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RLA find errors in wording of proposed deregulation act

RLA find errors in wording of proposed deregulation act

RLA Find Serious Drafting Error In Rented Housing Regulations Of Proposed Deregulation Bill

The Residential Landlords Association (RLA) have called on the Government to delay the implementation of the proposed Deregulation Act after they found errors in the wording of the document that would expose private rental sector landlords to a legal minefield.

The RLA published the following on their newshub

A major drafting error in Government regulations affecting the private rented sector risks undermining confidence in new legislation being applied to the sector.

The Deregulation Act, passed prior to the General Election, provides Ministers with the power to introduce a new standard form for landlords to complete and provide to a tenant when seeking to regain possession of a property on a no fault basis, known as a Section 21 notice.

With the form due to become legally binding from the 1st October, the Residential Landlords Association (RLA) has written to the Housing Minister, Brandon Lewis MP, to seek a delay following the revelation of a serious drafting error.

The standard form, as currently drafted, notes that where a fixed term tenancy ends and then turns into a rolling or periodic tenancy the Section 21 notice would only be valid for four months from the date that it is served on the tenant*.

This contradicts the Deregulation Act, which makes clear that the required period to regain possession of a property where a tenancy is a rolling or periodic tenancy, should instead be four months from the date the Section 21 notice expires**.

Despite having engaged thoroughly with the Government on its proposals, the final version of the standard form, published last week, had not been shown to the RLA.

The RLA is warning that the drafting exposes landlords to a legal minefield, and is calling for the implementation of the plans to be delayed to give more time to get them right.

RLA policy director, David Smith, said “The RLA continues to share the Government’s ambitions to ensure that all landlords understand and properly implement their legal responsibilities and obligations. In light of the major changes being introduced for the sector it is vital that all documents published by the Government are clearly understood. This drafting error will serve only to dent the confidence of landlords in the legislation. Whilst Ministers are understandably eager not to let these new measures drift, it would make more sense not to rush their implementation than face the potential legal difficulties that will now arise for landlords.”

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UK Property Investment Increases 8% In A Year

UK Property Investment Increases 8% In A Year

UK Property Investments Rise By 8% During 2014

UK property investment is booming again, thanks in part to the Government changes to the way pensions are controlled. The changes allow interested property investors to release pension funds for property purchases early, because bricks and mortar continue to offer a greater return than pension funds currently provide.

Property investment in the UK is becoming even more popular with the number of property investors increasing by 8% during the past year, according to data recently released by letting agent, Ludlow Thompson, with landlord numbers rising to approximately 1.63 million controlling approximately 3.1 million private rental sector (PRS) properties in the UK. 

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Mortgage Market Review Regulations Will Slow Property Transactions

Mortgage Market Review Regulations Will Slow Property Transactions

New Mortgage Rules Will Slow Down
UK Property Transactions

65,500 property purchases were approved by mortgage lenders in March 2014, showing the second successive monthly drop in the number of property transactions as mainstream mortgage lenders implement stricter rules which will be rolled out fully at the end of April 2014.

The figures for March were 7% lower than the 70,309 mortgage approvals recorded in February 2014.

The recent falls in the number of mortgage approvals are a stark contrast to the 11 months of continuous improvements which saw average monthly lending levels increase from 52,537 to 76,753 between February 2013 and January 2014.

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New Report Backs Welfare Reforms

New Report Backs Welfare Reforms

Research from an independent consortium led by the Centre for Regional Economic and Social Research (CRESR) at Sheffield Hallam University covering the impact of recent Housing Benefit reform in the private rented sector was published on Monday 13th May.

The report examined the attitudes of tenant claimants and private rented sector buy-to-let landlords in 19 areas across the UK, following the Housing Benefit and Welfare Reforms that were ordered by the coalition Government in April 2011.

Lord Freud, minister for welfare reform said:”Reform of Housing Benefit in the private rented sector was absolutely necessary to control a system that saw spending double over a decade to more than £20 Billion (GBP) a year. However, it is also necessary to monitor and follow the reforms to help us build and learn for the future”.

Ian Cole, Professor of Housing Studies at the Centre for Regional Economic and Social Research (CRESR), said:”This report provides findings from in-depth interviews undertaken with tenant claimants, landlords and housing advisors in early stages of the implementation of the reforms.

The CRESR also conducted separate analysis of all UK Housing Benefit claims to provide an insight to the initial impacts of the welfare reforms across the UK.

The CRESR report finds:

  • Large numbers of tenants claiming benefits have not been forced to move out of rental properties during the study
  • In 120 UK local authority areas, overall reductions to a tenant’s Housing Benefit / Local Housing Allowance (LHA) have been averaged at £5 (GBP) or less
  • The extra £130 Million (GBP) of support from the Department of Work and Pensions (DWP) to local authorities to help tenant claimants with Discretionary Housing Payment (DHP) has assisted tenant claimants well where Housing Benefit / LHA reductions have been greater than the national average.

