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TODAY'S OTHER NEWS

Government urged to ‘protect those facing homelessness’

Crisis, a national charity for homeless people, is calling on the government to do more to help renters facing homelessness due to eviction. 

The existing eviction ban in England and Wales will be suspended on Sunday 23 August after an initial ban was introduced in March amid the growing coronavirus pandemic.

But with just days left until the protection expires, Crisis is urging the government to step in and protect people from losing their properties.

The latest government figures reveal that 4,740 households were left facing homelessness after being served a section 21  eviction notice during the first quarter of the year. This is a 24% increase on the previous quarter. 

Jon Sparkes, chief executive of Crisis, said: “Since March, the temporary eviction ban has protected thousands of renters from losing their home, allowing them to isolate safely and protect their health during this pandemic. What we face now is a backlog of evictions from earlier in the year as the ban lifts and the courts begin to processing these previous claims, alongside a potential wave of new evictions as the economic impact of the pandemic starts to bite. 

“Many renters will have lost their job in recent months, will be struggling to make ends meet and having to leave their rented home will force them further to the brink of homelessness.

“To protect renters up and down the country from being swept into homelessness, we need the Westminster government to introduce emergency legislation making sure that judges will have the power to ensure that no one is unfairly evicted. 

“Alongside this, we must protect those facing crippling financial pressure and provide them with additional financial support if they are facing rent arrears. We must us use this opportunity to protect those facing homelessness.”

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    Easy, pay their rent for them, just make sure it goes direct to the landlord.

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    Makes sense and everyone wins.....?

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    Would have to change the rules that the tenant can change payment back to them via the Housing Benefit people and they currently cannot say NO!!!!!!!!!!!!

    And neither of those 2 parties are obliged to tell the Landlord...!

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    All very well getting the money paid direct to the landlord but if there are any arrears will the system increase the money paid to cover the accrued shortfalls?
    Lets see what Sunday brings but then there may be yet another U turn for landlords to put up with.

  • Matthew Payne

    A rise in evictions at some point as a result of rent arrears was inevitable ever since the fake news about Rent Holidays started hitting the news. HMG and Crisis should have been reading posts on this site and many others since March 23rd, especialy in the absence of them being able to work out for themselves the obvious outcomes of almost State encouraged rent arrears, in which case there wouldn't be a need for someone to finally have the penny drop and say "Alongside this, we must protect those facing crippling financial pressure and provide them with additional financial support if they are facing rent arrears" at the end of August??? You have done tenants and landlords proud with the speed of that analysis.

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    • 21 August 2020 16:43 PM

    Govt must be supremely confident that mortgaged LL will continue to be able to subsidise feckless tenants.

    If this is the case then Govt might be thinking if even more mortgaged LL are able to subsidise tenants for months on end perhaps they would also be able to manage substantial rent reductions via rent controls.


    So far there haven't been mass BTL repossessions which is surprising given the rent losses suffered by LL to date.
    At some point the capacity for LL to subsidise must surely end.
    Lenders repossess very quickly when faced with a mortgage defaulting LL.

    Will Govt prevent lenders repossessing!?

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    I suspect that whatever happens after this that LL in future will write much tighter contracts...
    And will charge MUCH more for rents.

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    We are limited in writing a tighter contract. It risks being deemed 'unfair contract' in court. Shelter's lawyers have done an excellent job of ruining the PRS and this will lead to tenants eventually not being housed as inventory goes down

     
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    And I will certainly DEMAND a guarantor so as to have an almost secured repayment.

    Never again will I have a contract without a guarantor nor:

    1 Housing Benefit tenants
    2 Singletons
    3 Single mothers
    4 Single men
    5 Just men
    6 Those with previous convictions
    7 Those with previous defaults
    8 Anyone I don't like
    9 Any Asians
    10 Any immigrants
    11 Any blacks
    12 Anyone who cannot show me a 6 month detailed bank account

    It is MY house...I DECIDE who lives there - Nobody else does.

    BIG BIG Full Stop

    If they don't like it, I don't have to rent it and I will walk away. Their loss if they think it unfair....

    I need to protect my business, my family, and me....Up to the tenant - It will be on MY terms, not Government terms

     
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    considering the recent news = cue the vitriol ?

