Buy-to-let news to Friday, February 16th, 2018
Landlords warned of Gas Safety Certificate risk to Section 21 notices
Landlords in England have been reminded that it is absolutely imperative to provide a valid gas safety certificate at the start of a new tenancy, to avoid rendering any future Section 21 notice invalid.
The Residential Landlords Association (RLA) issued the warning, following a case at Central London County Court in early February 2018, in which a letting agent was unsuccessful in their attempt to use a Section 21 to regain possession of a property.
The Court heard that the landlord had not provided the tenant with a valid gas safety certificate prior to the tenant moving into the property.
Even though a new certificate was provided following an annual gas safety inspection 11 months later, District Judge Bloom ruled that the Section 21 notice should be rejected.
According to the RLA, this ruling sets a precedent in England, as it had previously been assumed that providing a tenant with a gas safety certificate at a later date would not compromise the validity of a Section 21 notice, if a landlord wanted to gain possession of their property.
The RLA stated:
“This case highlights that it is absolutely ESSENTIAL for landlords in England to serve tenants a valid gas safety certificate at the start of a tenancy, together with other prescribed documents, if the tenancy began on or after the 1st October 2015 (when the Deregulation Act provisions came into force).
“Just as it is critical that all private landlords ensure that all gas equipment in the accommodation that they rent out has a valid gas safety certificate (which lasts for twelve months) it is now equally essential for landlords to share a copy of the gas safety certificate with tenants at the start or renewal of a tenancy.”
This ruling could still be appealed, but highlights the need for landlords to be fully prepared for a new tenancy.
At present, landlords must serve tenants with prescribed documents if a tenancy commenced on or after October 1st, 2015, when the Deregulation Act 2015 came into effect.
The rules dictate that landlords must provide a new tenant with a Gas Safety certificate, the property’s EPC certificate and the latest copy of the Government-issued How To Rent Guide. Failure to do so could make it much harder for a landlord to subsequently gain possession of their property through a Section 21 notice.
From October 2018, landlords will have to provide all of the above documents for all assured short hold tenancies in England.
Rental increases across the UK rose in January, including London
January saw an average year-on-year rental increase of 2.4% in rent across the UK, now £909, marking a good start to 2018 for buy to let landlords.
In London, where rental growth had been slow in recent months, there was a 2.3% annual increase, pushing the average monthly rent in the capital to £1,532. This suggests that the buy to let market in London might be turning the corner now.
The East Midlands saw the biggest regional annual variance in rent, with a 6.0% increase from January 2017, when the average rent was £582; this January it averaged £617.
Elsewhere in England, the South West grew by 3.4% and the West Midlands saw a 2.6% growth from January to January.
Northern Ireland experienced an increase of 3.7%, with the average monthly rent reaching £624 in January 2018, while Scotland saw 3.1% growth.
Commenting on the findings, Andrew Turner, chief executive at Commercial Trust Limited, said:
“The New Year has got off to a robust start for buy to let landlords.
“With the amount of additional costs landlords are facing, it was always likely that many would need to put up rents to maintain a profitable business.
“Whilst no landlord necessarily wants to put up rents, the reality is that sometimes this has to happen to make an investment sustainable.
“This data underlines that the private rental sector remains one of great demand and, with the scope to make adjustments to maintain profit, offers a level of flexibility that other investment routes may not.”
Minister urged to consider landlord ramifications of policy
The Minister for Housing & Homelessness, Heather Wheeler, was urged to consider the ramifications of Government action as it impacts on landlords, as she met with various housing organisations.
Richard Lambert, CEO of the National Landlords Association (NLA), warned the Minister that landlords, already faced with unfavourable tax changes and tougher lending rules, must be allowed to run a profitable property business or will simply leave the sector, potentially adding further pressure to the housing market.
The NLA was one of a number of Private Rental Sector (PRS) organisations to meet the Minister, along with the Association of Residential Letting Agents (ARLA Propertymark), the Royal Institution of Chartered Surveyors (RICS), the National Approved Letting Scheme (NALS) and the Residential Landlords Association (RLA).
Discussions reportedly covered a gamut of PRS topics, including letting agent regulation and the proposed letting agent fees ban, as well as the creation of a housing resolution Housing Court.
However, Lambert was keen to impress on the Minister the need to incentivise landlords, to ensure that they want to remain in a marketplace which, according to the latest English Housing Survey, supplies 20% of UK homes.
He stated: “I welcome the Minister’s willingness to talk to the NLA and other private rented sector representative organisations. With its self-professed focus on tackling the housing crisis, it is vital that the government recognises and supports the prominent role that the private rented sector plays in housing over twenty percent of UK households.
“Through the forthcoming ban on letting fees and other proposals the Government has shown it is more than willing to intervene in markets when it perceives them to be failing consumers.
“We urge the minister and her colleagues to work with the NLA and others to ensure that any intervention made is necessary, proportionate and maintains a fair regulatory regime within which landlords can continue to run their business.”
Decline in the number of buy to let tracker products
Moneyfacts has reported a steady fall in the number of tracker products available to buy to let landlords, which have dropped to a 9-year low, indicating a tone of uncertainty among lenders.
