Category: Uncategorised

Rising university applications are putting pressure on rental markets in student cities across the UK. With rising student numbers, and fewer landlords entering the market, it seems that this trend will continue to grow over the coming years.

This could lead to an increase of rental prices of up to 5% according to Unite, the UK’s largest developer of student accommodations

Data suggests that there are 3.5 students for every bed in purpose-built student housing in the UK. With student numbers only expected to rise in the coming years, this market is only going to become more competitive.

What can we expect over the next year?

• Demand, and as a consequence prices, for student accommodation will surely rise across the UK through 2023.
• More property investors may take the opportunity to explore student rentals as an option for their portfolios.
• Landlords may benefit from rapidly increasing yields on their student lets.
• This trend is likely to continue both in major cities and smaller student towns.
• The trend seems to be higher in northern student cities such as Manchester, Bradford and Nottingham. As well as a noticeable rise in demand in coastal university towns.

Presently, there seems to be a lack of landlords investing in new student lets despite the potential for profit increases over the next few years.

Student properties are known to have one of the greatest yields out of any housing lets. Charging students per room, rather than the rental for the entire property, means that rental income is naturally high without having too many negative repercussions for the tenants. Larger student houses (with four or more rooms) have highly compelling yields against the value of the property.

Whilst student lets are short-term in nature, each year landlords can guarantee a fresh set of students seeking accommodation in the area. A well-located student house should have no problem securing new tenants year-on-year, whilst having the freedom to evaluate rental prices annually before welcoming new tenants to the property.

Updated Legislation and how Howsy can help

At Howsy, part of our fully managed service is to keep our Landlords updated with changing legislation that may affect their property investments. 

The government has recently released updated regulations regarding the compliance of tenanted properties. In England, The Smoke and Carbon Monoxide Alarm (Amendment) Regulations 2022 means that from 1st October 2022, all new and existing tenancies require a Carbon Monoxide (CO) alarm in every room with a “fixed combustion appliance”, such as gas heaters, gas boilers, space heaters, and gas or wood burning fires. A draft of the full legislation can be found on the government website, here. 

The regulations also extend a Landlord’s responsibility to repair smoke or CO alarms during a tenancy once the tenant has reported that they are not working.

Breach for non compliance with this legislation may include fines of up to £5,000 per property and/or the local housing authority serving a remedial notice.

What are we doing to help our landlords?

We have arranged for our network of contractors to be ready to install CO alarms in any properties where our Landlords require them and are unable to install them themselves.

If we are due to inspect the general condition of a property or complete a gas safety certificate, we will also check to see if a CO alarm is required and install them where necessary. The cost of this is £35 to install one alarm and a further £25 for any additional alarms required, inclusive of VAT. 

If there is not an upcoming inspection or gas safety certificate planned, we can arrange a callout to fit the alarm. The cost of this is £60 to install one alarm and a further £25 for any additional alarms required, inclusive of VAT.

Want to work with us?

At Howsy, our team of property managers can take over the management of your tenancies from as little as £59 per month. On instruction, we will work with you to guide you through the hundreds of pieces of legislation that our ARLA qualified team are experts on.

We’d love to talk to you! Please give us a call on 0203 8686 548 or register your interest here, our lettings team can help take the hassle away.

Energy efficiency is a hot topic. 

The Government has set itself some ambitious emissions targets over the next few decades – great news for the planet, but the new rules could create challenges for some landlords.

To meet them, the carbon emissions from all buildings will have to be close to zero by the year 2050. It’s a big leap and in the longer-term properties will have to take their energy efficiency rating up to A. However, in the shorter-term, there are still some serious changes to be made in the private rented sector:

Tables of contents:

1. Is it a legal requirement to have an EPC?
2. Do I need to renew an EPC during a tenancy?
3. How often should an EPC be done?
4. New guidelines
5. Getting the EPC
6. How to boost your EPC rating
7. Get an EPC performance certificate with Howsy

Is it a legal requirement to have an EPC?

