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UK property news headlines have revealed attempts to curb overheating in new homes, the likely impact of an increase in interest rates, the impact of benefits cuts on tenants, and the lengths to which some tenants will go to secure improved air quality indoors.

So, let’s take a look behind those headlines.

New rules for new build conservatories

A blow has been struck to those many house hunters who have been hoping for a conservatory with the new home they intend to buy.

In a story on the 19th of January, the Daily Mail revealed intentions by the government to issue a ban on the construction of certain conservatories on new-build homes.

To meet new building regulations, it will have to be shown that any proposed conservatory avoids creating “unwanted solar gain”. Under the sun of British summers already – and into the near future – glass-paned conservatories can become unbearably hot and overheat the rest of the house as result.

It is forecast that summer temperatures could reach 40° or more in the future and the proposed restriction on conservatories is but one element in a raft of measures designed to manage the effects of global warming.

Interest rates hiked again as the cost of living rises

On the 3rd of February, the Bank of England increased the base lending rate from 0.25% to 0.50%.

In a posting on the 4th of February, the online listings website Zoopla commented on the effect of the hike in the cost of borrowing for homeowners. It calculated that an estimated two million borrowers currently on their lender’s variable rate of interest will end up paying more in monthly repayments – or will need to extend their mortgage term.

For someone with a £200,000 mortgage, Zoopla calculates, the increase will cost an extra £24 a month.

Revealed: damage of benefit cuts to renters

In a press release on the 20th of January, the National Residential Landlords’ Association (NRLA) revealed that one in ten landlords reported that tenants in receipt of Universal Credit have faced difficulties in finding the rent as it falls due.

The temporary increase in Universal Credit has now been cut back and tenants have been feeling that impact. Official figures show that 55% of tenants in the private rented sector face a shortfall between the welfare benefits they receive and the rent they have to pay.

That problem will only be made worse, says the NRLA, as tenants are further hit by inflationary increases in the cost of living.

Tenants “will pay more for homes with improved internal air quality”

The quality of the air inside their home is important to tenants in the private rented sector, reported Landlord Today on the 4th of February.

In a recent survey, 70% of tenants said that they would be prepared to pay a higher rent in return for better air quality indoors. The numbers can be expected to have grown after successive coronavirus lockdowns during which tenants have had to stay at home.

While seven out of ten tenants would be prepared to pay more in rent, 16% said they would be prepared to pay as much as 25% more.

Typically, internal air quality is measured according to the presence of five elements – temperature, humidity, organic chemicals (that vaporise into harmful gases), carbon and fine particles.

One of the central planks of Prime Minister Boris Johnson’s administration has been the promise to “level up” opportunities across a whole spectrum of economic and social spheres – to “transform the UK”.

Some long-awaited detail about what this will involve and how it will be achieved was published in a major White Paper released by Michael Gove MP on the 2nd of February.

Levelling Up: the impact for landlords

Housing is one of those essential spheres of UK life that will be subject to the drive for Levelling Up. Inevitably, therefore, this can be expected to impact landlords and their buy to let businesses:

Section 21 to be scrapped

  • Section 21 of the Housing Act currently grants landlords the right to repossess their property and evict sitting tenants without the need to give any reason or justification for the action. For that reason, they have become known as “no-fault” evictions;
  • Levelling Up plans mention the government’s intention to scrap Section 21 when the Renters’ Reform Bill is laid before Parliament later this year;
  • while landlords have naturally welcomed the relative ease with which repossessions can be made in this way, others have argued that it leaves tenants with an unacceptable degree of uncertainty about when they might be evicted – and some tenants have even chosen not to press for essential repairs to be made in case it prompts repossession by the landlord;
  • abolition of Section 21 will “reset the relationship between landlords and tenants” claims the Levelling Up White Paper;

Housing standards

  • Levelling Up is also about ensuring that all individuals can count on a decent standard of housing – and the current proposals focus on all private rented accommodation meeting the already published Decent Homes Standard;
  • the NRLA argues that the proposed standard was designed to be applied to housing n the social rented sector and, so, fails to consider the differences between this and the private rented sector, together with the type and age of the respective properties;

