Black Day for Buy-to-Let

Over the weekend the last of the demutualised building societies, the Bradford & Bingley, was nationalised. The demise of the Bradford & Bingley followed hard on the heals of the takeover of HBOS by Lloyds TSB and the Nationwide’s much less publicised takeover of the smaller building societies the Derbyshire and the Cheshire.

Monday saw the fourth largest US bank Wachovia rescued by Citigroup, Benelux banking giant Fortis partially nationalised, the third largest Icelandic bank Glitnir nationalised. The US stockmarket tumbled nearly 7%, it’s largest one day drop ever as the US Congress failed to agree on the $700billion bail-out.

The shock waves that have pounded the financial markets have hit the Buy-to-Let market particularly hard. The Bradford & Bingley owned Mortgage Express, arguably the largest Buy-to-Let lender. It is difficult to believe that the new owners of the Bradford & Bingley (the Government) will offer new mortgages to landlords. That means that the UK's largest Buy-to-Let lender has closed it's doors to new lending leaving a huge gap in the Buy-to-Let market.

The HBOS takeover will have a major effect on another huge Buy-to-Let lender Birmingham Midshires, part of the HBOS group. Companies like UCB, Mortgage Works and Cheltenham & Gloucester all pulled Buy-to-Let mortgage deals. Paragon, previously a huge Buy-to-Let lender, has yet to return to the market.

The Bank of England also reported on Monday that new mortgage lending had collapsed in August down 70% from August 2007. The Land Registry reported on Friday that house prices fell again in August this time by 1.9%.

Buy-to-Let lending is now a major casualty of the Credit Crunch. There are fewer lenders offering even fewer mortgages. The amount that lenders will lend is now considerably less than just 12 months ago. Fees have risen steeply. We believe that this situation will get even worse and talking to industry experts we have been unable to find one who thinks that things will get better before the end of 2009.

The best estimate is that the current banking crises will last for between 18 months and two years before we see any return to normality.

The message to Landlords is that you should focus on cash flow. There are still Buy-to-Let mortgages available so if you have fixed rate deals coming to an end over the next few months you should be looking at your options now. With house prices falling loan to value is becoming critical. We strongly urge Landlords to review their lending now to ensure that your cash flow is sustainable over the next 18 to 24 months.

We have Buy-to-Let experts available throughout the UK to help you decide the best course of action to take, click Mortgages through NetRent.co.uk for more information.

There seems to be little doubt that we are all destined for a very bumpy ride over the coming months. Landlords who prepare, control their costs and manage their properties well are likely to survive and succeed. Landlords who fail to properly manage their business are likely to become victims of this Credit Crunch.

HMRC warn about scams

HMRC (The Inland Revenue) have recently issued a warning about scam emails. The emails claim to be from HMRC offering tax refunds and often include an on-line form.

Further information about these scams can be found on the HMRC website, please click here HMRC scams for more information.

Encouraging Responsible Letting

A couple of weeks ago we published details and links about the Law Commission’s report Housing: Encouraging Responsible Letting. We believe that everyone involved in the lettings industry should read this report as it is likely to form the basis for future legislation.

The report itself runs to 135 pages but according to the report only 40 landlords actually contributed. This probably reflects the research we have done which indicates that most landlords did not know that the Law Commission was preparing a report.

Some of the more interesting parts of the report are:

“The consequence of poor housing management and housing standards is that the private rented sector continues to suffer from a poorer reputation than it should, and some tenants continue to experience poorer housing conditions than they should.”

The Law Commission states “we think that bringing about effective change of culture in the residential lettings market may ultimately require the introduction of a compulsory system of self-regulation.

“Although the private rented sector is highly fragmented, with large numbers of individual landlords letting only a small number of properties, when aggregated together the private rented sector is an enormous business.”

“Few sectors of the consumer economy are wholly regulation free. Indeed what is remarkable is that the rental market lacks the structures for consumer protection found elsewhere”

The Law Commission makes a series of recommendations:

We recommend that landlord accreditation schemes should be made available in every local authority area.

We recommend the creation of a housing standards monitor for the private rented sector.

We recommend that consideration be given to making the Office for Tenants and Social Landlords the housing standards monitor for the private rented sector in England

We recommend the establishment of a rented accommodation stakeholder board to which representatives of all sides of the private residential rented property sector are appointed in each of England and Wales.

We recommend the development of a single code of housing management practice for landlords in each of England and Wales.

We recommend that the housing standards monitors and the stakeholder boards should be asked to consider the feasibility of the introduction of a national landlords’ registration scheme within their areas.

We recommend that all those who provide letting agency services on a commercial basis should be brought within an appropriate regulatory scheme.

