Housing : Social Tenants / BTL & HB Problems / Shortages / Grenfell Tower Fallout

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Letting fees ban is good news for tenants – but beware a backlash.

Renters could save about £272 on average from June, but agents may seek to claw cash back.



It may be a little chilly for dancing in the streets, but those who rent their home have had two things to celebrate in January.

The first was official data showing that average rents rose by just 1% in 2018, a fraction of the 2.5% seen in the pre-Brexit days of 2015.

Renters have been beneficiaries of uncertainty, which has had a cooling effect on the property market and forced landlords to rein in rent increases. But there was more tangibly good news from the House of Lords, which approved the government’s much-delayed plan to limit charges landlords and letting agents can levy on tenants in England.

More than two years after the tenant fees bill was proposed by the chancellor, it is finally due to become law this summer.

While it will only apply to tenancy agreements signed after the start of June, the savings for tenants will be immediate and substantial.

Landlords and their agents will be banned from charging tenants for credit checks, inventories and references. At an average cost of £272 per person, such red tape can be eye-wateringly expensive; especially since it often comes at the start of a tenancy, when tenants also have to pay a deposit and their first month’s rent in advance.

Most galling of all, these checks serve the interests of two sets of people, neither of them the tenants.

While some fees provide reassurance to landlords, others – such as spurious charges for drawing up “cut and paste” tenancy agreements – merely line the pockets of letting agents.

The fees are a symptom of a system which is tilted in favour of property owners and their agents, rather than tenants. Take credit checks for example. Landlords, quite understandably, like to know a would-be tenant’s credit history. But letting agents like to charge applicants, rather than landlords, for the privilege. Running an online credit check can cost just a few pounds, yet many agents charge more than £50.

So good riddance to such egregious charges – it’s just a shame that it has taken so long for the ban to come into force.

Unsurprisingly, the bill has faced fierce opposition from landlords and letting agents, and with so much parliamentary time taken up by Brexit, its passage through Westminster has been glacial. Even though its lobbying has ultimately failed to block it, the industry has had plenty of time to prepare for the ban – and no-one expects it to take the new rules lying down.

The new law is detailed and specific, capping deposits and banning many of the most common charges. But there are a couple of loopholes: agents will still be able to penalise tenants if they pay their rent late or lose their keys, so anyone who makes that mistake can expect to be hit hard.

The timing of the ban is particularly awkward for lettings professionals. It is an industry built on volume – it needs a steady throughput of new tenancies to keep the money coming in. The current slowdown in the market, and the slowing pace of rent increases, are already squeezing margins.

That’s why the fees are so valuable. In an ironic twist, many were introduced by struggling agents a decade ago during the property crash; now, once again, they’re a crucial revenue stream.

Once the bill becomes law, agents will face a tough choice – take the hit or charge landlords more. Neither is particularly attractive, as the sluggish market means there is intense competition for landlords’ business, and raising fees more than a rival could lose valuable clients.

The pressure will be particularly acute on the high street where agents have higher overheads than their online rivals. There are about 16,000 branches around the country, many single-office operations which could be forced to merge with rivals to survive. Even the bigger agents, listed on the stock market, will face pressure from shareholders over what they are doing to protect their profit margins.

In the longer term, agents will have little choice but to find ways to recoup their lost income. Charging landlords a higher commission to find tenants and manage properties is an obvious starting point, but they could also do to property owners what they did to renters a decade ago – introduce new admin fees.

But as the whole thing comes full circle, tenants should be wary of schadenfreude – as landlords are likely to respond to their additional costs by putting up rents.
Housebuilders to pay record £ 2.6 BILLION to investors – despite housing shortage.



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The staggering amount to be handed out mainly to City investors in 2019 – largely as a result of taxpayer-funded schemes – is enough to build 11,400 houses.

It is vastly higher than the £50 million paid out in 2012 – a year before the controversial Help to Buy scheme was launched.

Critics say the scheme, launched by George Osborne when he was Chancellor, has fuelled house price rises, boosting the profits of builders who now have so much spare cash they have heavily ramped up returns to shareholders – often in the form of 'special dividends' – rather than building extra homes.


Greg Beales, of housing charity Shelter, said: 'Piecemeal schemes such as Help to Buy have made the situation worse by inflating house prices – while doing next to nothing to help those most in need.'

Reuben Young, of campaign group PricedOut, said: 'Private developers are able to make huge profits while not delivering at the pace we need because successive governments have created a system in which builders build homes only as fast as they can be bought up without reducing prices.'