Yes, it is a legal requirement to have a valid EPC when you let or sell a property.

The document exists to give a clear picture of the energy efficiency rating of your property, giving prospective tenants or potential property owners insight into the potential running costs of the home. Ratings range from A (the best) to G (the worst).

In England and Wales, it is a legal requirement to provide a copy of the EPC to new tenants at the start of each new tenancy before they move into the property (most people provide it when they sign the tenancy agreement). If you have a commercial property, you must display your EPC energy rating somewhere that it is easily visible. In Scotland, it is a legal requirement to display a copy of the EPC in the property.

You can check if your property has an existing EPC (they last for ten years) by checking on the EPC register, a free online database that holds copies of all energy performance certificates. The documents are uploaded by the assessor that carries out the check and are publicly available, and downloadable evidence of a property’s performance rating.

Do I need to renew an EPC during a tenancy? 

The EPC must be made available free of charge at the point the property is marketed. Because the EPC is made available at marketing, this means if you have a tenant in situ and the EPC runs out, it does not need to be renewed until the property is back on market again.

You only need to renew your EPC during a tenancy if the certificate’s ten-year‘ shelf life’ expires during the length of the tenancy, not at the beginning of each tenancy agreement. EPC requirements are not like gas safety checks, they do not have to be carried out annually, so it is unlikely that your tenants will be bothered often by this process.

If you do need to renew your EPC during a tenancy, don’t forget that you need to allow your tenant 24 hours’ notice before entering the rental property, and they are within their rights to deny you access to the home. It is a good idea to make a request via email, so you have evidence that you attempted to gain access, so should you need to highlight that you were unable to gain access, you have evidence that you tried.

How often should an EPC be done?

An EPC lasts for ten years. You can view your current certificate on the EPC register, if you are unsure when the date expires.

However, it is important to consider that if you have had any work done on the property that would be likely to increase the energy efficiency rating, it would be a good idea to have a new EPC carried out, to make sure that your certification reflects your property’s current EPC rating standards.

New guidelines

What are MEES?

Developed from a package of policies including the infamous Green Deal, the Minimum Energy Efficiency Standards (MEES) was introduced in March 2015.

Designed to tackle poor energy performance in private rented properties, the new regulations really came into force on 1st April 2018, when a minimum standard of band E was introduced to the rented sector, meaning it was no longer possible to renew existing tenancies or grant a new tenancy if the property has an EPC rating of F or G. On 1st April 2020, the changes will be extended across all existing tenancies. If your property falls below the E rating, you must either look to improve the rating, register an exemption or sell the property, thus removing it from the rented market.

How do you comply?

In order to comply with MEES, you have to show that you are attempting to make all changes necessary to bring it up to the required level. A cost cap of £3,500 (including VAT) has been introduced, to limit the amount that landlords are expected to spend on improvements. Any changes that have been made since 1st October 2017 can be included in this cost.

If you are unable to make our property meet the E banding for £3,500 or less, you should make as many improvements as you can for that amount- keeping clear evidence of the changes you have made and how much they have cost – then look to register an exemption.

Some funding may be available through schemes managed by your local authority, which can be used to fully fund or top up self-funding.

Registering an exemption

There are cases when it is simply not possible to increase a property to the minimum standards required. Non-compliance with MEES regulations can be an expensive mees-take.

Penalties operate on a sliding scale, with fines set at 10% of the property’s rateable value for the first three months of non-compliant letting (with a minimum penalty of £5,000 and a maximum of £50,000) before moving up to 20% of the rentable value after three months (with a minimum penalty of £10,000 and a maximum of £150,000).

With such hefty penalty notices to consider, it is important to register an exemption if you don’t think you are going to be able to reach the right requirements.