We recommend that the monitors for standards and the stakeholder boards should be asked to develop proposals to encourage the development of alternative methods for dealing with complaints and grievances.

We recommend that the housing standards monitors and stakeholder boards should be asked to develop proposals for piloting a scheme for home condition certification.

We recommend that the housing standards monitors and stakeholder boards should be asked to consider what appropriate and affordable incentives would be necessary to ensure that the proposed programme for the enhancement of voluntary self-regulation is made attractive to landlords.

Interestingly, the Law Commission seems to agree with NetRent.co.uk that there is no need to change the Section 21 notices. The Law Commission says:

“Retaliatory eviction

Although this was not an issue on which we consulted, it is an issue which has attracted a considerable amount of public attention over the last year. The basic idea is that, where a landlord seeks possession against a tenant, but it can be shown that the proceedings were taken against the tenant in retaliation for the tenant making a complaint to or taking some other step against the landlord, for example resulting from poor housing conditions, the landlord would not be entitled to a possession order from a court.

At first sight, this form of legal protection for tenants may seem an attractive idea. We think, however, there are likely to be significant difficulties with it in practice.

(1) Most tenants do not seriously consider taking legal proceedings. The availability of legal provisions to address retaliatory eviction may be of symbolic importance but be of little practical effect.
(2) There would be major evidential problems in establishing that a landlord was bringing possession proceedings solely as retaliation for steps that have been taken against him or her.
(3) Retaliatory eviction does not fit the smart regulation approach we advocate here.
(4) We anticipate that introducing retaliatory eviction could cause considerable disturbance to the private rented sector by introducing a measure whose impact would be unpredictable and uncertain.”

However, we believe that the threat raised by the Citizens Advice Bureau and others remains very real and we ask everyone involved in the lettings industry to sign our Petition Against Changes to Section 21 Notices. Already over 2,100 people have added their names, but we believe that is essential that as many people as possible join with us and sign the Petition.

Landlord Events

Below are some forthcoming Landlord Events. All events listed are open to anyone involved in the lettings industry.If you have an event you wish us to publicise free of charge please contact us at enquiries@netrent.co.uk or ring us on 01352 759988. Please contact the organiser for further information about individual events.


September 2008

Tamworth Landlord Forum
Tuesday 23 September 10am-12:30pm
Venue: Committee Room 1, Marmion House, Lichfield Street, Tamworth B79 7BZ

Swansea Landlords Fayre
Friday 26th September 2008, 1pm to 5pm
Venue: Brangwyn Hall, Swansea
Contact: Housing and Public Health 01792 635600 evh@swansea.gov.uk



October 2008

Darlington Landlord Forum
Tuesday 7 October 1.30pm to 4.30 pm
Venue: Maidendale House, Burnside Road, Darlington DL1 4SU
Contact: David Burrell, Housing Renewal Manager 01325 73410 david.burrell@darlington.gov.uk

Sheffield & District Landlord Trade Fair

Thursday 9 October 2008 1 to 7pm Don Valley Stadium Sheffield, S9 3TL Web: www.sheffield.gov.uk/landlordexpo

or telephone Dennis Tester at Sheffield City Council on 0114 273 5134 rls@sheffield.gov.uk

Manchester Landlord Forum
Thursday 9 October 2008, 9.45am-12.30pm
Venue: Manchester Town Hall, Albert Square, Manchester M60 2LA
Contact: Jayne Baker 0161 231 7101 help_with_private_renting@manchester.gov.uk

Camden Landlord Forum
Thursday 16 October 6.30pm-9pm
Venue: Friends Meeting House, 173 Euston Road. London NW1 2BJ

Cardiff Landlord Forum
Monday 20 October 6pm to 8pm
Venue: Cardiff County Hall, Atlantic Wharf, Cardiff Bay CF10 4UW

Tower Hamlets Landlord Forum
Wednesday 22 October 1:30pm-4.30pm
Venue: Room RR101, Albert Jacobs House, 62 Roman Road London E2 0PG



November 2008

Wrexham Landlord Forum
Thursday 6 November 5pm for 5.30pm
Venue: NEWI, Wrexham

Gloucestershire Landlord Expo
Thursday 27th November 1pm-7pm
Gloucester Rugby Club, Kingsholm, Gloucester
Exhibition with seminars.
NetRent.co.uk will be running a seminar on the Future of Buy-to-Let
Contact: Suzie Phelps 01453 754449 suzie.phelps@stroud.gov.uk

The Citizens Advice Bureau challenge to Section 21 Notices

Last week in this Blog we highlighted the campaign led by the Citizens Advice Bureau (CAB) to significantly alter Section 21 Notices (please see the article below). Under a Section 21 Notice a landlord has the automatic right to repossess their own property. Providing the relevant forms are submitted to the courts correctly the court has to award possession of the property back to the landlord.

