Welcome to another Newsround, let’s see what has been happening in the housing news this week.
Huge fine increases for failures in Right to Rent checks
A law firm is predicting that some landlords could face bankruptcy due to the government increasing fines if they are found to have let their property to unauthorised migrants. Landlords could face penalties up to £5000.00 per lodger and £10,000.00 per occupier for a first breach, this is up from £80 and £1000.00 respectively. These new fines come into force from January 2024.
Repeat breaches rise to a staggering £10,000.00 per lodger and £20,000.00 per occupier.
Gary Scott, a partner at Spector Constant & Williams says
This announcement is a further nail in the coffin for amateur landlords. The expectation seems to be that landlords should somehow become a branch of the Border Force.
He goes onto to say
Landlords, especially those with four or fewer properties and which make up over 50% of the total number of rented flats in the private rented sector, are not equipped or trained to carry out the role of a Border Force agent. The additional burdens on landlords brought in by the Government have already driven many from the market and this measure is likely to see many more follow suit.
This is also a potential peril for letting agents who do these checks on behalf of landlords.
According to Robert Jenrick, Immigration minister, since 2018 landlords have been given over 320 civil penalties to the value of £215,500 when the Right to Rent rules were first introduced. He says
Unscrupulous landlords and employers who allow illegal working and renting enable the business model of the evil people smugglers to continue.
He further adds
Increasing fines will deter employers and landlords from engaging in these illegal and dangerous practices, further deterring people from attempting to come to the UK illegally.
A warning to small portfolio landlords who cannot afford to get this wrong. We wrote a post about this here.
Propertymark’s appeal to Chancellor
Following the recent debacle from banks closing accounts, Propertymark’s Chief Exec Nathan Emmerson, has written to The Chancellor, Jeremy Hunt to highlight the issues that letting agents have with pooled client accounts because of their risk with non-compliance to anti-money laundering regulations.
Propertymark perceives that this could be due to lack of understanding on the banks part on how letting agents can legally operate in holding clients’ money in an account that is both authorised by the Financial Conduct Authority and also complies with the Money Laundering and Terrorist Financing Regulations.
Nathan Emmerson writes
Banks are taking the stance to de-risk themselves to a point where they are refusing to open new client accounts or maintain existing accounts, some of which have been open for decades without issue. The decisions behind which agents have been allowed to keep their accounts has often been made at the local branch-level, with some banks being less willing to allow agents to keep their accounts than others. This has made it difficult to establish a consistent approach across all bank branches.
The removal of undesignated client accounts poses a serious threat to an agent’s business. It is not uncommon for letting agents to manage hundreds of properties, yet many banks have now requested the agent hold an individual account per property. Even if banks allow the agent to hold that number of individual accounts (which is not guaranteed), it is infeasible to manage that many accounts.
He goes on to say that more action is needed from the government to ensure banks understand the legal obligations of letting agents.
Interestingly, we highlighted the same issue in one of our blog posts back in 2020. The issue has clearly not gone away.
Incentivise EPC improvements
A think tank called E3G involving some high street building societies, and also the NRLA, has written to the government saying that there must be some incentives given to landlords to improve the energy efficiency in their rented homes. According to them, one in four rental homes is in need of energy-efficient improvements. They say that there needs to be
Simple tax restructuring to allow energy performance management to be offset against rental income could help make investment more attractive for landlords.
Further, they say that the Autumn Statement by the Chancellor in November would be the time to announce some incentives.
NRLA, Ben Beadle chief executive, backs their initiative and says
We all want to see rental properties become as energy efficient as possible, but it is crucial that government sets out a clear strategy and realistic time frame on how landlords can make this happen. Ministers must assemble a clear, workable financial package to give landlords confidence and clarity as a matter of urgency.
You can read their letter to the Chancellor of the Exchequer here.
Younger tenants forego contents insurance
Go Compare has analysed house insurance data and claims that only a third of tenants and other residents under the age of 30 have contents cover for their belongings, their primary reason being that they say that they did not think that they would need it. The other most cited reason for 31% was the cost, and that it was too expensive.
It seems the younger you are the less of the desire to cover your contents with 82% of 18 to 24 year olds not having any contents insurance, and 46% of 25 to 34 years old not either but their reason was simple forgetfulness!
Snippets
Landlord wins praise for offering ‘only locals’ affordable property in town
Northern council prepares planning crackdown against HMO conversions
Complaints about lettings agents go through the roof
Braverman accused of using landlords to do her dirty work
Give councils cash to buy homes off private landlords – call
HMRC pushes up late payment charges for landlords
Company expelled from The Property Ombudsman owing landlord 10k – but appears to still be trading
Student landlords to face turmoil for several years, predicts guarantor firm
At last! Mainstream media support for landlords
Newsround will be back next week.