Rogue landlords

  • with respect to landlords’ compliance with existing legislation and regulations – just as much as the maintenance of decent housing standards – the NRLA also welcomes the Levelling Up White Paper’s promise to crack down on rogue landlords;
  • rogue landlords undermine the reputation rightly maintained by the vast majority of landlords, insists the NRLA;
  • one of the concrete proposals to appear in the White Paper, as a way of monitoring and managing rogue landlords, is the possibility of a national register – with market commentators looking forward to more detail about how such a register might work.

The Levelling Up ambitions and goals are designed to reshape practically every aspect of contemporary life – every corner of the UK can be expected to feel the proposed changes. The private rented sector is no exception and landlords will do well to keep an eye on how Levelling Up further affects their businesses.

Yes, you can! With the Cover4LetProperty service, you can get an online let property insurance quote in a few minutes and if you like what you see, can buy online – giving you immediate protection.

We accept most of the major credit and debit cards (we do not accept Amex) and payments can securely be made through our HSBC-led super encrypted service. This means you can feel comfortable that your details are safe and cannot be accessed by a fraudster.

We also accept cheques – note though, we may not be able to offer immediate cover for you until your cheque payment has cleared. We also accept bank transfer on the same terms as cheques.

Receiving your policy documents is also quick and easy as well. You can opt to have your policy schedule and documents delivered directly to your email inbox, or have them posted out – or both!

If you would rather, however, prefer to speak to us to arrange immediate cover, then please feel free to give us a call on 01702 606301.

We can then search for the most cost-effective landlords insurance for your circumstances and present you with a quote, then take your payment details across the phone if you want to proceed with the cover.

Contents and / or buildings accidental damage is not included as standard under your Cover4letProperty insurance policy.

This is because we strive to offer you what we consider is the most competitively-priced cover, without including elements of protection that you may not require.

You can, however, elect to have this additional cover when you apply for an insurance quote, either for both buildings and contents or one or the other.

What does accidental damage for buildings cover?

This covers damage to the fabric of your policy, such as the roof, walls and windows. Doors and mirrors are also typically covered.

What does accidental damage for contents cover?

If you are a landlord with a furnished property (ie. so your tenants use your contents) then this cover will safeguard items such as your TV. Your furniture and carpets are also covered.

If you do elect to have accidental damage cover, you should note that only events that have caused damage will entitle you to make a claim. So, damage that occurs suddenly due to an unexpected and non-deliberate external action is typically covered.

Damage as a result of wear and tear, by domestic pets, poor workmanship, or even a PC that has “died” for example, will not be covered.

Should you require any further information or clarification on what your landlord’s insurance does and does not cover, please feel free to contact us. We will only be too happy to clarify!

Yes, we do!

You can opt to pay a voluntary excess on top of your mandatory excess, which may result in discounts of up to 40% on the premium – depending upon the level of excess selected.

What is the excess?

This is a standard insurance feature that is usually expressed as a sum of money.

That sum will be the amount of money that the policyholder will pay towards the cost of any future, successful claims. It is sometimes referred to as the ‘first part’ of a claim because it will be deducted from any final settlement payment.

If that sounds a little complicated, it’s perhaps better illustrated with some simple figures.

If you have an excess on your policy of £500 and make a claim resulting in an agreed figure of £1000, then the amount paid to you would be £1000 minus the excess of £500 as the ‘first part’ of the claim. That would leave a balance to be paid to you of £500.

Had the agreed claim been for say £400, the net sum paid to you would be zero after payment of that £400 by your £500 excess.

Under most circumstances, it is safe to assume that the higher the excess is set, the lower the premiums be as a result if all other things are equal.

Some policies may have a mandatory minimum level of excess which you will not be able to reduce. The policies of some providers may not allow you to voluntarily increase the excess in order to obtain discounts on your premium.

Fortunately, ours does!

