RLA Future Renting - London 2018

Alexandra Morris, MakeUrMove Managing Director reports back from the RLA Conference which too place on Thursday 13^th September at Imperial College London.

The RLA put on a conference to discuss the future of renting specifically addressing the question ‘What does the future hold for private landlords?’.

Topics up for discussion include licensing, tax efficiencies, legislative change, health & safety, welfare reform and market prospects to name a few. An impressive line up of speakers including Katrine Sporle from the Property Ombudsman, David Cox from ARLA, Kate Faulkner property expert, David Smith in his role as policy director for the RLA. A keynote speech was delivered by Anne Frost from the Ministry of Housing Communities and Local Government (MHCLG) and the host for the day was Clive Bull presenter of the property hour with the LBC.

A warming welcome introduction was delivered by the RLA vice chairman, Douglas Haig raising valid points about the industry bashing and negativity not really being the true picture. Encouraging words to the delegates about seeking to highlight the positive that good landlords bring to the sector.

Anne Frost was welcomed to the stage to deliver the keynote. The theme was one of reassurance, communication and translating the views of Ministers to landlords. Stating that housing is a top domestic priority for the government and reassuring the audience that the focus is on a fairer market for all.

Anne delivered information about the key objectives for the MHCLG starting with increasing supply and investment into good housing stock whilst dealing with the issue of affordability. Raising property standards and protecting the rights of both landlords and tenants by making sure they understand their obligations. Finally, enforcement which should be designed to rid the sector of rogue landlords.

A discussion was had around enforcement and investigations into how local authorities work within this, a suggestion raised in later questions by delegates that local authorities are in fact not incentivised to deal with this as they have no ability to rehome tenants. Anne went on to confirm that the Housing Health & Safety rating system (HHSRS) will be reviewed to tackle issues about its practice and understand the ways in which it can be altered to achieve the objectives.

Another review called for on licensing and the effectiveness of it was confirmed, specifically looking at whether it works, when it works and where it doesn’t work understanding the unintended consequences.

The next subject related to the recently closed consultation period on the proposed three-year tenancy model with a 6-month break clause. With 8500 responses this is the biggest response the MHCLG have had to date. Anne revealed an interesting statistical quote claiming 10% of the population either are or have been landlords. This provides insight into how big an impact legislation would have, there was a focus on seeking solutions where possible without the need for legislation. Options presented were to create a voluntary model or to incentivise landlords to issue longer tenancies. The responses are currently being worked through and results are expected in November-December, however, there is no indication how much clarity the consultation will provide on the next steps.

The case for a housing court, which is strongly supported by the RLA, was discussed when considering the timeframe that landlords face dealing with evictions in court. On average 16 weeks, a call for evidence on this matter is expected before the end of the year and it is important that as many landlords and agents as possible respond.

Anne handed over to a panel discussion titled ‘Tenants in control? Consumer protection in the PRS’. On the panel was David Cox from ARLA Propertymark, Katrine Sporle from Property Ombudsman and Karen Buck MP.

David opened with commentary on the actions of the government in the PRS and confirming the belief that the effect on the sector would likely lead to the opposite outcome being sought by ministers. David pointed to the need for a structured housing plan which includes house building commitments and also highlighted issues in welfare reform and the effect this has on the PRS.

Katrine Sporle provided insight from the property ombudsman about the important work that is carried out b the redress scheme, citing around 25,000 complaints a year with half involving the private rented sector. A show of hands was requested in the room to understand how many landlords use professional agents revealing around 50% and then a further question was asked requesting a show of hands for how many had made complaints about their agents, 10 or so hands raised. Katrine pointed to the fact that most of the time things work. David supported this by saying that 9 out of 10 times things work fine.

Karen Buck was last up and wished to focus on substandard accommodation. Highlighting that only 1% of suspected substandard properties receive inspections and then enforcement by local authorities. Again, linking to the earlier question suggesting a reluctance to do this due to the pressure on local authority and lack of housing generally.

Karen has tabled the Homes (Fitness for Human Habitation) Bill which was approved and is hoping to see this through its journey in the House of Lords and appear in the statute book early next year.

Next up was safety, electrical and gas safety. Presented by Ian Halton, NAPIT and including visual aids to test the delegates on their opinion of safe and unsafe electrical installations. The biggest laugh coming from a shower fitted to the back of a door which opened against the bath, although the serious note for this was don’t attempt to be a DIY electrician and always use accredited electrical engineers.

