Tenant campaign group, Acorn, is helping tenants fight back against bad landlords. The group, launched in Bristol three years ago, is a union for tenants renting in the private sector. The founders of Acorn are keen to help tenants who are affected by poor housing – they claim many tenants do not know their rights and are reluctant to tackle bad landlords when things go wrong. Activists from Acorn act as advocates for tenants, talking to landlords and encouraging them to sort out problems. Acorn campaigns against poor conditions, rising rents, and wrongful evictions. They operate in the community, for the community.
Acorn Speaks to the BBC
The BBC spoke to one tenant who had contacted Acorn when his landlord refused to address serious problems with the rental flat he was sharing with his girlfriend.
The one-bed flat had no lock on the front door, black mould everywhere, and there was no electricity in the bedroom, so the pair were forced to go to bed using a torch. Then, to make matters worse, the landlord stopped paying the electricity bill, so the power supply was disconnected.
Acorn Steps In
Bristol council ordered the landlord to pay the bill, but he was given 28-days to act. Acorn activists visited the landlord and the power was back in within three days.
Some landlords have accused Acorn of acting as vigilantes, but the group denies the allegations. They told the BBC they were simply solving problems on behalf of individuals who needed their help.
One of the biggest headlines from this budget was that stamp duty would be abolished for first-time buyers, but how does Chancellor Philip Hammond’s much-awaited budget affect landlords?
Chancellor Wants to Kickstart the Housing Market
Unlike previous budgets, Philip Hammond hasn’t made landlords the target of his big cannons. Instead, the Chancellor has decided to focus on repairing the ailing property market by making it easier for first-time buyers to get a foot on the ladder.
Cut in Stamp Duty for First-Time Buyers
The immediate cut in stamp duty should make it easier for first-time buyers to afford a property, although it won’t help them save up a 20% deposit, which is often the biggest barrier to homeownership.
No More Council Tax Relief for Empty Properties
Mr Hammond has given local councils the authority to charge 100% council tax for empty properties, to dissuade investors from snapping up homes and leaving them empty indefinitely. However, most experts believe this will do little to deter overseas investors from buying up real estate in prime areas.
Indexation Tax Relief to be Abolished from 2018
One area of this budget that will hit landlords with limited companies is the freezing of indexation relief. Previously, incorporated landlords could gain tax relief on properties owned for many years, but this is being frozen from next year. Many experts believe the move is paving the way for indexation tax relief to be abolished altogether. As such, landlords should plan accordingly.
Landlords get a lot of bad press. There are always stories about rogue landlords who do their best to rip off vulnerable tenants to line their own pockets. Indeed, the government seems to hold the same opinion, as it has been working hard to discourage landlords from investing in the private rental sector!
However, not all landlords are rogues or money-grabbing profiteers. Many do their best to help put tenants and provide homes for vulnerable people living in the local community. In a particularly inspiring story, a Wycombe landlord has pledged to lower the rent of a very desirable property in his extensive portfolio to help a low-paid NHS worker make ends meet.
The landlord, who has asked to remain anonymous, has decided to cap the rent on his flat at £650pcm, even though it could easily attract tenants willing to pay £725 per month. The landlord has also stated that he won’t increase the rent after a year, which he customarily would do with his other properties.
The landlord’s kind gesture is motivated by a recent good experience of the NHS. He told reporters that his mother had recently been admitted to hospital for a few days and she had received wonderful care from a dedicated team of doctors and nurses.
He describes the staff as the “unsung heroes of the NHS”.
The landlord’s letting agent said it was the first time he had encountered a landlord who was willing to lower rent for a charitable cause. Hopefully, it won’t be the last!
The latest Your Move Buy to Let price index shows that rents are still rising, following the pattern of the last twelve months. In September, tenants in England and Wales paid an average rent (seasonally adjusted) of £843 per calendar month. The figure for the previous month was £841. These statistics indicate a 3.2% rent rise on the same period last year.
