Regulation & Law
News articles looking at national legislation and local regulation and the application of law to the residential property industry.
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Lib Dems reiterate Mansion Tax ambition with Election manifesto
The Liberal Democrat party has placed housing at the heart of its election manifesto, revealing plans to introduce a £100 cut in council tax for 10 years for people who insulate their home, as well as confirming that it plans to introduce a ‘mansion tax’ – originally a Liberal Democrat policy – on residential properties worth £2 million or more. Homes worth between £2 million and £2.5 million would face an annual mansion tax of up to £2,000 a year, under Liberal Democrat plans. Nick Clegg (left) confirmed the Lib Dems had scaled back the policy and it would now raise only £1 billion – considerably less than the £1.7 billion initially proposed. Mr Clegg commented, “It is less than originally mooted but as we have worked up the idea, looked at what we think is reasonable and fair, we think this is a reasonable and fair way of doing it and shouldn’t scare the horses.” The Labour Party has also proposed its own mansion tax, which would see properties valued between £2 million and £3 million paying £250 a month or £3,000 a year. The party is yet to set out details of higher bands. The Lib Dems’ manifesto,…
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Landlords’ body voice concerns over sub-letting
The Residential Landlords Association (RLA) has expressed concern over controversial plans to allow private tenants to sub-let their tenancies in England, announced by the Chancellor in the Budget last month. The Chairman of the RLA, Alan Ward (left), has written to DCLG Director General, Peter Schofield, seeking greater clarification over the detail of the proposals and has raised various questions as to how this would affect landlords with leases, licensing, and mortgage conditions, and why it is that this proposal has been put forward with no consultation. You can read Alan Ward’s letter in full below. Last month, tenant eviction firm, Landlord Action, also expressed grave concern over Government plans to allow private tenants to sub-let from their tenancies, claiming that it would be “catastrophic” for the rental market. “This appears to have slipped in under the radar which, if it goes ahead, will throw up a magnitude of problems in the buy-to-let industry,” said Paul Shamplina (right), Founder of Landlord Action. “We have never seen so many sub-letting cases going to court because of unscrupulous tenants trying to cream a profit from a property they have rented,” he added. Shamplina believes that “the risk of nightmare sub-tenants” and subsequently…
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Average 2-year fixed rate falls below 3% for the first time
Mortgage borrowing rates are continuing to plunge with the average cost of a two-year fixed rate deal dropping below 3 per cent, new figures show. Fierce competition between mortgage lenders is increasing the options for borrowers, as well as pushing interest rates down to record lows, with five lenders now offering fixed rate mortgages of less than 1.3 per cent, according to financial information group Moneyfacts. The average cost of a two-year fixed rate mortgage has fallen by eight basis points during March to stand at 2.98 per cent – the first time it has ever dropped below 3 per cent. Average 2-year fixed mortgage rate by max loan-to-value Date Max 60% LTV – Ave Rate Max 70% LTV – Ave Rate Max 75% LTV – Ave Rate Max 85% LTV – Ave Rate Max 95% LTV – Ave Rate Overall 2 -Yr Fixed 01-Mar-15 1.93 2.67 2.81 3.06 4.9 3.06 29-Mar-15 1.92 2.65 2.72 2.89 4.81 2.98 Change -0.01 -0.01 -0.09 -0.17 -0.09 -0.08 Source: Moneyfacts.co.uk The drop in rates is due to increased competition and falling…
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‘Retaliatory evictions’ should be reconsidered, says ARLA
The Association of Residential Landlords (ARLA) is calling on the Government to reconsider a recent amendment to the Deregulation Bill which prevents so-called retaliatory evictions after May’s General Election. The House of Lords in February approved a Government amendment to the Deregulation Bill, given Royal Assent last week, which will bring an end to so-called ‘revenge evictions’ by private sector landlords tired of moaning tenants. The new legislation will impose a ban on any landlord from serving a section 21 eviction notice on a tenant for a minimum period of six months if they make a complaint about the state of their property. But the legislation has been criticised for imposing rules that can be exploited by bad tenants. David Cox (left), Managing Director of ARLA, commented, “The provisions in the Act designed to prevent retaliatory evictions by landlords, creates a number of unintended consequences. ARLA supports the principle of legislation seeking to stop landlords from evicting tenants in response to a genuine disrepair issue. The measures will mean that protections previously afforded to compliant landlords may be eroded by dishonest tenants using the new powers to defend against legitimate possession proceedings; possibly by intentionally causing damage to properties.” The…
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Plans to allow sub-letting would be “catastrophic”
Concerns are growing over “catastrophic”plans to permit private tenants to sub-let their tenancies in England, while a Scottish housing organisation is calling on the Scottish Government to introduce a new law banning retaliatory evictions in the private rental housing sector north of the border. Following the Chancellor’s Budget last week, tenant eviction firm, Landlord Action, has expressed grave concern over Government plans to allow private tenants to sub-let their tenancies by preventing landlords from using clauses in residential tenancy agreements that expressly rule out sub-letting. “This appears to have slipped in under the radar which, if it goes ahead, will throw up a multitude of problems in the buy-to-let industry,” said Paul Shamplina (left), Founder of Landlord Action. “We have seen so many sub-letting cases going to court because of unscrupulous tenants trying to cream a profit from a property they have rented,” he added. Landlord Action, which is currently exposing the level of the sub-letting problem in a Channel 5 documentary due to air in a few months, reports that it continues to experience problems with tenants taking out tenancy agreements and then, in some instances, not even moving into the property themselves, but putting up partitions and sub-letting…