Here we look at some of the recent UK property news headlines …

Average UK property price hits a record high of £276,091

The average price of a home in the UK reached a record high of £276,091 in December – attributed to the increased volume of sales encouraged by buyers’ “race for space”, a Stamp Duty holiday, and the increased spending power of individuals who have spent much of 2020 and 2021 isolated at home.

According to the House Price Index published by the Halifax building society, the average house price increased by more than £24,500 in the course of 2021, with the year marking the biggest annual increase in prices since March 2003.

Average prices rose by 1.1% in December alone, with that quarter’s growth achieving an increase of 3.5% – a level not seen since November 2006.

Could the Government clamp down on holiday rentals?

A story in Landlord Today on the 10th of January took up concerns that have been expressed about the impact on the housing market of the growing number of holiday homes and Airbnb rentals.

In some parts of the country, the clamour for holiday rentals has left many local people unable to buy a home in their own area, labour shortages have been created, and community amenities such as shops and schools have been adversely impacted.

Following a debate of such issues in the House of Commons, it has emerged that the government will consider launching a consultation about the creation of a register of holiday rentals and might even pursue a suggestion that owners pay a higher rate of council tax than that paid on long-term lets.

Some tenants potentially facing a tax

Some tenants face a Stamp Duty liability about which the majority of them – not to mention their landlords – will be completely unaware, suggests Landlord Today in a story on the 12th of January.

The little-known rules have been in force since 2003 and impose a Stamp Duty liability for those tenants who have paid a total of £125,000 or more in accumulated rent – because their rental is especially high value, for instance, or because the tenants have continuously renewed the same tenancy over many years.

If that accumulated rental ceiling of £125,000 is reached, the tenant becomes liable to pay 1% of the annual amount of rent paid in the form of Stamp Duty Land Tax (SDLT).

To illustrate the effect of these rules, the article cites the example of London, where average monthly rents are currently £1,597 (£19,164 per annum). At that rate, therefore, a tenant in such accommodation will reach an accumulated total of £125,000 in rent paid after just 6.5 years – when an annual SDLT of £192 will become payable.

New guidelines for unvaccinated buyers and renters

In a posting on the 12th of January, online listings website Zoopla explained that failing to be vaccinated could affect those involved in buying a new home or taking up a new tenancy in rented property.

The government has introduced new rules requiring anyone who is not fully vaccinated against the virus to self-isolate in their current home if someone in their household tests positive for Covid – even if it means missing their moving day.

Those who are fully vaccinated, on the other hand, remain entirely free to go ahead with their intended move of house, even if a household member has tested positive. They are, however, “strongly advised” to take a lateral flow test every day for seven days, and to self-isolate if any of their tests are positive.

If you are the landlord, it pays to keep abreast of anything that is likely to affect your buy to let business. Overlooking any new laws or regulations or simply being unprepared for those changes could cost you dearly.

So, let’s look at the six forthcoming and most likely developments in the year ahead. *

1. Carbon monoxide laws

Ministers have already decided on the introduction this year of significant changes to carbon monoxide laws – principally to extend further protection to those in social housing but with across the board changes that will also typically affect the whole private rented sector.

Under the new rules, every unit of social housing must be fitted with smoke alarms. Carbon monoxide detectors and alarms must also be fitted where such housing has a gas-fired boiler or open fire.

The regulations also extend to all property in the private rented sector. Currently, at least one smoke alarm is required on each floor of a let property and a carbon monoxide detector in any room in which an appliance or fire is capable of burning solid fuel.

2. Minimum six-month notice periods in Wales from Spring 2022

With effect from this Spring, landlords in Wales will have to give tenants at least six months’ notice of any notice to quit the let property, points out estate agents Hamilton Fraser.

The same legislation also prevents landlords from issuing such notices – with the exception of Section 8 notices – within the first six months of any tenancy. The combined effect of these changes, therefore, is to grant any tenant in Wales a minimum of 12 months’ occupancy.

3. Rental reform

2022 should also see some of the most significant changes for quite some time to the private rented sector as a whole.