Exemptions include:

• ‘All relevant improvements made’ exemption: you’ve spent up to the required amount (£3,500) and the property is still below band E. This exemption lasts five years.
• ‘High cost’ exemption: No improvements can be made, as even the cheapest measure would be over £3,500. Three quotes from qualified installers are required. This exemption lasts five years.
• ‘Wall insulation’ exemption: If the only improvements to your property are cavity, external or internal wall insulation.

AND

• You have obtained written evidence from an expert highlighting that these measures would have a negative impact on the structure of the building. This exemption lasts five years.
• ‘Third-party consent’ exemption: If the relevant changes need approval from a third party, such as a tenant or freeholder, and this cannot be gained. This exemption lasts for five years, or, if the tenant consent is the issue until the tenancy ends – whichever is soonest.
• ‘Property devaluation’ exemption: If making changes will devalue the property by more than 5%. This must be supported by a report from an independent surveyor. This exemption lasts five years.
• ‘Temporary exemption due to recently becoming a landlord’: If you have taken over the property in the past six months, you have a short grace period in which to take action or register another exemption.  

You can register an exemption here.

How it differs around the UK 

Landlords in England and Wales are required to comply with the MEES regulations, failing to do so could land them in real hot water. However, it’s not the same all over the UK.

Landlords in Scotland are not impacted by the MEES legislation, although commercial landlords north of the border do have to consider similar legislation when working on the energy efficiency management of their properties. Section 63 of the Climate Change Act Scotland 2009 required building owners to improve energy efficiency and reduce emissions across commercial buildings.

How do I get an EPC?

Making sure you are shouting from the (well insulated) rooftops about your property’s energy efficiency is vital, especially as more and more tenants are looking to ‘green living’ and lower energy bills as a key feature in their property search.

But making sure you make the most out of your EPC isn’t as simple as you may think. Your property will be inspected by a qualified domestic energy assessor, who will judge the property against a set of pre-set parameters.

However, there are some top tips to make sure that your assessor is seeing everything your property has to offer, ensuring that your final report accurately highlights your property:

• Make sure your loft hatch is open and the ladder is down: assessors are not allowed to ‘explore’ and can only grade on the evidence that they can see. They don’t know your loft is fully insulated if you don’t show them!
• Provide evidence of recent work, including invoices and receipts – this is an unarguable proof that the work has been done in line with the epc regulations.
• Much as it may drive you crazy, don’t rush to paint over the evidence of cavity wall insulation as soon as the installers drive away. The little holes in the exterior walls are vital proof of the activity, and are great for an assessor to see!

Once the check is complete, the assessor will compile an EPC report for you, and produce your EPC.  The main certificate will be added to the register, and the report will be sent to you – most will have suggestions of energy efficiency improvements that you could make.

How to boost your EPC rating

There are many things you can do as a landlord to push this rating up.

Cheap switches

• Light bulbs: Switching halogen or non-low energy light bulbs to LED alternatives is a cheap and simple switch
• Pipe lagging: Easy to install, slipping lagging around any visible metal pipes will give you a big green tick when your assessor comes knocking
• Boiler jackets: If you have a stand-alone hot water tank, a cosy jacket (available online or in DIY stores) is a great way to prevent heat escaping.
• Green showers: A power shower is a big selling point for many tenants, so why not offer a water-saving one too? Cheap to buy and easy to fit, a win-win for everyone!

Medium changes

• Loft and roof insulation: relatively simple to install yourself, or cost effective through a scheme, this has a huge impact on heating efficiency
• Replace white goods: Replacing old appliances such as fridges and washing machines with more efficient upgrades will help save a bundle on energy bills

Investments for the long term

• Double glazing: Double, or even triple, glazed windows are a brilliant way to keep a home cosy, and are a huge selling point too.
• Cavity wall insulation: Not viable for all, but a useful undertaking if possible, cavity wall insulation fills the gaps between the outer and inner skin of your property with foam or filler, adding a layer of insulation and warmth.