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Housing industry welcome Chancellor’s boost for homebuyers
First-time property purchasers saving for a deposit will be given a 25 per cent financial top up from the Government, George Osborne (right) announced in last week’s Budget statement, much to the delight of many property professionals. Many industry experts are pleased that the Chancellor has recognised the need to provide yet more support for homebuyers by announcing the launch of a Help to Buy ISA later this year. Whilst the operational details still need to be finalised, in principle the scheme will provide an important financial incentive for first-time buyers, helping many people achieve the goal of owning their own home. “Combined with the extension of Help to Buy and measures introduced in the Autumn statement to reform Stamp Duty Land Tax with a fairer system, this should provide further positive stimulus for the wider housing market,” said Chris Endsor, Chief Executive of Miller Homes. Nicholas Leeming (left), Chairman of Jackson-Stops & Staff, with 44 offices nationwide, also welcomed the announcement of a new Help to Buy ISA in last week’s Budget. He commented, “Any help to incentivise the young to save money and enable them to get on the property ladder has to be welcomed. We look forward…
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Property Redress Scheme attracts 3,000 members
More than 3,000 individual residential property agents and professionals are now signed up to the Property Redress Scheme (PRS), new figures show. The new consumer redress scheme for the property industry, authorised by the Department of Communities and Local Government (DCLG) and the National Trading Standards Estate Agency Team, aims to provide fair and reasonable resolutions to disputes between property agents and their consumers. It became a legal requirement for all property agents, as defined by legislation, to join a consumer redress scheme on the 1st October 2014. The PRS began trading in the summer of 2014 and was authorised and set up as an alternative to the two other schemes, the Ombudsman Service: Property and The Property Ombudsman, which were already in operation. The PRS claims that prior to 1st October 2014 deadline, there were an estimated 3,000 to 4,000 letting agents that would be required to comply with the new legislation, indicating that many of these previously unregistered agents have chosen to join the PRS. The PRS also claims that its scheme is also seeing an increase in the volume of agents switching from the other schemes now that awareness is spreading that there is another option available…
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Government makes it harder to license landlords
Reforms to the Selective Licensing scheme, announced last week by Brandon Lewis (left), the Minister of State for Housing and Planning, will further restrict local decision making powers making it harder for councils to license landlords. Since 2010, local councils have had the power to licence landlords across an entire borough or jurisdiction in order to combat issues such as anti-social behaviour in so-called ‘hotspot areas’. However, the changes, which come into force on 1 April 2015, will mean that councils will require Government approval before implementing a licensing scheme if they plan to license a large area or proportion of the market – likely to be above 20 per cent of either the geographical area covered by the council or the local private rented sector (PRS). The decision appears to have been influenced by sustained lobbying efforts by various organisations, including the National Landlord Association (NLA), which published its report on the state of landlord licensing across the country in February. The report points to a boom in the number of blanket licensing schemes since 2010 but highlights a lack of enforcement actions being taken by local councils. It also shows a correlation between the political control of a…
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COMMENT
This year a bright and harsh light has been shone onto the letting industry. Agents now face compulsory redress scheme registration and there’s a voluntary code for property management. And model tenancies are in the pipeline too. These all pale into insignificance compared to lettings fees. Agents, of course, have been charging registration and application fees for decades and most feel that they are a legitimate charge for the paperwork, reference checks and deposit chasing that tenancies require. But in recent months a well co-ordinated campaign to abolish these fees has been underway, led by housing charity Shelter, which has persuaded Labour to pledge to abolish lettings fees for tenants in the private rented sector if it forms a government after the next election. Unless the industry comes up with a solution the criticism will not go away.” It is not difficult to see why Ed Milliband wants to join in. Campaign organisations such as Generation Rent have painted a national picture of low paid tenants, high rents and young tenants being ‘ripped off’ by landlords and agents – all natural territory for Labour. The response of the industry thus far has been defence and it’s been a successful tactic…
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Majority of buyers benefit from progressive stamp duty
Some 71 per cent of homebuyers in England and Wales will benefit from changes to the Stamp Duty Land Tax (SDLT) announced in the Autumn Statement, according to Nationwide. Nationwide said that 86 per cent of purchases in London and the South East would profit from the Government’s decision to abolish the slab structure on Stamp Duty tax. Homebuyers in London are set to be the biggest beneficiary of the change due to the fact that home prices are generally higher and thus a higher proportion of transactions are liable for stamp duty. Overall, it is estimated that 98 per cent of buyers will pay the same or less tax under the new system in which purchasers pay the marginal tax rate on the relevant elements of the purchase price. According to 2013/14 data from the Land Registry, homebuyers in England and Wales would save an average of £1,600. In fact, according to the latest H M Revenue & Customs Tax Receipts statistics released in recent days, the Chancellor’s reform of the SDLT regime is already having an impact on tax receipts. The figures show that following the changes, SDLT receipts in January 2015 were down £299 million month-on-month, and…
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