbalance
Richard Rowntree, Paragon Bank’s managing director of mortgages, said: “Although tenant demand has come off its record highs, there remains a chronic supply-demand imbalance across large parts of the country.
“Although it’s a complex issue with many factors at play, the supply and demand dynamic dictates that we pay more for goods and services that are in high demand and short supply. It is unsurprising, then, to see that the landlords in the regions seeing the most demand are amongst the most likely to see rents rising. This illustrates how a healthy, sufficiently supplied private rented sector (PRS) is needed to maintain rent levels that are affordable for the millions of people that live in rented homes.”
Majority of landlords bought more property last year
According to research from The Mortgage Lender (TML), a quarter have added one property with a further 27 per cent adding multiple properties.
In the next year, more than half of landlords are looking to grow their property portfolio. Approximately 26 per cent plan to add another single property to the roster, and another 26 per cent plan to add multiple.
The report said that this could be attributed to “positivity” in the market, with nearly three quarter saying they were confident in the residential property market in the coming year.
Almost a third pointed to heightened tenant demand, while a quarter said they grew their portfolio as they had “spare capital to deploy”.
Nearly a quarter said they want to diversify their portfolios across different property types and different UK regions respectively.
One in five said they wanted to buy a property with a better Energy Performance Certificate (EPC).
However, nearly a third of landlords said they had sold one or more properties in the last year and a further third were planning to do so in the next year.
Over a third pointed to rising interest rates at remortgage as the primary reason, followed by 28 per cent citing falling house prices and 23 per cent said they sold a property to buy a better investment.
Chris Kirby, head of key accounts and specialist distribution at TML, said: “Buy to let plays an important role in the residential property market, ensuring that there continues to be a good supply of quality and well-maintained rental properties to meet consumer demand.
“Last year’s high inflationary and interest rate environment saw unsettled confidence levels among prospective homebuyers, though for residential landlords our research shows they have not been as discouraged.”
He continued: “Many are taking opportunities to grow their portfolios, and with rates reducing, average rents increasing and house price growth predicted, landlords have good reason to be optimistic. It certainly paints a positive picture and highlights the continued interest in buy to let as an asset class.
“For those landlords who are looking to grow their portfolios, it’s important to seek advice to ensure they are accessing the best possible opportunities in the coming year.”