Get an EPC performance certificate with Howsy

When you join Howsy, EPC certificates are among the list of add-ons you can get on top of our standard service. If you don’t have the time to deal with getting an EPC yourself, we will do it for you for £78 inc VAT. We track EPC expiry dates as part of our property management service, and we will send you notifications to let you know when your EPCs and gas safety certificates are about to expire. You can deal with the renewal process yourself, or we can do it for you.  

When deciding whether or not to become a landlord there are a number of issues to take into consideration. You need to consider whether you have the time to dedicate. For now, here is everything you need to have in place before making the final decision. 

What to consider or inspect prior to placing the property on the market:

Leaseholder/Mortgage company consent

If you have a leasehold property or a property which is subject to a mortgage you are required to obtain the Freeholders and/or mortgage company’s permission prior to renting out your property. Such consent may be subject to certain conditions including that any tenancy must be for a minimum term and changing your mortgage product to a Buy-To-Let mortgage. 

Furniture and Furnishings

All soft furniture and furnishings provided to a tenant must comply with the Furniture and Furnishings (Fire)(Safety) Regulations 1988. This means that if items such as sofas, mattresses, curtains catch light any fire will promptly go out. To check whether your furniture and furnishings comply you need to check the items labelling. When purchasing from a UK reputable supplier, the furnishings will usually be labelled accurately. Whereas if labels can’t be identified it is best to replace them. 

Smoke and Carbon Monoxide Alarms

Newly built premises from 1992 and HMO properties must have mains operated smoke alarms with battery back ups. Older properties must have a a battery operated smoke alarm on each floor.

Properties that hold a solid fuel burning appliance, like a log fire will also require a working carbon monoxide alarm. 

Appliance manuals

Tenants should be provided with manuals for any gas, electrical or other appliance in the property.

Legionnaires disease

With Covid and the lack of visitors to the UK some properties have unfortunately remained unoccupied for some time. We recommend a legionnaire assessment for those properties least lived in. Legionella bacteria can breed in warm stagnant water and reach a concentration at which they become hazardous to health. If a property obtains a water tank, an appropriate risk assessment should be carried out. The risk assessment may be carried out by a third party unless you believe you are competent to do so.  

Internal blinds

The Blind Cord Safety Regulations 2014 require blinds to be “safe by design”. It also requires to have the appropriate child safety devices installed. All blinds must carry safety warnings and ideally landlords should consider blinds without cords especially in a child’s bedroom. It’s the landlords responsibility to change the previous tenant blinds – to ensure safety.

Insurance

If you have a Leasehold property and/or mortgage, you should have an insurance policy to remain compliant with your obligations. We recommend sorting insurance if you haven’t already. Such insurance is reassuring and can be useful in the event of serious damage such as fire. Furthermore, when your property is occupied by tenants you should also consider third party liability insurance. For example, in an event where a tenant claims that they have sustained a personal injury while in your property. 

Your previous home

If the property you intend to rent out was previously occupied by you then you may want to consider Ground 1, S.8 of the Housing Act 1988. Ground 1 is a mandatory ground for possession so if there is any chance that at any time in the future you may want to move back into the property you will need to ensure that the tenancy agreement refers to it. It is therefore important that you ensure your agent is aware of this so that they can include it in the agreement.

What to consider once marketing commences:

EPC

You must have a valid EPC. The EPC must be renewed every 10 years so if you have one ensure it is in date and you agent will include it within the marketing material. 

Gas

Under The Gas Safety (Installation and Use) Regulations 1998, gas appliances and fixed installations must be in good order and checked annually by a gas safe engineer. The certificate that the engineer provides must be provided to a tenant upon the commencement of the tenancy.  

EICR

Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020 came into force in 2020 and from April this year all properties must have a valid EICR. An EICR is a report provided by an electrician who has tested the electrical installation in a property. The EICR must be provided to the tenant before they occupy the property. 

Keys

If you are renting out a property you will need to consider how many sets of keys you need to organise for your tenants, whether you want to retain a set and whether you wish to provide your agent with a set. Further fobs and other entry systems may also need to be organised. 

