More reform to Universal Credit is needed, as tenants are falling into rent arrears, insists the Residential Landlords Association (RLA).
The organisation is speaking out in response to a new report published by Citizens Advice yesterday (6thFebruary 2019), showing that 49% of those that it supports with Universal Credit are in arrears on their housing payments.
Chris Town, the Vice Chair of the RLA, says: “Today’s report demonstrates the need for more changes to be made to Universal Credit.
“One of the main drivers of rent arrears has been that tenants cannot routinely choose to have the housing element of Universal Credit paid directly to their landlord at the start of a claim. Many tenants prefer to have the assurance that their rent is paid and their right to do this should be introduced immediately.”
He adds: “This needs to be coupled with lifting the freeze on housing benefits and the housing element of Universal Credit. Housing cost support is simply not keeping up with the realities of rents in the private sector, despite them falling in real terms over the past year.”
A report for the RLA by experts at Manchester Metropolitan University noted that caps on the Local Housing Allowance rate have been key drivers of homelessness from the private rental sector.
The Office for National Statistics has found that, in the UK, the average rent in the private rental sector increased by 1% in the year to December 2018, which is much lower than inflation.
Landlords, do you have tenants on Universal Credit? If so, have you experienced issues with rent arrears?
There has been an increase in the number of private tenants
in England, with 20% of all households
now renting from a private landlord. Subsequently, build to rent
properties, designed for long-term occupation, are on the rise.
There are many reasons why more people are renting, and for
longer, in the UK, whether it be because of the changing and uncertain housing
market, or the struggle to save for a home deposit.
Build to rent properties need to be designed with tenants in
mind, and, thus, community and residence experience need to be considered
carefully by investors.
To help, broadband and utilities provider Glide has put
together its five top priorities to consider when investing in build to rent
properties:
1.Understand your customer
With over a third (37%) of build to rent properties being
occupied by young professionals, it is important that investors understand what
they are looking for. All-inclusive bills are a high priority when choosing a
place to live, according to over half (52%) of millennial movers. Any other
ways to save time and make things as convenient as possible for your tenant,
such as parcel storage or dry cleaning, are also desirable.
As many young professionals commute to work, it is a good
idea to consider this when choosing areas in which to invest. According to
recent research, two in five (40%) of those without children factor in distance
to work when choosing a rental home, while one in five (21%) also prefer to
live near public transport links or airports.
2. Sense of community
As experiences are valued highly among young professionals,
creating a sense of community is key in build to rent properties. Your
professional audience needs to feel part of a well connected, respectful and communal
living environment.
A good way of ensuring a positive community atmosphere is a
Facebook group for the building. This can be a good way for tenants to interact
with other people that they are living with, and create social events, such as
barbecues and meet-ups. This is particularly appealing to those who have only
recently moved to the area for work and don’t know many people before they move
in.
In order to accommodate and promote this social setting,
spaces, such as rooftop terraces, communal gardens or lounge areas, are a good
idea for tenants to socialise and relax outside of their own homes.
3. Not just a place
to sleep
Creating space, or the illusion of space, is very important
for ensuring that tenants don’t feel too claustrophobic. In-built storage
facilities will mean more floor space and open-plan rooms, which are more
appealing to millennials.
Lighting is crucial for making rooms appear light and
spacious, so natural light is a must-have. However, being able to wind down
with more relaxed lighting is also important. Therefore, well-sized windows and
dimmer light switches will help to facilitate this. There should also be lots
of plug sockets available, so that your tenants can use lamps and other
electricals, such as chargers and tablets, to create a personal environment.
4. Stay up to date
with technology
Cutting edge technology is vital to enhance the customer
experience. Millennials rely heavily on fast and reliable wifi in their lives,
from streaming TV shows and movies, to ordering their weekly groceries online.
High-speed connectivity is an essential part of renting for 80% of young
professionals.
Being able to control all aspects of your home at the tap of
a screen is becoming more popular. You should ensure that this is incorporated
into your build to rent properties, as well as any other upcoming home
technologies.
5. Be future-proof
As tenants are looking to rent long-term, they will be keen
to live in a building that is set to last. You should make sure that you invest
in solid infrastructure, so that you can ensure that your tenants have what
they need for years to come.
Integrating engineering systems allows for high quality
space, which means that developers have more floor space to play with.
In order to use less power, consequently providing lower
energy bills, you should have a full fibre infrastructure that will stand the
test of time. This will also reduce the tenants’ carbon footprints, which is a
key and topical issue for millennials.
Are you looking to invest in build to rent properties? Make
sure that your investment has the features above.
A fifth (21%) of millennials have been evicted from their rental homes before they were ready to leave, due to a change in ownership of the property.
Many tenants face the uncertainty of potentially having to
find a new home when their landlords want to sell their properties empty.
The research from online property marketplace Vesta Property
claims that 39% of millennials fail to understand exactly what their rights are
as tenants when their landlords sell, while 32% did not know that tenants could
be legally served notice to vacate the property, even if they have done nothing
wrong.
The study indicates that most private tenants would prefer
to stay in the property, regardless of a change in ownership, with 77% of
respondents saying that they want the option to stay in their homes, even if
their landlord sells to another buy-to-let investor.
Russell Gould, the CEO of Vesta
Property, comments on the findings: “The current
buying and selling system, where good tenants are evicted for no reason other
than to sell a property, makes life harder for everyone.
“Buyers
have to find new tenants, sellers can lose valuable income and renters are
forced to disrupt their lives by finding new accommodation.”
He
insists: “The sector needs to move with the times, and mould the system into
something that works for both landlords and tenants alike. Specifically, the
practice of advising a landlord to evict tenants in order to sell a property is
outdated.”