According to the financial data specialist, the number of tracker rate products fell to its lowest total since September 2009, following the Bank of England’s decision to increase the base rate in November 2017.
Moneyfacts data shows that a year ago there were 294 tracker products on the market, which they say has fallen to 268 at present.
Following the Bank’s base rate increase, average tracker mortgage rates have had less appeal and have risen from an average rate of 1.93% to 2.15%.
Charlotte Nelson, spokesperson for Moneyfacts, suggested that many borrowers, faced with the first base rate increase in a decade, have simply opted for the perceived greater safety of a low fixed rate mortgage.
“The number of tracker rate mortgages on the market has been in steady decline for some time,” she commented.
“The fact that the markets are already starting to factor in multiple Base Rate rises makes the tracker rate market particularly unstable. In uncertain times providers are more likely to concentrate their efforts on fixed rates rate rather than trackers, and this is one of the main reasons for the steady decline in tracker deals.
“During uncertain times, borrowers tend to err on the side of caution; opting for a fixed rate instead of leaving themselves exposed to a potential rate rise. This lack of demand is also depleting variable products, with providers choosing to focus on fixed deals instead.”
More clarity sought by landlords over pet proposals
Landlords would like greater clarity on how the Labour party’s plans to permit tenants to keep pets as the default position, unless they cause a nuisance, would work in practice.
At present, many landlords will not allow pets in rental properties due to concerns over the damage they may cause to the interior and garden of their property.
Grounds for refusal include the size of the animal, the damage it could cause, the potential implications on future rental prospects for the property and the risk of additional costs for repairs.
Explaining the Labour Party rationale, Sue Hayman, MP, commented:
“Recognising that currently for the majority of people under 30, buying a home is sadly less and less of an affordable option, Labour would seek to improve the rights of renters to own pets that do not cause a nuisance.”
In response, two landlord bodies have sought greater understanding of how Labour’s plans would work, whilst suggesting that the proposals will need to be refined to meet landlord concerns.
Richard Lambert of the National Landlords Association (NLA), stated:
“You can’t take a blanket approach to keeping or refusing pets,” indicating that roughly half of landlords are reluctant to allow renters to keep pets due to a perceived additional risk of damage, and the increased costs of related-repairs at the end of a tenancy.
Whilst in principle the NLA supports schemes allowing pet owners to rent, citing positive benefits to this approach, Lambert stated that landlords should be given the right to refuse permission if they can justify their decision.
“Tenants who keep pets do tend to stay for longer periods of time, and there are a few simple steps that landlords can take in order to mitigate the perceived increased risks, such as by inserting specific clauses and policies into their tenancy agreements,” he added.
Meanwhile, the Residential Landlords Association (RLA) wants to see more explanation from Labour, particularly on whether landlords could charge higher deposits in scenarios where a tenant has a pet, in order to cover the added damage risk.
The RLA points out that landlords could incur extra landlord insurance costs, while other tenants could have their lives affected adversely by a tenant with a pet.
Below are the top 3 buy to let mortgage deals, by lowest initial rate, for fixed, tracker and variable products.
This table updates twice daily with the latest deals from a diverse range of specialist and high street lenders. Call our team to discuss any deal or click through for the full range.
|Rate||Product||Monthly cost||LTV||Lender fee||APR|
|1.34% then 5.00% Fixed for 26 months||Fixed for 26 months||£111||60%||£2,178||4.69%||Enquire|
|1.90% then 4.90% Variable for 26 months||Variable for 26 months||£158||60%||£25||4.53%||Enquire|
|1.49% then 5.00% Tracker for 24 months||Tracker for 24 months||£124||60%||£2,178||4.76%||Enquire|
|1.74% then 5.99% Fixed for 27 months||Fixed for 27 months||£145||70%||£2,034||5.36%||Enquire|
|1.99% then 5.64% Variable for 24 months||Variable for 24 months||£165||75%||£1,334||5.32%||Enquire|
|1.89% then 5.00% Tracker for 24 months||Tracker for 24 months||£157||70%||£2,178||4.82%||Enquire|
|2.94% then 4.99% Fixed for 24 months||Fixed for 24 months||£245||80%||£1,825||4.94%||Enquire|
|2.89% then 5.19% Variable for 24 months||Variable for 24 months||£240||80%||£295||4.98%||Enquire|
|3.84% then 5.50% Tracker for 24 months||Tracker for 24 months||£320||80%||£500||5.42%||Enquire|
|4.59% then 6.58% Fixed for 24 months||Fixed for 24 months||£382||85%||£3,110||6.73%||Enquire|
|4.64% then 6.58% Variable for 24 months||Variable for 24 months||£386||85%||£3,110||6.74%||Enquire|
Important: Lender fee is calculated based on a loan amount of £100,000.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE.
*Some lenders offer mortgages with no fees; however, our broker fee of up to £1,198 for Buy to Let first mortgages and up to £2,198 for Buy to Let secured loans will apply.
This table includes both Purchase and Remortgage rates. Speak to our advisors for a personalised recommendation.
This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.