It is highly likely that electrical safety reform will be enacted to require 5-year electrical installation condition reports and Ian explained to the room that this was a check by an engineer to determine if your property was electrical safe or note. Ian also encourages annual checks and pointed delegates to the NAPIT free download of home safety guides for visual inspections. Gas safety reforms were covered including the new renewal date protection allowing checks to be completed up to two months prior to the renewal date and not to lose that renewal date.

Kate Faulkner, property expert then took to the stage to talk about market prospects. The talk provided insight into locations around the UK and the movement in the market, recommendations to look at movement over a much longer period and not just year on year.

All of the statistics are available on the website Property Checklists and is updated monthly. Kate presented that there is no one trend in the market and that if you are going to invest you need to understand the local market. A worrying statistic for the prime London market showing an overall 17% decline, one to watch to see if this ripples out.

Kate talked about rent controls and suggested this wouldn’t be all bad, if looking at the link to inflation then landlords would be better off. During the crash of 2007-2008, the social sector saw rent increases of more than 20% being linked to high rates of inflation whereas the private sector was much lower.

During an eventful lunch break, I got the opportunity to catch up with Kate Faulkner and discuss the challenges facing landlords today. I also had the chance to speak to David Smith about the role that the RLA play in the sector and how landlords can keep up with the raft of legislation.

We resumed after the break with Richard Tacagni of London Property Licensing, shedding some light on the new mandatory HMO licensing requirements from 1^st October and covering selective and additional licensing. The main change in mandatory HMO licensing is the removal of the three storey in the standard test meaning that many more properties will fall into the category of HMO.

The biggest issue is awareness with just a few weeks to go and an absolute obligation to have your applications submitted by the date of 1^st October 2018 the government seems to have done nothing. The law does not provide a grace period and to be compliant the application needs to have been submitted before the date of enactment.

It seems that many local authorities are not ready to deal with these and some don’t even have an application process in place. Another complicated element of the licensing scheme is the minimum room requirements which mean any room with a floor are less than 4.64m2 cannot be used as a bedroom. This floor area is permitted for an occupier under 10 years old and 6.51m2 is the minimum requirement for an occupier over 10 years old. 10.22m2 is the minimum requirement for two occupiers over 10 years old.

Various problems include landlords that do not meet the minimum sizes and already have tenants in place. Breaches by tenants themselves and protected characteristics such as pregnant women which may then create a breach once they give birth but which landlords are unable to evict.

Richard handed over to David Smith, RLA policy director. David took us through a host of legislative changes including recapping the HMO amendments, licensing requirements and MEES.

Dr Tom Simcock from RLA Pearl introduced us to the work carried out by the research arm of the RLA and the reasons behind it. Referring to the many calls for evidence to support arguments and suggestions. The RLA gives landlords a voice and work towards steering policies and changing or introducing policies which would provide benefit to the sector. The closing points highlighted that 62% of landlords indicated that they would not rent to a tenant in receipt of Universal Credit, Dr Tom Simcock went on to confirm that this research was being used to present evidence on the issues with welfare reform to the DWP and open communications on how this can be improved.

This subject led nicely to the next speaker, Sherrelle Collman from Carridon Landlords Solutions. Sherrelle talked the delegates through the welfare reforms and what Universal Credit was. The potential issues facing the transfer of tenants onto the reformed benefit and how this impacts landlords couple with how landlords can apply for deductions from benefit payments to cover historic arrears.

Sean Hughes then joined the stage to talk to the room about tax planning, Section 24 and examples on how this would change your tax obligations. Sean provided an understanding of what is required to incorporate and how this could potentially cost you and then provided alternative solutions for this.

Sean closed with a discussion around inheritance tax and how you can plan for this with efficiencies in mind.

Closing remarks were provided by Andrew Dixon, Chief Executive of the RLA. Andrew thanked the delegates and the speakers and reiterated the comments made throughout that there is a lot to be positive about in the sector and reinforce the need for us all to discuss. Landlords encouraged to make sure they sign up for the RLA Pearl research lab to provide their feedback on important issues so that they can help drive policies in the right direction.

A very insightful day which delegates undoubtedly found useful. I am sure lots left with their heads spinning as a lot of knowledge was shared but the conference absolutely highlights the need for landlords to sign up to services like the RLA providing this knowledge and support every day. On the face of it, there is lots of change but there is no reason why landlords and agents can’t work together to make these changes work and continue delivering an exceptional service to tenants.