Boris seeks to suspend parliament

Shock as Boris Johnson seeks suspension of parliament from the Queen, with motives to block MPs trying to stop no deal Brexit implied. July rent rises at record high. Universal Credit still causing rent arrears and PRS needs accessible homes.;
Downing street

Announced on the morning of 28th August, Boris Johnson’s government is to ask the Queen to suspend parliament. As a result, trying to pass any law intended to stop a no deal Brexit will be practically impossible.

By holding a Queen’s speech on October 14th, to mark the new session of parliament, MPs will have only two weeks to either hold any vote of no confidence in the government or pass any law to block a no deal Brexit on October 31st.

The prime minister was adamant he is unwilling to wait to move forward with his plans:

“We are not going to wait for October 31 before getting on with our plans to take the country forward.

"We are a new government with a new, exciting agenda. We've got to be bringing forward new and important bills.

"That's why we are going to have a Queen's speech and we are going to do it on October 14.

Whilst Mr Johnson emphasised that there will be “ample time” to debate Brexit, it is clear that others strongly challenge this view.

John Bercow, the Speaker for the House of Commons expressed his anger at the news:

“I have had no contact from the government, but if the reports that it is seeking to prorogue Parliament are confirmed, this move represents a constitutional outrage.

“However it is dressed up, it is blindingly obvious that the purpose of prorogation now would be to stop Parliament debating Brexit and performing its duty in shaping a course for the country"

The request for the process, called prorogation, made to the Queen is not one that can be refused, as she is guided by the prime minister.

Andrew Turner, chief executive of Commercial Trust had this to say, on the impact on landlords:

“This is stage one in the end game of uncertainty for landlords. It is clear the new government administration is determined to conclude the exit from Europe.

"The one thing it will start to put in-front of us all, is what life will look like in a post-Brexit world, for better or worse, which will allow onward planning for the future in property investment.”

Couple enquiring about a home

The PRS needs more accessible homes

The National Landlords Association (NLA) has found that accessible homes, in the private rental sector (PRS) for the differently abled and older generations, are in short supply.

As a result, it has taken its first step in raising awareness of the issue.

The NLA invited representatives from organisations who work with each group, Age UK, Foundations, the Nationwide Foundation, Abode Impact and the Centre for Aging Better to a roundtable, to discuss current landlord awareness of the housing needs of such tenants.

Under the Equality Act 2010, landlords are required to fulfil requests for “reasonable adjustments” to a property, for any tenant, with a genuine need.

Structural and physical features fall outside this requirement, but, where a property is otherwise accessible, extra equipment or further changes may fall within scope.

A growing demand

By making a rental property accessible for older tenants or tenants with specific accessibility requirements, evidence suggests that landlords will benefit from a strong level of demand.

Meera Chindooroy, Policy and Public Affairs Manager at the NLA made clear that demand from these groups is only set to grow:

“There is an acute shortage of accessible housing in the PRS. But with the aging population, this is something that we need to be thinking about and changing now so it doesn’t become an even bigger issue in the years to come. Landlords need to be proactive in meeting this demand.”

Financial support for property modifications

Government Disabled Facilities Grants are available to eligible individuals, or to landlords with tenants who are differently abled.

Prior to works being undertaken, the council must have approved plans to establish that they are appropriate and reasonable (based on the suitability of the property).

Foundations, the National Body for Home Improvement Agencies, shared findings which demonstrate that only 7% of grants are secured by private rental tenants, despite 73% of the elderly living with chronic pain or a disability.

The NLA is set to release a report which makes clear the changes that are needed to provide accessible homes. It will also give landlords within the PRS guidance on how to provide suitable homes to fulfil the needs of these tenants.

Pounds coins and bank notes

54% of Universal Credit tenants in arrears

Problems with Universal Credit rumble on for tenants and landlords. Of the private landlords surveyed who house tenants on the benefit, 54% reported the tenant had fallen into arrears in the last 12 months.

The research highlighted that the majority (82%) of the arrears occurred either at the beginning of a new claim, or where a tenant had been switched from the old housing benefit system to Universal Credit.

Furthermore, over two thirds (68%) of landlords found that the Universal Credit amount did not cover the rent cost, leaving a shortfall for the tenant to make up.

Three vital changes to prevent rent arrears

The Residential Landlords Association (RLA) has cited three critical changes as essential to preventing rent arrears.

Firstly, they are calling on the government to enable tenants to have the housing payment element their Universal Credit be paid direct to their landlord, from the point a claim is made.

At present, landlords can apply for an Alternative Payment Arrangement (APA) once a tenant has fallen into two months of arrears with the rent.