Rents in the North West are rising faster than anywhere else in the UK. Prices there have gone up by 3.6%. Second on the list was the East Midlands, which registered an increase of 3.4%, closely followed by the East of England, where prices rose by 2.9%.
Only two regions registered a decline in rental prices. The North East had previously shown a marked increase, but rents there have fallen by 0.3%. Rents in the South West also fell, by 2.2%.
It’s not all bad news for the North East, as landlords are there are enjoying excellent rental yields of 5.1% on their properties, mostly thanks to very low property prices. The other top place for landlords was the North West, where rental yields are 5%.
London Still Expensive for Tenants
Rents in London are still higher than anywhere else in England and Wales, although price growth is much slower than other areas. Tenants there pay, on average, £1,280. However, it is important to note that there are significant differences in rents across the different boroughs of London, with some areas far more expensive than others.
Experts report that rental yields are now stabilising after a turbulent year for landlords.
The BBC has carried out an undercover investigation and discovered that criminal gangs are providing fake passports and National Insurance cards to illegal immigrants. The Black Market in fake IDs is running rampant and landlords are unwittingly being caught in the middle.
Right to Rent
The government introduced new Right to Rent rules last year. Landlords are now expected to check a tenant’s immigration status before offering them a tenancy. Anyone who can’t prove they have the right to be in the UK won’t be able to rent a property. Or at least that’s the idea.
Unfortunately, undocumented immigrants are paying around £500 to criminal gangs for fake IDs, which are almost impossible to detect. A Home Office spokesperson told reporters that landlords were not expected to be able to spot a fake document. He admitted this was a huge problem.
Dealing in Fake IDs
An undercover BBC reporter had no problem securing fake IDs from dealers all over London. In many cases, the documents arrived within 48 hours of the cash being handed over. He discovered that before the Right to Rent legislation was rolled out, fraudsters were selling between six and 10 fake IDs a week, but now the dealers are extremely busy.
The reported purchases fake documents and took them along to a letting agent, who accepted them without question. The dealers told reporters that the passports were good enough to fool landlords and letting agents, but would not fool an immigration agent at the airport.
Upon close examination, the passports were good quality but did not stand up to closer scrutiny. The lettering was not quite right and photos were the wrong size.
An enterprising landlord in Leicester has decided to raffle off one of his properties worth £145k at £5 per ticket in a bid to help those in need. He will donate some of the proceeds from the raffle to a local cancer unit.
Amit Sehgal has been a landlord for 15 years. During that time, he has witnessed the difficulties faced by poor and vulnerable families who are struggling since the government introduced a benefits cap. He has a large portfolio of properties in the local area and has had to send in the bailiffs on numerous occasions to evict families who can’t afford to pay the rent.
Effect of the Benefits Cap
One of his tenants, a mother of three, had rented a property from him for six years, but once the benefit cap came into effect, she couldn’t afford the rent and Sehgal was forced to evict her. He described the situation as “heart-breaking”.
Creating a Brighter Future
Sehgal is hoping that at least one needy family will have a better future if they are lucky enough to win the keys to his property. The raffle is easy to enter. Hopeful entrants can buy a £5 ticket online via the website www.winaleicesterhouse.com. The winner will be announced on Facebook when the competition closes on January 25.
The only costs incurred by the winner will be stamp duty and solicitor’s fees, so if you decide to enter, make sure you budget for these costs.
Government tax changes are starting to bite in the buy to let sector, but it looks as if career landlords are unfazed. Research carried out by Countrywide has found that the average buy to let property investor now owns more homes in his or her portfolio.
There are fewer landlords in 2017 compared to 2015 and some 154k landlords have left the buy to let sector. This may be because of the punitive 3% Stamp Duty on second properties, or even because mortgage interest tax relief is being phased out over five years, but what is really interesting about the Countrywide study is that the number of rental homes has increased during the same period.
Government Tax Changes
In 2015, there were 4.9 million private rented homes in the UK. Today, there is 5.1 million buy to let properties. This is surprising, as many experts predicted that the rental market would shrink in response to government tax changes. However, while many smaller landlords have indeed exited the property market, career landlords have expanded their portfolios.