Utility management

Utilities should be put into the tenants name from the commencement date of the tenancy. Meters should therefore be read and those readings given to the tenant and or the utility company. Meters readings should also be taken at the end of the tenancy and again provided. Some elect to leave the management of the utility to the tenants however, this is a personal decision but one that should be considered. 

Inventory

Prior to the commencement of the Tenancy an inventory and check in should be carried out. This report will assist you with any claim that you may want to pursue against the tenant in the event of any damage. Without the report it can be very difficult to make deductions from tenants deposits if the matter is referred to a deposit adjudication. 

This is of course a long list and demonstrates the importance of getting things right in order to ensure you comply with the law and ensure your property is safe for a tenant to occupy. It is of course an easy option to hand these matters over to an agent and certainly most agents will be familiar with the process. If fail to consider this guide, there could be serious consequences including civil and criminal penalties so caution is advised. 

Does your rental need to be renovated?

You might think rental renovations are an unnecessary landlord expense. But have you considered how much an unrenovated rental might be costing in lost revenue? If your property is not let for a month, or even longer, consider how much that would cost.

For example, if your property is advertised on the market for £1,245 pcm, every week it stays on the market you are losing £287.30(!!) in potential income.

We all know that every rental need to wash its face financially, of course. However, rentals are also destined to be someone’s home. So, they deserve the best they can afford. Therefore, consideration of your customer is a key part of the rental renovations equation. Here is a list of potential actions for landlords that are considering a rental renovation. This might be the perfect opportunity to bring a fresh property to the rental market in 2021.

1. First look critically at your property when a renter moves out.

How will it look to the next prospective renter? Attractive and inviting or tired and unappealing?

2. Create a list of everything that needs attention.

This might include faulty locks to ill-fitting windows. Then prioritise the repairs. Ideally, a property should be fully functioning, in every sense, for any new tenancy.

3. Understand your target renter.

What are they looking for? Do other properties in the same price bracket within the local area charge similar rent? What amenities do these properties have? Does your property currently fit the bill? What’s missing?

4. If your property lies within a school’s catchment area

And it is a suitable size, then you’re likely to attract families. Is there a bath? Is there sufficient storage? If appropriate, can you make the property more flexible? Will it accommodate the changing needs of families? The aim is to keep good renters from moving on. Happy renters tend to stay longer in a property they like.

5. Next, when you have listed priorities then it’s time to research your property thoroughly.

Therefore, what you are offering should fit the kind of renter that might view. There is little point in offering something inappropriate that will not yield any return. If your rental renovations become too costly they will impact your bottom line

6. Having listed your priorities then prioritise that list further.

Furthermore, undertake work that will make the biggest difference. Can you drop a kerb and provide parking? Will excellent storage be an attractive feature? Will a breakfast bar offer flexible dining? Would building an additional partition wall or even removing one make an exciting transformation for your property?

7. Do remember, during the pandemic, outside space was often seen as a priority.

If you have any outside space making that look low maintenance but super attractive. It can be the difference between renting and not renting.

8. Certainly, be hyper-critical of the main areas of your property.

Certainly, kitchens and bathrooms can make or break a property’s desirability. You can add money to your rental by ensuring kitchens are clean and appliances are modern. Neutral colours in bathrooms, a new shower curtain and storage can really add value to the rental rate and ensure your rental renovations repay your efforts.

9. Flooring that looks stylish and cleans up well can transform hallways and rooms in general.

Of course, neutral tones will allow renters to add their own belongings to create a cosy home. Appealing to the masses will hit the mark rather than appealing to your own personal taste.

10. Above all, set your budget and what the best way is to achieve the most change.

Undertaking DIY projects on a rental can be a way to save money. However, the finish must be first class. A poor job will cost more money in the long term. Do not attempt changes to boilers, gas fires, electrics or plumbing if you are not qualified. A rental property needs to be compliant. As a landlord you have a responsibility for your renters’ safety. More details on your requirements regarding gas safety are available here.