Yet fewer than 230,000 new homes have been built in each of the past ten years, well below the Government's 300,000 target.

Research by Heriot-Watt University last year said England needed nearly 4 million homes to deal with the growing housing crisis – or 340,000 a year until 2031.



Crisis ... what crisis ?

Back to 1975 Supertramp !
The Great Leasehold Betrayal: Minister REFUSES to crack down on toxic contracts and blames buyers for being too " Excited " to read small print properly - as families reveal they are trapped in " Nightmare " houses that are unsellable.

MP Heather Wheeler dismissed claims of mis-selling in toxic leasehold deals.

Appeared to play down number affected saying it could be 12,000 not 100,000.

She said she would prefer to rely on developers and property companies voluntarily giving families better terms than setting new legislation.



CAVEAT EMPTOR !!!

( If home buyers AND their solicitors did their homework , none of these toxic properties would have been sold !!! )

Not the first , or last , time this Issue will be featured on this thread.

A scandal that could quite easily have been avoided by a change in the Law relating to leasehold interests in property.

There again , WHO is benefiting ???

Follow the money !!!
What a surprise ?

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Half of councils expected to miss housebuilding targets.

National Audit Office report concludes planning system in England is " Not working well. "

Targets for new homes are likely to be missed by half of England’s local authorities, according to a damning assessment of the government’s housing strategy, while increasingly profitable building companies are getting away with paying less for infrastructure and more than half of councils have failed to draw up adequate plans to solve the housing crisis.

The National Audit Office (NAO) concludes that the planning system in England is “not working well” and says councils are struggling to negotiate successfully with developers, leaving swaths of the country vulnerable to either housing shortages or situations where the wrong homes are built in the wrong places. Since 2010 there has been an almost 40% real-terms cut in spending on planners, according to the public spending watchdog.

The NAO report follows claims from Conservative ministers that housebuilding is a top policy priority and that by the mid-2020s the rate will increase to 300,000 new homes a year. Between 2005-06 and 2017-18 the housebuilding rate has averaged 177,000 a year and the annual number has never exceeded 224,000.

Separately, a study by the National Housing Federation (NHF) has found that an estimated 1.3 million children are living in poverty in privately rented homes in England, an increase of 69% since 2008. Its report says 242,753 of these children would not be living in poverty if they had access to social housing as their parents would be paying lower rents.

Kate Henderson, the NHF’s chief executive, said: “It is a disgrace that in one of the wealthiest countries in the world we cannot provide our children with a secure and affordable home. The critical lack of social housing is pushing more and more families into poverty by forcing them into insecure privately rented homes they cannot afford.”

The NAO report cites research by a planning and development consultancy, Lichfields, which found that in 2020 about 50% of local authorities are likely to fail the test for building enough homes and could face penalties, including giving developers in those areas greater freedoms regarding where they can build.

The report says only 44.1% of local authorities had up-to-date plans setting out how they could meet the need for new homes.

Government figures show that while the average contributions agreed with developers for public infrastructure such as schools, health centres, roads and social housing remained at about £19,000 per new home between 2012 and 2017, average house prices increased by 31% in that period. The top five developers’ average operating profit margin increased from about 12% to 21%.

Only 47% of local authorities had implemented a community infrastructure levy, intended to raise money from developers. The Ministry of Housing, Communities and Local Government told the NAO that town halls may not have the commercial and negotiating skills needed to deal with developers’ arguments on viability and that some were unable to negotiate effectively.

The report also found that planning appeals were taking longer and between 2010-11 and 2017-18 there was a 37.9% real-terms fall in net expenditure on planning functions.

Kit Malthouse, the housing minister, said he recognised the challenges identified by the NAO. “Over the last three decades, governments of all stripes have built too few homes of all types,” he said, adding that the figure of 220,000 homes built in 2017-18 was higher than in all but one of the last 31 years.

“We’re conducting independent reviews on build-out rates and planning inquiries,” he said. “And through multibillion-pound funding, planning reforms and giving councils the freedom to borrow more to build homes, we’re helping to make the housing market work for everyone.”
Renters to be given right to SUE landlords for cold or mouldy homes.

The Homes (Fitness for Human Habitation) Act comes into affect on March 20.

It will mean tenants can take their landlord to court over cold and mouldy homes.

It is hoped the new regulations will force landlords to carry out repairs in homes.



Mmmm ... any reader one step ahead of what will happen in the real world once this one hits the Statute book ???