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    • 21 August 2020 19:44 PM

    I personally consider the mortgaged PRS as no longer viable.
    We now have a further eviction ban and increased S21 notice period.

    So even to be able to submit PO we are are looking at April 2021 before it could be submitted.

    That could be a year with no rent being paid.
    Then another year to evict and that is being optimistic!!

    More likely 2 years so a total of 3 years.
    Surely no LL could provide free accommodation for 3 years.

    May I refer all LL thinking of selling up to the

    free.co.uk


    website.
    They will list your property for sale for FREE on

    RM
    Zoopla etc

    Plus FREE photos and floorplan.

    Get your properties listed for zero cost.

    You may be able to sell and derisk your property exposure.

    It is clearly unsustainable for LL to provide free accommodation where tenants refuse to pay rent.
    LL should be at least attempting to sell one property every tax year.
    Now they may do this for free with free.co.uk

    They may well have competitive offers as far as the other costs occasioned as part of the sales process.


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    Yes Paul this is the end of the mortgaged landlords, cash is king again

     
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    • 21 August 2020 20:17 PM

    @andrewtownshend

    Yep I consider your sentiments to be absolutely correct.

    Most LL could reduce to zero leverage resulting in ownership of just a few unencumbered rental properties or rather as unencumbered they are free to let them as they wish.

    Perhaps with lodgers occupying!?

    I consider that in light of recent events being a BTL LL has been exposed as a very risky business proposition.

    I would like to see the PRS reduce in size massively.
    Not so much the unencumbered part as that can do what it likes with impunity.

    I consider it would be a very wise move for mortgaged LL to reduce their exposure to leverage as much as they can.

    It would be very good news if the PRS would reduce to about 10% of the market.
    This would result in millions of homeless which would be good news for rent increases along with financial security for LL.
    For ongoing viability I do believe you are correct that LL should be striving to become unencumbered as quickly as possible.
    The fear of repossession caused by rent defaulting tenants then goes away.
    My intent has been to sell up since 2015.
    Only other circumstances have prevented me.
    S24 was the catalyst for me to wish to sell up and possibly invest mortgage free.

    When furloughing ends that will truly show where the various emperors aren't wearing any clothes!


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    Yes Paul there are many landlords out there with 40+ properties all mortgaged up to the hilt, who could all have 10 properties all bought and paid for and be much better off. I have 16 properties that have purchased for cash slowly over the yrs, just think how many properties I could have if I had mortgaged them all up to the hilt, If I get a bad tenant it's not going to bankrupt me, I'm fine as I am, no worries, and I sleep at nights.

     
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    Paul/Andrew

    There are two considerations with leverage/ gearing. One is the % of equity in a portfolio and the other is the multiple of interest cover from the rent. My families' portfolio has about £1 million debt and £3 million equity, so 25% gearing, which I consider low risk and selling 25% of the portfolio would leave the other properties unencumbered if it weren't for CGT! On the other hand, the interest payable on the £1 million mortgage is currently under £20,000 and the interest cover is around 12 times at £250,000 per annum. However, selling 25% of the portfolio would lose around £60,000 in rental income and only save £20,000 in mortgage interest. I'm comfortable with the risk level of my borrowing and interest rates would have to go up to around 8%, or rent defaults go to over 30% before I would consider divestment of any of the portfolio. Having put the majority of the portfolio, and all of its debt, into the names of my grown up children to avoid IHT, I think we're in the PRS for the long term, even with the SNP loony legislation but I welcome any move by other landlords to sell up and let market forces continue to drive up rents for the best properties. I'm not interested in adding more properties or going downmarket into low income or DSS tenant territory which is where most of the risk and hassle is and will continue to harm landlords in that market sector.

     
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    I write my contract...If they do not like it...then so what?....They do not get the property.

    Simple....It is my decision as to my terms, they do NOT have to take it.

    Their choice...But always a bank statement of 6 months form tenant and guarantor....

    Take it or leave it...

