Housebuilder Redrow just announced a record year according to Merryn Somerset Webb in MoneyWeek. The number of houses sold is up 9%. Revenues are up 16%. Pre-tax profits are up 21%. And the dividend payment to the firms shareholders is up 65%. The chairman and founder, Steve Morgan is pleased and keen for this fabulous run to continue, so he has an idea. He'd like the Help To Buy scheme under which the government underwites 20% of the purchase cost of a new build home to continue forever. "If it aint broke" he says, "Why fix it?".
He has a point, H2B works brilliantly for housebuilders. 30% of Redrows sales last year relied on it which is typical across the industry. Without it, the sales number would probably be lower. But H2B doesn't just help housebuilders shift stock, it helps them shift it at high prices. After all, anyone effectively getting an extra 20% worth of loan from the state can clearly pay more than someone who isn't. Probably explains why Redrows profits are growing faster than their revenues. This government driven house price inflation is no different to the 'rent inflation' which has been caused by Housing Benefit. That to some extent, stopped when LHA was uncoupled from inflation - but it still underpins the market and sustains higher rents than would otherwise be asked (and thus higher house prices as the yield justifies it). Interesting as H2B was originally setup to solve the problem of high house prices.
The PDPLA was invited to a private reception at the House of Commons, hosted by Sir Christopher Chope MP to mark the 20th anniversary of the RLA. The event heard from Housing Minister, James Brokenshire, MP and also Shadow Housing Minister, John Healey MP and was celebrated by the publication of a series of essays on the future of the private rented sector.
RLA Chair, Alan Ward, made a point of highlighting the positive contribution that private landlords make and how they have struggled as a result of recent legislation. The MP’s present, from all parties, sang the praises of private landlords but we obviously have to wait and see if any of this positive support translates into improvements to the environment in which we operate.
A big achievement by the RLA was in bringing together so many diverse voices in the collection of essays, from the RLA to Crisis and Shelter to the British Property Federation – a collection of organisations not always on the same side.
Read on for a summary of what was discussed....
Following on from our article highlighting the fact that a landlord or a tenant could be fined up to £5,000 for leaving bin bags in the street on the wrong day or rubbish in a forecourt, it is imperative that you instruct ALL of your tenants on their obligations and be able to prove you have done so, in order to avoid the prospect of being fined for their misdemeanours. We have drafted a document which we recommend that you get all new tenants to read and to sign to show they have read it.
A member asked what the pro's and con's of joint contracts were compared to individual contracts when you have multiple tenants in one property, this is what we came up with....
Our friends at Havant Borough Council struggle to find homes for some of their more difficult residents, whether due to their history or just their current circumstances and the shortage of accommodation available. They approached us to help them understand what they could do to improve the situation for these families and individuals. Part of our response follows…
Running this gig has taught me a lot about being a good guest, previously I was always first at the breakfast buffet stuffing plastic bags for a packed lunch, but no more! I have learned what goes into creating a great place and that has taught me appreciation in return.
Additional Licensing of HMO’s in Southsea comes to an end this month. Its original objective was to improve the standard of houses offered, to encourage better management of those houses and to reduce issues within the local community. Has it done that? We need to hear your perspective…..
At the July Cabinet meeting for Housing, Portsmouth City Council signed off the new regulations mentioned in last months ‘Ensuring we are heard’ column, allowing PCC to fine landlords OR TENANTS up to £5,000 if they leave rubbish in forecourts or on the street.
The PDPLA was invited to visit Hope House last month, the homeless hostel operated by the Salvation Army after their presentation to us at our April members meeting. Tony Athill and Alwin Oliver were the only members to attend which was sad but no surprise, we have had many such requests from homeless charities in recent months.
The centre provides temporary accommodation and support for homeless people, usually with a local connection, including people with alcohol, drug and mental health problems. They also provide ongoing support for those who they have helped move on.
They have a few residents who have been through a process and have been assessed by staff to be ready to move out into social housing or the PRS. Vacancies in the former are rare. These residents are effectively bed blocking the acceptance of new residents who would benefit from help. The centre would like more private sector landlords to provide homes for these individuals.
At our June members meeting Gary Jenkins from the Department for Work and Pensions and Mark Sage, the Tackling Poverty Officer at Portsmouth City Council updated attendees on the current status and plans for Universal Credit and gave guidance on how best to handle the rollout locally, what support was available, what landlords should take care with, etc.
After the meeting, Mark produced comprehensive guidance for landlords which we have appended below in full...
From the days of rent controls in the 80's through to the financial crash, we saw wave after wave of government incentives to get people investing in property. This had the dual benefit that it provided housing to replace that which was being lost from the social sector whilst also pushing up house prices which made the majority of voters feel richer (and thus, in theory, encouraged them to say thankyou when they went to the polling booth).
However, the tide has now turned - the proportion of voters disgruntled that they cannot get on the housing ladder has grown to a size where governments of all colours have realised that ever increasing house prices may have worked once but is not a recipe for success anymore. The Labour party talk about re-introducing rent controls and this week, Conservative MP Neil O'Brien writing for Onward (a centre-right think tank) argued that the crackdown on landlords has not gone far enough and mortgage interest relief should be scrapped altogether and that there should be further reforms to property taxes.
Locally, we see block after block of student housing going up - you cannot blame the developers, no other development type avoids council tax, business rates and section 106 CIL obligations - but do we really need so many?
Against this backdrop, it is not surprising that some of our older members are having second thoughts about whether to continue with student accommodation or not - whilst they have had a reasonable income over the years from the service they provide, it is now getting harder and harder for them to manage their properties in the way they always have done. I asked one such couple to give me their thoughts.....
Instead of our normal summary of planning applications, once again this month we are sharing the news item created by the Portsmouth Society for their members. Whilst it is not as focussed on the PRS as our normal summary, we hope you find this version more informative and complete. The Portsmouth Society are a voluntary organisation interested in preserving the best of Portsmouth's environment: buildings, streets, open spaces and seashore, and in encouraging well designed new buildings and amenities. Click here for more information.
Over the past few years the PDPLA's simple 'one size fits all' membership structure has struggled to meet the needs of members who want some of their staff to benefit from membership, but that has now all been resolved with the announcement of the new 'PDPLA Corporate Membership'
New legislation has just passed into law extending Mandatory HMO Licensing to all dwellings with 5 individuals from 2 or more families from October and, along with that, new rules restricting the use of smaller rooms in any licensed HMOs have been included in spite of our evidence that this will increase homelessness without any positive benefits.
At the AGM we covered GDPR in some detail (the new General Data Protection Regulation) and how it applies to landlords. If you have not yet registered with the ICO or worked through the steps to enable you to create a privacy notice you do need to get started as soon as possible. However, we might ask whether any Local Authorities or Universities have complied...