The consortium is led by Ian Cole, Professor of Housing Studies, from the Centre for Regional Economic and Social Research (CRESR) at Sheffield Hallam University. Other key team members included Peter Kemp of Oxford Institute of Social Policy, Carl Emmerson of the Institute for Fiscal Studies (IFS) and Ben Marshall from IPSOS-MORI.

The Centre for Regional Economic and Social Research (CRESR) at Sheffield Hallam University is one of the UK’s leading academic research centres specialising in social and economic regeneration, housing and labour market analysis.

The consortium’s research started in April 2011 and will run until this Autumn (2013) and covers the effects of:

  • Setting Local Housing Allowance (LHA) rates from the median to the 30th percentile of local market rents from April 2011
  • Capping Local Housing Allowance rates by property size from April 2011 to:
    • £250 per week for 1 bed
    • £290 per week for two bed
    • £340 per week for three bed
    • £400 per week for four bed or more
  • The increased Government contribution to the Discretionary Housing Payment (DHP) budget
  • Increased powers of local authorities to make direct payments to landlords to support tenant claimants in order to retain and secure tenancies in the private rental sector.
  • Allowing an additional bedroom within the size criteria used to assess Housing Benefit claims in the Private Rented Sector where a disabled person, or someone with a long-term health condition, has a proven need for overnight care and it is provided by a non-resident carer who requires a bedroom.

The full research ‘Monitoring the impact of changes to the Local Housing Allowance system of Housing Benefit: Interim report’ is available here: Monitoring the impact of changes to the Local Housing Allowance system of Housing Benefit: Interim report

The Scottish Government along with the Department of Communities and Local Government (CLG) and Welsh Assembly Government are working in close partnership with the DWP and each contributing to the costs of the review.

Further CRESR reports are expected to be published in early 2014.

The ‘Bedroom Tax’ – Under Occupancy Ruling

Changes will be made to Housing Benefit under the UK Government’s Welfare reforms which will come into effect from 1 April 2013 which will mean tenants claiming benefits will receive less benefit towards the cost of the rent.

If there is one spare bedroom in the rental property then the Housing Benefit will be cut by 14% of the cost of the rent. If there are 2 spare bedrooms then the Housing Benefit will be cut by 25% of the cost of the rent.

The new bedroom tax rules mean that tenants in social housing will see their benefit cut if they have spare rooms. These rules even apply to those not on benefit, they will now face charges of around £13 for one spare room and £22 for 2 rooms.

Under the new government rules, one bedroom is allocated for:

  • A couple.
  • A person who is not a child (aged 16 and over).
  • 2 children of the same sex up to the age of 16.
  • 2 children who are under 10.
  • Any other child, (other than a foster child or child whose main home is elsewhere).
  • A carer (or group of carers) providing overnight care.

What it could mean for your tenants

If your tenants are affected by these changes and their Housing Benefit doesn’t cover the cost of the rent, the tenant is expected and legally obliged to pay their landlord the balance.

These welfare reforms will instantly affect social housing tenants, however, private rental sector (PRS) tenants won’t be affected by this change at the present time, but it will happen.

Use the link to the welfare reform calculator to see how your tenants could be affected – Welfare reform calculator

Preparing your tenants for the changes

As a landlord you may wish for your tenants to consider:

  • Talking to you – Re-negotiate a rent reduction to a level which is more affordable
  • Opening a Credit Union account so that rental payments can be made automatically without the tenant having full access to the whole proportion of their benefit payments.
  • Get a job to replace their benefit income.

Housing Benefit will be paid direct to people of working age through Universal Credit. This means that they will have to make arrangements to pay the full rent on time every month directly to their landlord.

This will start in October 2013 for all new claims, with existing claimants being moved onto ‘Universal Credit’ from April 2014.

Universal Credit is a new means-test benefit for working age people. It will be a monthly payment paid into a household bank account that will be generally phased in from October 2013, however this will be trialed by certain local authorities including the City of Salford from April 1st 2013. It will first be introduced for new claimants and for people whose circumstances have changed resulting in a change to their benefits.

It will replace lots of benefits that your tenants may currently receive, including: Housing Benefit, Local Housing Allowance, Working Tax Credit, Child Tax Credit, Income Support, Income based Jobseeker’s Allowance and Income-related Employment and Support Allowance.

How It Will Affect Your Tenants

When the changes affect your tenants:

  • Tenants may receive less benefits resulting in a shortfall in income leading to financial struggles.
  • Tenants will be paid benefits on a monthly basis, direct to their bank account.
  • Universal Credit payments will include the Housing Benefit payment which will be paid directly to them even if they are still in rent arrears or are considered vulnerable
  • There may be a risk of tenant rent default and this needs to be watched out for and action should be taken  to recover the rent immediately.

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