London landlords are the most likely to have larger portfolios, closely followed by landlords in the North East and Yorkshire and Humber.
PRS Favours Experienced Landlords
Increased buy to let sector regulation and changes to income tax relief seem to be favouring career landlords, who are more experienced and are therefore better able to cope with the changing climate in buy to let.
However, despite the seismic shift in the sector, most landlords still only own one property.
Approximately one-third of homes (an estimated 1.4 million properties) in the private rental sector don’t meet health and safety standards, yet the majority are let to tenants in receipt of housing benefit. This creates an uncomfortable reality whereby the UK taxpayer is paying rogue landlords to provide poor quality housing to vulnerable people.
Current estimates suggest that £2.5 billion in housing benefit is handed to rogue landlords. One-third of this money is paid to landlords in London.
The Housing Benefit Bill is Soaring
This is a lot of money. Government spending on housing benefit has increased dramatically in the last seven years, as more and more people are forced into the private rental sector. The government has attempted to rein in costs, but their cost-cutting exercise hasn’t prevented some landlords cashing in and fleecing the system.
Landlords operating sub-standard housing are happy to pocket housing benefit from their tenants. Reputable landlords reinvest money in their properties, but rogue landlords don’t spend a penny making their properties safe and fit for human habitation. They don’t need to. After all, in many areas, the shortage of affordable housing has led to enormous competition.
What is a Non-Decent Property?
For a property to be classed as “non-decent” in the government’s eyes, it must be unsafe or downright dangerous, have a non-functioning or dangerous boiler, dodgy electrical wiring, poor quality sanitation, or be infested with vermin. 17 per cent of all private rental properties are in this category. Nevertheless, tenants still live in them and claim housing benefit.
Landlords have shared their horror stories of nightmare tenants with the Manchester Evening News. The tales of woe are very eye-opening, especially for inexperienced landlords not yet savvy to the ways of some tenants.
One landlord described how he only found out his property was being used as a cannabis farm when the police informed him. The landlord’s insurance company refused to pay out, as the damage was linked to “criminal activity”. He lost money on the property as it cost several thousand pounds to fix the damage. He did admit, though, that it was a common problem and he had experienced the same issue before.
Tenant Destroys Property
Another landlord described how a long-term tenant, who had never caused a moment’s bother, trashed the place before she moved out. In all previous inspections, the house had been immaculate, but when the landlord checked it after she left overnight, he found it had been destroyed.
No Pets Clause Ignored
A third landlord let an agent manage their property. Despite assurances from the agent that everything was fine, neighbours began to complain, so the landlord went over to inspect the place.
He discovered filthy carpets, pet damage, despite a ‘no pets’ clause in the tenancy agreement. The tenants promised to clean up, but the situation deteriorated and by the time they were evicted, suddenly, the house was a disaster area with rubbish piled high.
It isn’t surprising that some landlords decide the property sector is not for them.
Landlords are frequently maligned in the press, but a recent Channel 4 TV show has shown that some landlords do want to give back to their local community. Marco Robinson, a 49-year-old landlord who spent time sleeping on a park bench with his mum when he was a child, decided to give away one of his properties now he’s the owner of a $25 million property empire.
A Free Home Giveaway
Eight thousand people applied to become the owner of a free house. After an extensive filtration process to see who was the most deserving, the long list was eventually whittled down to three applicants.
Single mum, Holly, lives in a mouldy flat with her baby and feels she won’t ever escape the poverty trap. Jo works, but can’t save for a house deposit. She is also going blind and is fearful she will lose her job and be unable to afford her rent. The Ali family are asylum seekers but their application was rejected. In the meantime, they can’t work and are homeless while their application is being reconsidered.
Giving Something Back
Marco didn’t want to hand out cash. His intention was to help people in a more meaningful way. In the end, he elects to give the flat to Holly so she can make a better life for her baby. Jo is given the deposit so she can buy a home and the Ali family are provided with temporary housing while their asylum application is sorted out.
It was a life-changing event for all three of them.