11. Do your best to renovate the rental property so it is fuel efficient.

Ensure pipes are lagged and loft spaces are insulated. Check windows and doors for draughts. But do ensure there is suitable ventilation. If you upgrade your property’s green credentials it will pay off in the long term. Homes that are expensive to heat will retain less value moving forward. Updating your EPC is also a positive consideration for new renters. Details of how to do this and its importance are available here.

12. Don’t over complicate the renovation of your property.

Remember the more complex the lighting or heating system the more capacity you are building in for repair.

13. Also, aim for quality where practical in your rental renovation.

A slightly more expensive click flooring or vinyl covering will last longer than a bargain basement finish. This will save you time, effort and hassle

14. Most importantly, work out the project management time required for your rental renovations.

It might cost less for you to undertake the work in terms of money. Yet a contractor might be far quicker enabling you to re-list your property much quicker.

15. Clean a flat or house thoroughly.

You need to set the standard, so a renter knows you take care of your property. It may well nudge any resident to reciprocate.

16. Finally, when your property is renovated to your liking then ensure that the quality of your photographs reflects its new style.

In addition, marketing your property is extremely important. The more effort you put into making the rental welcoming and practical the quicker a new renter will want to move in. Then they start paying rent.

Howsy, understands the importance of finding the ideal match for your property. Schedule a call with one of our team today. We can discuss how we can help match your perfectly renovated property, with a renter who will love it as much as you do!

Schedule your call here today.

The past year has prompted many businesses to think about how they work and what could be different moving towards the future. Lockdown and general distancing between people have seen a rethink in the management of assets, especially within the property sector.

It has been a time of reappraisal. Landlords that run businesses from a spreadsheet may well be thinking now is the time to do something different. Technology adoption has accelerated in every sector and property will not and should not be left out.

If you want to grow a portfolio nationally what are the issues?  

There are estate agents that have a branch network but don’t cover the whole of the UK. Some management companies are massive and put the management out to tender or to other branches. A few tech options undertake tenant find or management but not both or were London centric. In addition to solving those specific issues, by using different hubs it often means that working practices differ. Which often leads to a period of adjustment and even confusion.

Tenants’ expectations are higher than ever

If a landlord is developing a nationwide portfolio it can be a challenge to find a nationwide provider that knows the properties and the local area inside out. Tenants are very savvy, and they expect detailed and thoughtful inventories and meter readings alongside information. For example, are appliances integrated? Is their installation recent? Is there a video? Can tenants get a real feel for the property both inside and outside and even local information? All of these attentions to smaller details really offers tenants and landlords the kind of service they expect and deserve. 

Other challenges might also include excellent check in and check out facilities to avoid late fee charges on fuel bills. When things are measured, they are managed and can make a massive difference to all parties involved in a rental.

Landlords are keen to maintain their asset value. 

This can be quite complex but a pertinent consideration especially around the topic of sustainability. In the long term there is a shift towards green finance where low interest rates will be available to energy efficient assets. It’s likely that in future, assets will be less valuable if they do not align to government regulations.

Properties are not inanimate objects but living, breathing assets

Also, one of the best ways to maintain asset value is to consider them as living assets. Your properties should be redesigned and enhanced over time. They are not inanimate objects that do not change. People’s expectations and lifestyle are always shifting, and your property can increase in value when it keeps up with some trends. This is where it is important to use intelligent property and asset management. By thinking carefully about what tenants want then inevitably your property will speak their language and be easier to let and also more marketable.

Consider an individual property’s potential not just the area it sits in

Therefore, we suggest that a landlord should look at the property potential rather than just looking at the value of its location. If a property is attractive people will often forgive other locational factors if this is the property they’ve always wanted. You can add value by knocking living spaces into one or replacing a dated bathroom with a top-quality shower as two examples. It is important to think carefully about the market and about trends and even regulations. If you are on top of your game, then you are rarely in a position when change is forced upon you.