Delayed from last year, said the National Residential Housing Association (NRLA), the proposed Renters Reform Bill is scheduled to address issues including:

  • repeal of Section 21 of the Housing Act;
  • reform of Section 8 (the so-called “no-fault” evictions);
  • the possibility of a formal register of landlords;
  • the introduction of lifetime deposits; and
  • the improved enforcement of housing laws and regulations.

4. Energy efficiency rules

The year ahead is likely to see further steps along the path towards government plans for enhanced energy-efficiency in the private rented sector, suggested an article by Which? magazine on the 29th of December.

The precise steps remain to be seen but the government has already decided to delay until 2026 (instead of the original 2025) a deadline by which all private sector landlords must bring their let properties up to a minimum band C energy-efficiency rating.

It also remains to be seen whether there will be a price cap on the maximum amount landlords will be expected to pay to upgrade the energy efficiency of their properties.

5. EV charging points requirement in new builds and refurbs

At the end of last year, the Prime Minister set the ball rolling by announcing that all new buildings and those in the process of major renovation will be required to install charging points for electric vehicles (EVs).

That, in turn, will require major infrastructure developments including:

  • real-time monitoring of charge consumed and the setting of charging schedules to take advantage of off-peak energy tariffs;
  • establishing minimum technical standards (according to British Standards);
  • cyber security arrangements that comply with European standards EN 303645; and
  • rules for the inspection, testing, and removal of charging points to the required standards.

6. Making Tax Digital

Until now, you have been able to avoid signing up to the government’s Making Tax Digital (MTD) initiative if your buy to let business had an annual turnover of less than £85,000.

With effect from the start of the new tax year this April, whatever your business is earning, you will be required to submit your VAT tax returns in accordance with MTD requirements.

Summary

As in previous years, 2022 is likely to see a further raft of new laws and regulations that impact you as a landlord and your buy to let business.

Make sure to follow any changes that are put into effect – and, whenever possible, prepare for those changes well in advance.

*Please note, these proposed changes are based on our current understanding of the Law etc. Please note that this information is for guidance purposes only, as not all these changes may come into effect – and some may only come in to affect in certain areas of the UK. Please always seek professional advice if you are unsure as to your obligations as a landlord.

When we help you to find a policy suitable for your needs, we also make sure that you are totally clear as to how to make a claim should the need arise.

As a general principle, you will lodge your claim with the claim services of the issuing insurer. In some cases, they may administer the claim themselves or in other cases they may use a third-party to do so. Whichever is the case, it should make no difference to the excellent service you receive.

As you may appreciate, you do not make your claim with us as such. Our formal involvement in handling a claim would mean we would sit between you and the issuing insurer. That would be likely to achieve little other than administrative delay.

However, if you do need to make a claim against the policy, we have sourced for you, please notify us so that we can assist with its smooth processing. It is not unusual for questions to arise during a claim, and you should not see that as any reflection on the validity of your position. It is routine and typically only to clarify aspects of the detail.

Do note though that we are unable to overrule any positions adopted by the issuing insurer and their claims handling. We have a role to play in clarifying positions and helping you to understand any points of detail and that’s a duty we take very seriously but ultimately the decision as to whether to accept a claim or not will sit with the insurer.

Remember that the provision of receipts, photographs and where appropriate witness testimonies, may all help speed your claim to final resolution.

We are very pleased to confirm that Cover4LetProperty policies will cover all types of tenant irrespective of the category they may come into.

That would typically include students, social benefit recipients, asylum seekers and so on.

It is worth drawing to your attention though that not all insurance providers will necessarily do so, and some may exclude certain groups of tenants based upon perceptions of risk. That is why it is important that you understand the terms of your let property insurance.

Other considerations

You should also be aware that insurance might not be your only consideration in these circumstances.

There may be other, perhaps rather more unusual circumstances under which there may be restrictions as to who you can let your property to.

That might arise in circumstances such as when a property sits in a conservation area or is in a location where it is surrounded by sheltered housing etc.

They may be exceptional and unusual situations though and for the most part, your main issues will most likely be with your insurance cover and possibly your mortgage provider.