History is against the real problem being tackled ... Rent Act ,1957 , aftermatn a prime example !
Taxpayers continue to fund purchase of toxic leasehold homes through Help to Buy, ministers admit.


Nothing will be done to stop taxpayer cash being used to buy toxic leasehold houses for at least two years, ministers have admitted.

Hundreds of the controversial properties are still bought every month using state money loaned to customers through Help to Buy, official figures show.

The practice continues despite an outcry over unfair terms in many lease contracts for new homes – but ministers are refusing to take prompt action.

It means taxpayers are directly supporting the sale of leasehold homes with cash that goes straight into the pockets of developers.

As many as 100,000 families have been hit with exorbitant lease costs, including ground rents that double and hidden charges for having pets or building conservatories.



FOLLOW THE MONEY ... FREEHOLDERS ... THEREIN YOU'LL FIND THE ANSWER AS TO WHO IS PRECISELY BENEFITING
AT OUR , THE TAXPAYERS , EXPENSE !

ONCE YOU'VE UNCOVERED THE LAYERS OF COMPANIES AND FUND MANAGERS TO REVEAL THE TRUE BENEFICIAL OWNERS !
Persimmon " Faces losing its right to sell homes in the Help to Buy scheme " as it gets set to report £1 billion profit.

James Brokenshire reviewing Persimmon's participation in government scheme.

The housebuilder giant is set to become the first to report a profit of £1 billion.

Help to Buy was introduced in 2013 by the then chancellor George Osborne.



A source close to Mr Brokenshire told The Times that the housing secretary was 'concerned' about Persimmon's behaviour in the last year.

They said: 'James has become increasingly concerned by the behaviour of Persimmon in the last 12 months.

'Leasehold, build quality, their leadership seemingly not getting they're accountable to their customers are all points that have been raised by the secretary of state privately.

Given the contracts for the 2021 extension to Help to Buy are being reviewed shortly it would be surprising if Persimmon's approach wasn't a point of discussion.'

The source added: 'James is clear any new government funding scheme will not support the unjustified use of leasehold for new homes, including Help to Buy.'

Clive Betts, the Labour MP and chairman of the housing, communities and local government select committee, said Persimmons behaviour has been 'questionable'.

He told The Times: 'Help to Buy has clearly been the prime driver of Persimmon's profits.

'Companies are there to make money but they should behave responsibly as well.

'Some of Persimmon's practices have been questionable to say the least.

'I think most ordinary people will be outraged by this.

'My personal view would be that if government wants to help solve the housing crisis, it will have to put more money into helping build homes that people can afford to rent.'
Flat owners win battle to get combustible cladding replaced.

Freeholder Pemberstone says new fund is being set up to cover two Manchester blocks.


Owners of flats in Manchester that are covered in combustible cladding are celebrating after the success of a campaign to force the building’s owner or developer to pay the estimated £5m bill to replace them.

Leaseholders of apartments at Vallea Court and Cypress Place in the city centre have been told by their freeholder, Pemberstone, that the recladding bill, plus their legal costs and the cost of a 24-hour walking watch, will be met by a new fund. They were each facing a bill of about £20,000.

“We absolutely can’t believe it,” said Fran Reddington, one of the residents. “It has been a huge burden. We know we still live in a dangerous building but now we have the funds they can start work. This should give hope to other people in the same situation. It should put pressure on other developers.”

The residents have been battling for 20 months to make their homes safe following the Grenfell Tower disaster after it emerged that the buildings they lived in, which had been developed by Lendlease, used similar aluminium composite panels and combustible insulation.

They are just two of the 197 private residential buildings in England more than 18m tall still wrapped in ACM cladding, which has been banned by ministers for safety reasons on new high-rise homes. Only seven tall private blocks have been fully repaired as legal disputes rumble on between freeholders, who are often large investment funds, and leaseholders about who has the moral and legal responsibility to pay bills that on some blocks are estimated at £40m.

Many freeholders appear to have ignored warnings from the housing secretary, James Brokenshire, that they should “take action now, or face enforcement action from their council”. He announced in November that councils would be able to step in, carry out works and recoup the costs, but councils have complained that he has not made any money available.

Leaseholders at the Northpoint building in Bromley in south London are still each facing £70,000 bills to replace combustible cladding in a situation they describe as “absolutely desperate”. The freeholder is Citistead, a company owned by the family trust of the property mogul Vincent Tchenguiz and it is declining to pay.