Don’t ignore your properties because things appear to be going well

When a let is going well, and managers are doing an excellent job then the temptation is to stop visiting the property at change of lease because no news is good news. This is probably a mistake. Only you can walk the property and get a feel for the atmosphere, the décor and the current facilities. In addition, it is worth keeping in communication with agents and property managers and the other teams that help manage your properties. When you pick up damage or design issues quickly then they are usually much quicker, cheaper and easier to fix. Think carefully about your relationship with tenants. Some people suggest treating tenants as business partners. If you develop positive relationships with tenants on every level you will probably find the property is looked after more carefully, especially if they know repairs will be attended to quickly and efficiently.

Look for a seamless approach to property management

With technology making life easier for almost everyone Howsy has continued to develop its own software with more exciting innovations to follow Our aim has been to remove unnecessary hassle from the landlord experience. Why have multiple agencies managing properties nationally when you can have one? We pride ourselves on offering a seamless approach which takes away management difficulties.

On 23rd February 2021, Calum, CEO of Howsy, sat down virtually with David Smith, Legal Counsel at the NRLA and Partner at JMW Solicitors, to discuss the key elements of the Debt Respite Scheme or ‘Breathing Space’ legislation. – Access the recording here

The webinar was broadly split into three sections, to help clear up some of the confusion around the new legislation:

• What is the ‘Debt Respite Scheme?
• The types of ‘Breathing Space’
• What does this mean for landlords?

David Smith outlined the ‘excitement’ around the implications of the new scheme and said that it was easy to become confused. Basically, the Debt Respite Scheme consisted of two different things that are not closely connected, despite what people might imagine. This legislation is the government’s answer to some of the spiralling debt issues regarding Covid’s impact. In addition, this now includes rental debt, as initially there was no provision for this.

One of the problems with the scenario regarding Covid debt means that governments needed to deal with this pressing issue. 

Government has been considering solutions.

1. The first is statutory changes. For example, should they make a law that writes off all the debt in its entirety? What would that do to the economy? Also its impact would be significant for landlords, mortgage providers and others.
   
2. Secondly, the Welsh and Scottish governments have offered loans on advantageous terms to tenants and landlords. The Welsh governments have focused on tenants while the Scottish government have put their emphasis on landlords. The problem is the issues are not equal across the whole of the UK. For example, there is more rental property in North Yorkshire and Humber alone than the whole of Scotland. Also, there is more rental in London than in Birmingham, for all types of property in that city. Therefore, different places require different solutions.
   
3. The aim has been to try and find a mechanism for people to pay down debts in a graceful way instead of speeding towards bankruptcy. Also, it is important not to ruin people’s credit history while spacing out affordable payments. These regulations are attempting to achieve this.

As an aside, there needs to be some breathing space for a government that’s also under significant scrutiny and intense pressure. With the optimism revolving around the vaccine program and the hope that being the first country to be well advanced with this the UK may leverage an advantage. This may well help, alongside Brexit to stimulate the economy, create more jobs and opportunities for people to pay down their debt.

Is the Breathing Space Legislation the same across the UK?

However, as suggested earlier, this legislation does NOT apply to the whole of the UK. It covers England and Wales that are a single jurisdiction. In Scotland and Northern Ireland there is a more substantial devolved package and they will develop their own way.

What is the impact of a debt breathing space?

If a debt breathing space is instituted during this period it is not possible to chase debts. As part of that breathing space cordon, as a landlord you can’t approach a tenant, levy fees or interest.

Some period after, a debt solution or agreed deal where defaulters pay debts off over time might be implemented. Call it debt rescheduling and this legislation puts some of this on a statutory footing. Therefore, Breathing Space is just that, a temporary lockout period where no one can pursue for accrued debt until the person gets themselves in order. Then they return to the fray and the debt still remains. However, with luck, debt advice, time and a little less worry, their situation will have improved.

Will people take advantage of Breathing Space, so landlords lose out?

