Courts begin to resume eviction hearings

Eviction hearings resume in courts across England and Wales. Pressure grows for Welsh politicians as councillors call for AirBnB to be banned. Buy to let demand grows among first time buyers in the UK.;
Eviction cases resume

Eviction hearings will now resume in courts in England and Wales as the eviction ban officially came to an end on 20th September.

The ban that was introduced in March, and extended twice to protect tenants from that suffered from financial difficulty because of Covid-19, has also caused great concern for landlords.

Landlords have been left ‘powerless’ to take action against tenants acting in an anti-social behaviour or those committing domestic abuse.

However, now the courts are open, these types of cases will be given priority according to the National Residential Landlords Association (NRLA). Including cases where rent arrears were building before lockdown.

New procedures

The NRLA points out that although the courts reopening is a massive step in the right direction, landlords should be aware of the new rules and best practices regarding the way bailiffs and high court enforcement officers will be operating.

They also warn that landlords should ‘temper’ their expectations in regards to how quickly they might regain possession of their property.

With the six-month back log and only 300 bailiffs operating full time across England and Wales, priority cases will be heard first, meaning that cases related to rent arrears associated with the Covid-19 pandemic will take longer.

When in court, landlords will need to provide judges with information on how tenants have been affected by the pandemic. Without this detail, judges will be able to adjourn proceedings until this information is provided.

Ben Beadle, Chief Executive at the NRLA, commented:

“The framework put in place by the judiciary and the government largely strikes the right balance between the needs of landlords in such situations and those of tenants affected by the pandemic.

“We continue to encourage landlords to work with their tenants to sustain tenancies wherever possible, making use of the guidance we have prepared.

“To support this the Government should follow the example of Scotland and Wales and develop a stronger financial package to help tenants to pay off rent arrears built since the lockdown started.

“Ministers also need to address the crisis faced by those landlords who have rented their homes out whilst working elsewhere. The six months’ notice required in such circumstances freezes them out of accessing their own homes, effectively making them homeless.”

Opposition parties unite

Although the eviction ban has come to an end, opposition parties in both the House of Commons and the House of Lords have called on the government to postpone eviction proceedings from resuming.

Former Liberal Democrat Leader, Tim Farron, used a parliamentary debate to voice his opinion on the eviction ban, where he urged the government to introduce a ‘six-month moratorium’ on court proceedings as the UK looks to be entering its second wave of coronavirus infections.

He explained that 55,000 renters were served notices between March and August, before the six-month notice came into place.

Similarly, House of Lords, Liberal Democrat peer Baroness Grender, initiated a motion to annul the eviction ban, suggesting that there was a loophole that unfairly targeted renters served with a Section 21 notice between the six month notice period was implemented in August.

Pressure grows in Wales to ban Airbnb

At the beginning of September, calls were made by politicians and local residents to increases taxes on second homes in the Gwynedd coastal town, as AirBnB and other holiday homes were ‘taking over’.

The Gwynedd coastal town of Nefyn has seen a significant rise in second homes being purchased since the Covid-19 lockdown and now councillors are supporting plans to make it mandatory for holiday home investors to apply for full planning permissions.

Councillors have also requested for ‘affordable housing’ to reflect the average salary which is as low as £16,000 in some parts of Gwynedd.

As well as Gwynedd, it has been reported that more than a quarter of houses in Conwy, another coastal town located in Wales are currently being used a holiday homes. Many homes that are for sale throughout the country are being marketed by estate agents as being suitable to turn into AirBnB lets.

Welsh politicians have previously criticised news reports which were encouraging investors to purchase holiday lets within the region. Articles were being published offering affordable housing to buy as a holiday let to take advantage on the staycation boom the country has experienced as a result of the travel restrictions abroad.

The debate continues

Since the issue was reported on at the beginning of September, another Welsh politician has joined in on the debate.

Plaid Cymru’s councillor for Llanrswt, Aaron Wynne, believes that the holiday rental business has stopped young people from getting on the housing ladder and has threatened local businesses including hotels.

Wynne argues that AirBnB properties should be instead used for family homes as the housing stock shrinks. He commented:

“Airbnb is a blight on our communities,”

“It’s just not sustainable to have so much of our housing stock out of the reach of the people who want to and need to live here. The Welsh government needs to act and change the planning rules so homes can’t be turned over to be used for commercial interests that do not benefit our communities.”

“This has been a very difficult year for our hotels and guest houses so having holiday home owners making extra cash by turning their holiday home into an Airbnb is undercutting these businesses that are so important to the fabric of our communities.”

Councillors demand change

It has been reported that local hoteliers in parts of Wales have felt the impact of short-term rentals, however many argue that an outright ban would be difficult to put in place. Other countries have enforced alterative restrictions to minimise the negative impact, in the form of rental caps and registration systems.

The council are now calling for more powers to be given to the local government to improve the housing market within the region. They are demanding that houses on the market are to be offered to local people first to prevent the amount of new holiday lets.

The town council has requested that people who are planning to buy properties with the intention to let them out as holiday homes are to pay an increased council tax, so it reflects that Gwynedd has the highest percentage of houses identified as second homes within the country.

Rise in first time landlords

Demand has grown among first time buyers who are looking to enter the buy to let market, as stated by the Legal and General Mortgage Club.

New data from Legal and General’s mortgage tool, used by mortgage advisers has shown that the search combination for first time buyer, first time landlord and non-owner occupier increased by 18% since the beginning of September.

The mortgage club also discovered that ‘holiday lets’ was the second most searched for term for mortgage advisers this month.

They also note that the demand for buy to let investments from expat and foreign investors remains strong, with searches up 50% in September.

Why the rise?

Legal and General have suggested that the interest to enter the buy to let market is in response to an increase in demand from consumers that are choosing to holiday in the UK rather than travelling abroad, due to the changing travel restrictions.

Legal & General Mortgage Club director Kevin Roberts explained:

“Despite the impact of coronavirus, we are seeing rising demand across the housing market with buy to let in particular enjoying a mini-boom.

“Our latest findings from SmartrCriteria suggest a growing number of first-time buyers are searching for mortgages for buy-to-let ventures, including those engaging with the growing trend towards staycations this year.

“Amidst this continued high demand we are seeing in the mortgage market, borrowers are turning to independent advisers to help them with their plans and these experts are playing a vital role for consumers.

“There have been thousands of criteria changes since the lockdown and mortgage advisers are supporting seasoned property investors, first-time landlords and other buyers to find lenders and products that meet their needs.”

A great time to invest

The stamp duty holiday has likely contributed to the demand in buy to let enquiries from first time landlords.

Although second homeowners must continue to pay the 3% stamp duty surcharge on new purchases, the stamp duty holiday means that investors pay nothing else on the first £500,000 of the property’s value.

Whilst some people have experienced financial hardship as a result of the coronavirus outbreak, some people have found themselves with more money than expected. Leaving them to look at different ways to invest their savings.

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