It is a vital piece of legislation. It protects the investment that the landlord has made by ensuring that they can always re-claim the property. It has also been the catalyst for the Buy-to-Let boom since the late 1980s, in particular because it enables lenders to offer mortgages safe in the knowledge that they can gain vacant possession should the landlord default on the payments.

As we explained in our last email this situation is now under threat. In a publication called A Tenant’s Dilemma – Warning: Your home is at risk if you dare complain the CAB spell out why they want a change in the legislation.

No-one wants to see tenants evicted by irresponsible landlords, especially vulnerable tenants. NetRent.co.uk would willingly support any scheme that could be proven to stop such evictions. The CAB report would have you believe that evictions by evil landlords are widespread. But just how big is the problem that has caused the CAB to launch this campaign? According to their own report:

“Eviction from an assured
shorthold tenancy is one of the most common
reasons for households becoming statutorily
homeless. In 2006, 10,470 households were
accepted as statutorily homeless by local
authorities following eviction from an assured
shorthold tenancy, accounting for around
13% of all homelessness acceptances (DCLG
homelessness statistics, 2006).”

Whilst not wishing to diminish the impact for any of the people affected, there are around 2.5million privately rented homes in the UK. Therefore, if the CAB statistics are correct this problem affects just 0.41% of tenancies in the UK.

The implication from the CAB report is that every one of the 10,470 made homeless following eviction is the victim of unscrupulous landlords. They make no distinction between ‘landlords from hell’ and ‘tenants from hell’. It is totally unfair to assume that every eviction is due to vindictive landlords.

We have been flooded with emails and phone calls into our office since we launched our Petition Against Changes to Section 21. Landlord after landlord has told us about their experiences with ‘tenants from hell’. The CAB report makes no reference to this and the reader is left with the impression that a huge social problem lies squarely with landlords victimising helpless tenants.

The CAB’s focus is on retaliatory eviction. So how widespread is retaliatory eviction? According to the CAB report 129 Environmental Health Offices responded to their questionnaire. Asked whether tenants were deterred from asking for help in case of retaliatory action the CAB state:

“Forty eight per cent of respondents said this happened
always or often.”

Actually, according to the CAB’s own report, just 2% said this always happens, 46% said it often happens and the majority, 54%, said that it sometimes happens. There are no statistics to back up these claims just the ‘gut feelings’ of 129 Environmental Health Officers (EHOs), 67 of whom said that they believe the problem ‘sometimes happens’. Less than 3 of the EHOs they questioned believed that landlords always issue retaliatory Section 21 notices against tenants. Based on this evidence the CAB feel confident enough to call their report Warning: Your home is at risk if you dare complain.

Nowhere in the CAB report did they question landlords about why landlords seek repossession under Section 21. They claim that they spoke to landlords but they conducted no survey they were prepared to publish. I suspect that the CAB knows why landlords usually issue Section 21 Notices, but it doesn’t serve their purpose to highlight the reality that far more landlords have problems with tenants than tenants have problems with landlords.

What the CAB report singularly fails to do is offer any sort of balanced view of the use of Section 21 Notices. The report is peppered with provocative images of tenants living in squalor. The title itself is inflammatory Warning: Your home is at risk if you dare complain hardly gets the report off to a balanced start. Imagine the outcry there would quite rightly be if landlords published a report called Warning: Your home is at risk if you let it to DSS tenants.

We all know that some landlords don’t care about their properties or their tenants. We also know that some tenants have no respect for the landlord’s property, but that isn’t even mentioned in the CAB report. To tarnish all landlords with an imaginary brush in order to deal with this problem should weaken the CABs claims. However, if landlords do nothing they will get away with this unwarranted attack.

As we said in the previous post on this Blog, the implications of a change in Section 21 Notices are huge. We are currently discussing these implications with landlords, tenants, lenders and others in order to present a full picture. We will report our findings shortly on this Blog.

Meanwhile, we ask landlords to join us and help prevent any changes to Section 21 Notices before a full, frank and open debate has taken place. To do this please sign our Petition Against Changes to Section 21. Please also tell other landlords about this petition.

So far just 2 landlords have contacted us to tell us that they do not support the aims of our petition, whilst nearly 1,300 have already signed. We believe that unless landlords act now and in great numbers the CAB and others are likely to push through changes to Section 21 Notices that would adversely affect landlords, tenants and potentially the whole UK housing market.

Please sign the Petition Against Changes to Section 21 Notices

Win £1million of property for just £25

A landlord has decided to raffle his £1million portfolio to just 88,888 entrants in a novel competition.

Avtar Chagger's website PropertyCompetition.com has full details of the competition where one lucky ticket will win property in Leicester, Birmingham and Aldershot with a rental income of £3,500 per month. At the same Avtar will be making substantial donations to various charities.