It is important to advise your insurance company about changes in the tenancy of your property. If you are in any doubt or have any questions, please contact us on 01702 606301 and we will be happy to advise you further.

Citing research by the pressure group Action on Empty Homes, an edition of the Big Issue on the 25th of November 2022, reported that there are some 257,331 long-term empty homes in England – those that have been unoccupied for longer than six months. The same sources revealed that there are a further 43,000 long-term empty homes in Scotland and around 27,000 in Wales.

This is at a time when the overall shortage of housing – especially for those looking for affordable housing – is getting worse rather than better. A story in FT Adviser on the 15th of March 2022 pointed out that in the 1990s, the average age of the first-time buyer was approximately 29. By 2002, it had reached 31. Immediately before the recent Covid pandemic, it had climbed further to 32. During that pandemic, it rose two more years to an average age of 34.

Lengthening delays in the purchase of that first home, of course, means that further pressure is put on the already high demand for accommodation in the private rental sector.

So, what is being done to bring empty homes back into the use for which they were intended – and help to address the chronic shortage of housing?

National and local government grants

At national level, the government body responsible for housing, land, and regeneration – including the regeneration of empty housing – is the Department for Levelling Up, Housing and Communities (until September 2021, it was the Ministry for Housing, Communities and Local Government. Its executive branches are currently Homes England and the Regulator of Social Housing.

Pressure groups are calling on the government to do more to tackle the growing number of empty houses. During National Empty Homes Week in 2022, Propertymark wrote to the Department for Levelling Up, Housing and Communities asking it to restart its Empty Homes Community Grant Programme, which has been inoperative since 2015.

Those initiatives included a New Homes Bonus that made available grants to local authorities to bring empty homes back into use and a Build to Rent fund for the building works that included the conversion of empty properties into homes.

These have been replaced by an overarching Home Building Fund – providing development finance for new housing – administered by Homes England.

Local government

Responsibility for tackling housing shortages caused by empty houses has instead fallen on the shoulders of local government. The execution and administration of the policy objectives and funding provided at the national level are effectively delegated in practice to local government.

It is at this level, that a large proportion of grants and loans become available to smaller, individual investors in buy to let property regenerated from previously empty housing.

With the availability of a large number of empty properties, coupled with favourable loans and bids for grants from the local authority, together with the protection of empty property insurance whilst refurbishment and modernisation takes place, there are some opportunities for prospective landlords and homeowners to make use of a previously wasted housing resource.

Access to the assistance available from local authorities for the regeneration of empty housing – by way of loans and grants – varies from one council to another.

Incentives are frequently launched, therefore, on a relatively small-scale and very local basis.

Who can get an empty home grant?

This varies depending on where the property is and your status (e.g. investor or owner-occupier). Some are available to:

Empty property grants

One such scheme in South Wales, for instance, is offered by the local council Rhondda Cynon Taf and makes up to £20,000 available by way of grants for repairs and refurbishment of long-term empty property (that has been vacant for more than six months). The applicant must plan to use the property as their main residence for at least the next five years.

The London Borough of Brent also offers grants – of a maximum up to £6,500 – for the refurbishment of sub-standard homes (including empty houses) or the conversion of large empty homes into smaller dwellings. A condition of the grant is that when the works are completed, the property must be let to the council for a period of five years.

These two above examples help to illustrate:

  • the active steps being taken by various councils around the country to identify the number of empty homes in their area;
  • the type of incentives that are available by way of locally funded grants and loans;
  • the very local – and sometimes quite small-scale but no less valuable – nature of such schemes; and
  • the widespread recognition by local authorities that empty housing represents a wasted resource at a time when practically every part of the country faces a housing shortage.

The upshot is that if you are interested in buying an empty property to refurbish, modernise to live in, let to tenants, or sell on there is likely to be help from a local council nearby. It is important, though, to do your research and establish just where and in which districts any such scheme might apply and to make enquiries about which of your refurbishment and regeneration projects might qualify for a grant or loan.