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  • In the Spotlight

    Government announce dilution of Section 21

    UNISON declares the decision to scrap Section 21 to be “a huge victory for England’s 11m private tenants and UNISON’s housing campaign”.

    Despite not being a natural ally of a Conservative government, the union declares that the Ministry of Housing Communities and Local Government has given “balance” to its proposal by also pledging to reform the court system for landlords, “to make it more efficient and effective.”

    So now the union is calling on its members to press the government to honour its pledge by a range of measures.

    Full/source article

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    Interesting opinion on Property Industry Eye on this topic this morning:

    Market reaction – the law of unintended consequences

    Bad news for the disabled, single parent families and anyone on benefits – if the personal circumstances of the tenants currently in occupation mean that they are probably going to want to live there long term and need state aid, then these could be a sitting tenant problem in the making.

    Bad news for the over-worked court system – if the Government can be believed, the clock is now ticking and landlords may be well advised to use the time remaining to serve Section 21 notices to de-risk their stock.

    Bad news for buy-to-let mortgage providers – if vacant possession of the asset might not be so easily obtained in future, and might even be discounted to open market value, then lending on buy-to-let properties looks a great deal riskier.

    Bad news for anyone thinking about a buy-to-let investment – why take the risk until the exact future legal framework is made clear, and there is a cross-party consensus on the future of the PRS?

    Good news for insurers providing rent guarantee and legal costs insurance – as the likelihood of being stuck with a tenant who is not paying the rent and who cannot be easily evicted goes up, and so will sales of rent guarantee and legal costs insurance, and so will the insurance premiums.

    Good or bad news for agents? – as installing and removing tenants becomes a process in which procedural legal matters are of vital importance then arguably, even if the PRS shrank overall, those landlords who are left might take up the services of agents to a greater degree than they do now (50% use an agent to let, 14% to let and manage).

    Full/source article

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    Accepting we won't know the legalities until Liz signs the s21 abolition bill off, but an option for eviction for no reason at all if s21 is abolished would be a company let (A company being the tenant): This prompted by an article in "Bricks & Mortar" section of "The Times" today....

    Quote #######  It is argued that company lets that artificially try to avoid housing legislation are unenforceable, and in the leading case of Street v Mountford the House of Lords stressed that judges “should be astute to detect and frustrate sham devices and artificial transactions whose only object is to disguise the grant of a tenancy and to evade the Rent Acts”.

    The courts have nevertheless tended to uphold their validity. For example, in the 1988 case of Hilton v Plustitle Ltd the landlord insisted that he would rent a flat only to a company tenant. An actress bought an off-the-shelf company, which took a six-month tenancy, with the actress providing a personal guarantee for the rent. The Court of Appeal said that the agreement was not a “sham device” and the arrangement was effective to avoid the operation of housing legislation. So a genuine company let of a residential property is not illegal in England or Wale
    s. #######

    £5 says some cunning solicitor/lnandlord association starts peddling such an agreement soon.

    As it happens when the s21-equivalent was abolished in Scotland I ended up letting one property on a company let, albeit that was to house two staff members of a 5* Hotel (Hotel being the company).

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    Housing Secretary of State James Brokenshire has rejected suggestions that the Conservatives could bring in rent controls.

    However, Brokenshire made clear his commitment to ending Section 21 – or, as The Sunday Times put it yesterday, “Landlords will lose their automatic  right to kick tenants out”.

    In an interview with the paper, Brokenshire said it was meeting a homeless man with a dog at a shelter in Bristol just before Christmas that led him to announce the biggest change to the private rented sector for 30 years.

    He said that the meeting had moved him to think what could have prevented the man ending up on the street with his dog, adding that tenants being asked to leave without good reason is “one of the most significant factors in homelessness”.

    Brokenshire told The Sunday Times that he was keen not to antagonise buy-to-let investors, downplaying concerns that landlords could leave the sector in droves.

    Full/source landlords

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