But, the average turnaround time for and APA is eight and a half weeks, leaving landlords with in excess of four months’ rental debt.

The second measure, sought by the RLA, is to eradicate the long wait for a first Universal Credit payment.

Not only is there a one-calendar month delay in each assessment, but up to a further 7 days may pass before funds hit the recipients bank account.

The third change the RLA is seeking from the government, is for the Local Housing Allowance (LHA) freeze to be lifted.

LHA rates are derived from local rents, however, since 2010, housing benefit has not reflected the rise in private rents. This is set to be the case until 2020. The RLA is instead proposing that the benefit should accurately reflect local private rents.

The proportion of people affected by the challenges of Universal Credit, within the PRS is significant. 45% of households in receipt of the benefit are tenants of private landlords.

David Smith, Policy Director at the RLA, commented:

“Today’s research shows the stark challenges the Government still has in ensuring Universal Credit works for tenants and landlords.

“The system only provides extra support once tenants are in rent arrears. Instead, more should be done to prevent tenants falling behind with their rent in the first place.”

Red Monopoly houses on stacks of pound coins

July 2019 rent rises at highest level on record

ARLA Propertymark (the regulatory body for UK letting agents) has released their July 2019 figures on the Private Rental Sector (PRS). Their statistics show that rent rises in July were the highest they have seen since their records began.

63% of tenants faced a rent rise in July 2019, up from 31% in the same month in 2018, and an increase of 15% from June 2019 – previously a record high.

Nonetheless, demand for rental properties was unceasing. In July, the number of prospective new tenants per agent branch was 73, up from 70, in June 2019.

The rent hikes follow the inception of the Tenant Fees Act, in June.

For industry professionals this was the inevitable outcome.

Many argue that this clearly demonstrates that, however well intended, government plans to reduce costs to tenants have simply changed the route by which tenants are charged for the cost of administering tenancies.

As for the impact on letting agents themselves, the average number of properties under management has dropped from 199 in June 2019 to 184 in July.

This may be down to those existing the market, or could be landlords opting to self-manage to avoid any additional costs coming their way as a result of the Tenant Fees ban.

Regional variation in these figures is considerable. Agents in Scotland are enjoying the highest level of demand for their services, averaging 350 properties per branch. By contrast, London agents recorded an average of 147 properties being managed per branch.

Tenant demand in London is, however, the highest across the country, with 88 new prospective tenants per branch in the capital. This bodes well for London landlords.

Those tenants trying to negotiate rent reductions saw a decrease in the rate of success, month on month. In July this figure was 1.2%, down from 1.9% in June.

The number of landlords exiting the market is static, year on year, at four per branch.

Overall, the picture painted is broadly positive for landlords operating in the private rental sector, who cut their cloth accordingly to maintain profitability from their property investments.

Crowd of happy people

NLA and RLA to merge

Subject to the approval of each association’s members, the National Landlords Association (NLA) and the Residential Landlords Association (RLA) will merge to launch as the National Residential Landlords Association (NRLA) on January 1st 2020.

If plans go ahead to join forces, membership of the two organisations will combine to sit at 80,000 landlords, who are responsible for half a million properties.

This figure represents approximately 10 per cent of the private rental sector.

The boards of the NLA and RLA have already sanctioned the merger, and the following joint statement has been issued by Alan Ward, chairman of the RLA and Adrian Jeakings, chairman of the NLA:

“After more than 20 years of friendly competition the time is right to create a single organisation to represent and campaign for landlords.

“With so much of our work done in parallel there are major benefits to be gained for our landlord members.

“We will be stronger together when presenting a unified voice to government both nationally and locally about the importance of supporting the majority of landlords who do a good job providing the homes to rent the country needs.”

The new NRLA will have a regional structure and will serve landlords in England and Wales.

In their joint manifesto, both sides acknowledge the growing “political and financial pressure” faced by landlords, and a keen emphasis is placed on the intention to become a stronger voice politically:

“Speaking for more landlords as a single voice will strengthen our representation and influence in Westminster, Cardiff and with local councils. It will enhance our ability to influence debate and policy.

Together we will promote our own positive vision for private renting to help shift the perception of the public and the media, while marginalising the rogues and criminals who are too often portrayed as typical of the majority.”

There will be no increase in membership fees. Overlapping members of each organisation (2.4% of the total) will have their duplicate subscriptions credited to the new NRLA membership, thus extending the date of renewal.

Members of the NLA can submit their vote on the matter via the organisations website here.

Members of the RLA can submit their vote here.

This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.