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    • 21 August 2020 22:40 PM

    @andrewtownshend

    Yep I certainly believe your sentiments will become more widespread amongst the LL sector.
    Big has proven to be certainly NOT beautiful!
    As you suggest there are many big LL that are heavily exposed to potential rent defaulting tenants with their large mortgaged portfolios.
    It must as you suggest make sense for a whole variety of reasons to reduce those properties to unmortgaged status or hardly any mortgage at all.

    We know Rishi is after increased CGT on BTL properties.

    Such BTL LL would do well to follow our business model.

    Makes far more sense.
    The concept of an unmortgaged rental property is about as perfect a business model as can be achieved.
    Yes there will always be the eviction problem but no repossession risk.

    I reckon appropriate DD on tenant prospects should mean that few mortgage free LL ever suffer rent defaulting tenants.
    I do believe there will be a major reset to your way of thinking.
    It makes pragmatic sense.
    LL to get rid of properties and reduce to mortgage free to provide financial resilience

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    As I have said above, such resilience can come through volume and ensuring the portfolio can only be afforded by solvent tenants with solvent guarantors, preferably with several sharing joint and several liability. In the days of high interest rates, the interest cover was much less and the risk much higher, but the compensation was high capital growth which could be remortgaged to provide deposits for further properties. Currently mortgage companies want interest cover of 125 to 150%. I think that is too risky but I'm comfortable with interest cover of above 300% ( I currently have about 1200%) and with mortgages of up to 50%, which is twice what I currently have. Being panicked into selling up simply to reduce gearing is foolish without carefully considering all the other factors in the mix- CGT, IHT, Interest cover, number of enquiries for every vacant property, alternative rental streams from HMO, Student lets, Airbnb, furnished holiday lets etc. We have many weapons in our armoury if we know how to use them and when to use each one to best effect.

     
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    • 22 August 2020 02:05 AM

    @robertbrown
    Yep clearly you are in a very good place as you you have arranged things much as I would ideally do.

    But the vast majority of little LL with BTL mortgages do not have the same resilience as you.

    The prevailing lender criteria is clearly and has been too high.

    In hindsight I suggest gearing should be no more than LHA can afford including other costs.

    This would have the effect of reducing gearing to levels you have achieved.

    Of course if this was a required lender criteria very few could afford to be BTL LL due to the required large deposits.

    I believe this would be an excellent criteria which would decimate rental stock and leave millions homeless which would be great news.
    Govt achieves it's objective of removing vast numbers of mortgaged LL from the PRS and remaining newly unencumbered LL find their properties much in demand with higher rents easily achievable.

    Unless properties are being retained for legacy purposes then it makes sense to take a current CGT hit now as it will definitely be increasing.

    There is no way that future yields will ever match the increased CGT rates.
    Of course if you consider nothing is to happen to CGT then maintaining the status quo would make sense.
    I consider that CGT is going to be massively increased on 2nd properties.

    I know therefore that I would if you will be panicked into selling properties at current CGT rates
    My pessimism about all things PRS has always been proven correct.

    Not that I take any comfort from that.

    But the threats to mortgaged LL are simply too high to remain mortgaged.
    Reducing to unencumbered status remains for most LL the best method to ensure financial resilience in the face of feckless rent defaulting tenants along with the increasing difficulty in getting rid of them.

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    But Paul if CGT was increased then wont LL just think either
    a) I need a higher price - not selling or
    b) not selling
    In other words it just wont work practically and will lead to the PRS going underground . This is already happening
    'Decimate rental stock and leave millions homeless' This is a close run race as to will the Gov or Shelter achieve this first.
    The main question to ask is where do tenants that just cant or wont save a deposit for a mortgage live if we sell up and they go to owner occupiers?

     
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    • 22 August 2020 20:18 PM

    Interesting you mention the PRS going underground.
    So what exactly does this mean?
    You can't exactly hide a BTL mortgage.
    But I can see unencumbered or resi mortgaged properties not having any tenants.

    But it is difficult to hide 2nd properties though there are communities where everyone is a cousin of a cousin where the system is easily manipulated!!
    But as a rule not easy to evade CGT

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    Many of my properties were purchased in the 90s for peanuts, I cannot sell them even if I wanted to because I'm sure as hell not giving the government all that CGT for them to hand out to low life spongers .

     
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