Brokenshire last month told leaseholders that he had warned Citistead and the builder Taylor Wimpey that he expected them to fund the work. But Colin Smith, the Conservative leader of Bromley council, has told Brokenshire that is not enough and said his announcement of council powers had raised expectations “without solutions being in place to deliver them”.

The 342 leaseholders of the two blocks in Manchester had been defeated at a property tribunal where the terms of the contract were interpreted as leaving them responsible not only for the recladding bill, but the walking watch and the legal costs of the freeholder.

“We never gave up,” said Reddington. “Every other day we have been public with this. We went down all sorts of different avenues and were getting nowhere. What if we did nothing? We would have been stuck.”

In a letter to leaseholders, Pemberstone acknowledged that the cladding had been “a source of worry and financial concern” and said works are likely to start in the summer and conclude in early 2020.

The cladding panels, which are filled with combustible material, will be replaced with solid aluminium panels.
Private flat owners start campaign over Grenfell-style cladding.

Homeowners want freeholders to pay costs of removing fire-risk cladding from tower blocks.



Scared homeowners living in tower blocks covered in Grenfell-style cladding are launching a national campaign demanding urgent action to make their homes safe.

Amid growing anger that too little is being done to guarantee the safety of tens of thousands of people living in private flats, leaseholders in London, Leeds, Sheffield and Manchester have established the UK Cladding Action Group.

Only 10 of the 173 private buildings discovered with combustible cladding have been fixed while rows rumble on over who should foot a repair bill expected to rise well beyond £500m.

In isolated cases, freeholders and developers have offered to pay, but far more often they are refusing and, 20 months after the Grenfell Tower fire claimed 72 lives, are defying the housing secretary, James Brokenshire, who insists it is their responsibility.

The launch of the national campaign reflects a sharp contrast in how private and social housing is being fixed. Similar cladding to that which helped spread the fire at Grenfell has been used on 433 high-rise residential and public buildings in England. Of the affected council and housing association blocks, 79% have works under way or have been fixed compared with 11% of the private towers, according to figures published last week. The government has set aside £400m to fix social housing, but nothing for private homes, the freeholds of which are often held by investors and offshore companies.


“This affects a huge number of people and is extremely stressful,” said Rachel Loudain, 30, a business analyst who owns one of the 87 apartments in Victoria Wharf in Bethnal Green that features the now banned cladding. She said the main strain on her was fear of a fire starting, but added: “You can’t sell, you can’t remortgage because the flat is essentially worthless. It’s like being stuck in a prison.
William Martin, 30, a leaseholder at the Metis building in Sheffield facing a bill of up to £40,000, described the situation as “disgusting”.

“There shouldn’t even be one building still with cladding on,” he said. “We are nearly two years on since Grenfell. Can you imagine if my building or one of the others went up in flames?”

Most leases hold the leaseholders rather than the freeholders legally responsible for the works, but because the bills are so high few have the money to pay for works and buildings are left at risk.

Loudain’s local council, Tower Hamlets, has said it will issue enforcement notices to the freeholder and the management company, ordering them to fix the cladding. But leaseholders have already been told those costs will be passed on to them within months. They are likely to total at least £5m – a minimum £57,000 per apartment.

Ritu Saha, a resident at Northpoint in Bromley where residents have fallen sick with stress and face £70,000 bills, said: “There doesn’t appear to be any end in sight for us. Our only hope is to get together and coordinate our efforts, so that the government and local authorities cannot ignore us any longer.”

The government has so far refused to publish a list of affected private buildings, citing arson fears, so the campaign wants other leaseholders to get in touch. It will call for new legislation to stop costs being passed on to leaseholders and to make public money available when freeholders won’t pay.

Saha said government attempts to “get developers and freeholders to do the right thing” are failing. “The reality is, the government needs to make funding available to public authorities,” she said.

In a letter last month, Brokenshire told Saha it was his “strong expectation” that leaseholders should not have to pay and said he had written to the freeholder and developer to make clear they should fund the work.

However, nine days later, the freeholder’s agents wrote to leaseholders saying it was down to them to remove and replace the aluminium composite material cladding.

Brokenshire has told leaseholders he understood the cladding issue was affecting residents’ health and wellbeing and said that the government will fund councils to remove dangerous cladding, the costs of which they will then recover from the building owners.

He said a “joint inspection team” set up by his department has been asked to explore how it can support the council to take action on Northpoint.

But the ministry of housing has admitted it is still recruiting environmental health officers to the inspection team. It declined to say how many councils it has advised or how many buildings it has inspected.
248 posts