Good luck to all those who enter.

The Law Commission - Encouraging Responsible Letting

The Law Commission recently published their final report on housing. The recommendations made in the report could be become law as early as next year. Their press release reads:


The report, Housing: Encouraging Responsible Letting, follows wide consultation with both landlords and tenants. It focuses on improving the overall coherence and stability of the current private rental framework in a cost-effective way.

Based on the principles of smart regulation, the Commission recommends a programme of staged reforms designed to promote self-regulation and enhance voluntary initiatives already in place in England and Wales. The proposals include

Creating a housing standards monitor (for each of England and Wales) for the private rented sector

Establishing an associated stakeholder board to which representatives of all sides of the private residential rented property sector are appointed

Developing a single code of housing management practice for landlord

Making landlord accreditation schemes available in every local authority area

Launching a pilot programme for home condition certificates

The Commission proposes that independent evaluation and development of appropriate incentives to make the programme attractive to landlords should supplement these initiatives.

Professor Martin Partington, who was the Commission’s Special Consultant on Housing Law in charge of the project, said

“Too much privately rented property is in a poor condition and poorly managed: the law does not operate as Parliament intended. An increasing number of people are deciding to rent in the current economic climate making it more important than ever that the private rented sector takes its place effectively in the housing market.

“The recommendations in our report are aimed at benefiting both landlords and tenants by enabling them to use existing legal processes more productively thereby more fully realising the intended impact of housing legislation. Implementation of these reforms would not only improve rental conditions for tenants, but also help to build the reputation and professionalism of landlords. More broadly, it would encourage institutional investment in the provision of rental accommodation, enhancing the important role of this sector in the wider economy.”

For more information click here The Law Commission Report.

A Bigger Threat to Landlords than the Credit Crunch

If campaigners from the Citizens Advice Bureau get their way Buy-to-Let could face it’s biggest challenge since Assured Shorthold Tenancies came into being in the 1980s.

When the Housing Act 1988 came into being it gave landlords the right to obtain vacant possession of their property under Section 21. The ability to obtain vacant possession automatically was crucial to lenders entering the Buy-to-Let market and was the key to the huge rise in the number of landlords.

The Citizens Advice Bureau (CAB) along with others like some MPs, Shelter, the Chartered Institute of Environmental Health and tenants associations are now pressurising Government to significantly water down Section 21.

Debbie Crew from CAB Merseyside, who won the Sheila McKechnie campaigning award for Consumer Action for her work on retaliatory eviction, said “we want a change in the law ….by putting restrictions on the use of Section 21”.

David Harker, Chief Executive CAB, offered support saying “a change in the law would end the misery endured by many vulnerable people”.

Adam Sampson, Chief Executive of Shelter, added his weight saying “Shelter strongly supports this campaign”.

The Citizens Advice Bureau claims to have spoken to 198 local authority environmental health officers and have arrived at the conclusion that “98% of those questioned said they agreed that legislative changes concerning Section 21 needed to be made”. A Chartered Institute of Environmental Health statement said “(the CIEH) is happy to support the recommendations”.

Since the CAB campaign started they have been joined by some political heavyweights. South Shields MP David Miliband and his Jarrow counterpart Stephen Hepburn have offered their support to the campaign. They are both writing to Housing Minister Evette Cooper and Hazel Blairs, Secretary of State for Communities and Local Government, to raise their concerns.

The reality is that this campaign is gaining strength and landlords ignore it at their peril. We believe that if Section 21 is in any way weakened then lenders will start to pull out of the market. The result of that will be that landlords will start to sell and the number of rented properties will drop significantly. Landlords may find that they are trying to sell property in a depressed market and it could cost them a fortune.

If that happens it is not difficult to imagine a situation where the whole Buy-to-Let market could implode with thousands of landlords trying desperately to sell their properties.

Those who say it will never happen probably said the same thing about HMO licensing, tenant deposit schemes and Energy Performance Certificates. All of these changes came about because of pressure from organisations like CAB and Shelter. The fact is that the CAB and Shelter are highly skilled at campaigning. Can the same be said of landlords?

There are over 800,000 private landlords in the UK and probably less than 30,000 belong to any landlords organisation. The fact is that landlords struggle to compete with the organisational and campaigning skills of Citizens Advice, Shelter and similar bodies.

We believe that landlords must take a stand – in fact we believe that a change in Section 21 will affect the whole industry, landlords, letting agents and tenants alike.

NetRent.co.uk has started an on-line petition against any negative changes to Section 21. We strongly urge everyone in the lettings industry to join us and sign this petition now.

Act now, sign the petition and help us in this fight to protect the fundamental right of landlords to own and manage their own property.