Landlords will be notified if one of their tenants has been granted Breathing Space. These spaces are only given by debt advice officers with an FCA licence to offer debt advice. This is important to bear in mind. The person who comes to them for help and is accepted on to the Breathing Space scheme will be required to notify the adviser of everyone who is owed money…then the debt adviser will contact those on the list.

If you are concerned about tenants ‘pulling a fast one’ please be aware that there is a computer system run by the insolvency service on their website. You can also find the government contract tender for the company that runs the system. It is an online portal and it is searchable. People have to be registered officially to appear there. So, if someone says they have a Breathing Space you can check if it’s true.

Are there any benefits for landlords of the Breathing Space legislation?

The first part of this is a positive one. Becoming registered means that at least renters are seeking professional advice. They are not burying their heads in the sand. The government is not encouraging non-payment of rent. They are actually providing professional support to help people manage more efficiently. Bear in mind also that generally, tenant rent is not pursued, and it is eventually written off. That’s not a good thing for landlords and bad for the people who lent the money. It also affects the tenant‘s credit rating. Therefore, it does not benefit anyone. It is also damaging to the economy when debts are unenforced.

Landlords and tenants need a change of behaviours and thought processes

Some may still be of a mind that a section of renters may well use it to pull the wool over people’s eyes. Yes, perhaps some might well put off the day when they are eventually going to be evicted. However, the professionals issuing the Breathing Spaces will be regulated and are not just anybody. Tenants cannot make a decision to award themselves this space.

The other thing to consider is that when tenants go into arrears it is like a one-way street and they often stop paying all together. If they manage to save any money that goes towards the next property and the spiral continues.

In practical terms, it may be that this scheme will encourage people to seek advice and achieve some debt respite. This may well allow them to stay in the property. The logic is that some people just need time and eventually the debts will be paid.

Better relationships and longer tenancies

This also fits in with the government’s initiative to encourage longer-term tenancies. They would also like to see landlords supporting tenants through life experiences and long term there should be more chance for tenants to recoup income and a greater chance for landlords to get back the money that is owed.

End of the ‘easy come easy go’ mindset

This may well appear to be an alien approach to some landlords, and it may well be the time to change habitual thinking of ‘easy come, easy go.’ Of course, there are landlords that take this philosophy to extremes and don’t do repairs. They then serve a Section 21, throw out the tenant and get a new one instead of doing anything more. The logic is that another tenant may not moan so much about the living conditions.

This really is a poor tenant and landlord relationship and one that should be stopped. This has probably contributed significantly to the abolition of Section 21. You can see the trajectory starting towards a slightly different relationship between landlords and tenants. This is quite probably inevitable and has been coming for some time.

Section 8

To conclude this section please bear in mind that if you have a debt Breathing Space with respect to rent arrears a landlord cannot serve a section 8 notice with respect to those rent arrears because they are part of the Breathing Space. This also applies to possession proceedings with respect to rent arrears. In addition, you cannot get a court order progressed and cannot enforce it or get a warrant etc. These are only in relation to debt, however.

If you issue a Section 8 based on anti-social behaviour, you are entitled to serve a notice and repossession proceedings and finally secure possession.

There is a change coming across the sector

At present landlords can serve a section 8 for a number of reasons including rent arrears or a section 21 where they simply wish to recover possession. But the reality of abolishing Section 21 is that some landlords and their advisers specifically, will have to rethink their strategy of only serving a Section 21 because right now it is difficult to defend and is used predominantly by landlord eviction specialists.

Many advisers don’t possess the skill set to prove another case so they may well have to rethink this strategy moving forward. Section 21 is not going to be available in some cases. Rent arrears will also not be an available claim because of Breathing Space therefore landlords and landlord eviction specialists will have to think about other routes towards possession. These will have to be authorised by the law and then consider how they are going to be able to prove those cases.

This is a significant change in this sector’s construction and also a change for agents in finding the evidence to prove these cases.

Find out more about the mental health breathing space here.