Landlords,
have you evicted a tenant due to a change in ownership of your property?
The average tenancy deposit across the UK in 2018 was
£1,110, following an increase across all locations, according to the latest
Statistical Briefing report from the Tenancy Deposit Scheme (TDS).
The report highlights the increasing value of tenancy
deposits and number of deposits protected in England, Wales, Scotland and
Northern Ireland, but there are regional differences in the average tenancy
deposit.
The average tenancy deposit value in England and Wales is
almost double the level in Northern Ireland, although the TDS points out that
significantly higher deposits in London distort the overall picture.
According to the TDS, the average tenancy deposit in England
and Wales last year was £1,110. In Northern Ireland, it was £587, while the
Scottish average sat in the middle, at £675.
Across the UK, the average tenancy deposit increased in
value between 2017-18, by 2% in England and Wales, 1.5% in Scotland, and by
1.4% in Northern Ireland.
Alongside the average tenancy deposit value increasing, the
number of deposits protected has also risen year-on-year in the UK.
In England and Wales, 3,748,725 deposits were protected,
which is up by almost 1.6% from 3,691,242 a year earlier. In Scotland, an additional
9,441 deposits were protected between 2017-18 – an increase of nearly 4.7%
annually.
Northern Ireland experienced the greatest growth in the
amount of tenancy deposits protected year-on-year, at 8.97%, from 49,102 to
53,510.
Steve Harriott, the Chief Executive Officer at the TDS, says: “While the report
highlights broad differences between the constituent countries of the UK, it
hides more local disparities. For example, the average deposit value in England
and Wales does not reflect the difference between central London and areas with
lower average deposits.
“The
report does, however, demonstrate that the private rented sector is continuing
to grow, with an increase in the number of deposits protected and their value
across the UK.”
He adds: “There
are, of course, a number of reasons behind the growth, but, as the sector
expands, we continue to see the numbers of deposits protected increasing.”
Landlords
and letting agents must be aware that security deposits will be capped at five
weeks’ rent under the upcoming Tenant Fees Bill.
A new whitepaper, Neighbourhoods
of the Future 2 from The Agile Ageing Alliance and Tata Steel, was launched
at the House of Lords in Westminster on 21st January 2019, offering
a new vision for the housing market, as the UK finds itself in a crisis.
The whitepaper advocates a fundamental shift in the way that
housing is considered. Rather than a series of rungs that the homeowner must
climb, from starter home upwards and then back down again in later life,
properties must be capable of adaptation, the report insists – of morphing to
support a growing family, and then adjusting to accommodate an ageing one.
Gillian Girling, the Chief Executive of Girlings Retirement
Rentals welcomes the whitepaper, particularly its focus on an ageing
population, and the need to develop homes and neighbourhoods with older people
in mind.
She says: “We
are an ageing nation, but housing has not kept pace with the changing needs of
the population. House builders and Government have, in the past, focused more
on the younger generation, but we are facing a housing crisis that can only be
solved by looking at the needs of all generations. The lack of affordable
housing for young people, as well as the lack of desirable retirement housing,
needs to be addressed.”
In
the report, leading experts have shared their views on how neighbourhoods and
housing could be developed in the future, in a collection of articles on key
areas: housing, design, health and care, technology, finance, and ageing
societies.
The whitepaper highlights that ageing
populations are a global phenomenon. Towards the end of 2019, there will be
more people worldwide aged over 65 than under the age of five. And, by 2050, in
the UK, 30% of the population will be over 60-years-old.
The question is: Where and in what type of
homes will these older adults live, and to what extent can technology support
healthy ageing and independent living?
One of the major challenges, summarised by Judith Torrington, the author of Future of Ageing: Adapting Homes and Neighbourhoodsin Neighbourhoods of the Future 2017, is that people age differently, but physical decline is inevitable.
She highlights that the key features of
accessibility – level access, flush thresholds, wide doors and circulation space,
and entrance level toilets – are only found in 5% of English homes. Also, older
people may have difficulty getting in and out of baths, walking upstairs,
bending down, and reaching up.
Some of these needs can be met by adapting
existing homes, but studies suggest that 16% of properties would need major
structural alterations to become fully accessible, while alteration would not
be feasible in 28% of homes.
The Future of Housing for an Ageing Population
The whitepaper considers several housing
options, such as retrofitting existing homes to better suit people as they get
older, multigenerational living (which is on the rise in the USA), and mixed
communities, with housing built to suit different ages.
There is also some consideration given to
renting, especially when it comes to community-based housing associations. Jim
Ripley, the CEO of Phoenix Community Housing, pointed out that, by 2028, around
one third of the residents who live in Phoenix homes will be 75-years-old or
over. Today, just 12% of its tenants and 5% of its leaseholders are in this age
range.
Ripley comments: “We knew
that lots of older people were struggling to maintain their homes. Many
struggled with heating bills, and with the garden and the cleaning. And we knew
that, presented with the right offer, many would be keen to downsize to
properties that better met their needs.”
Renting
in retirement is on the rise. The Centre for Ageing Better predicts that, by
2040, a
third of people over 60-years-old could be living in rental
accommodation.
Research
agency Boomer found that 27% of those between 55-85-years-old said that they
would choose to rent instead of buy, citing a lack of stress, being able to
live in a place that they couldn’t afford to buy, avoiding Stamp Duty, and the
ability to release equity.
Girling
says: “Renting is increasingly a key consideration for people when they
downsize. Many of our tenants have chosen to downsize and rent in a retirement
development, rather than buy, because our apartments are adapted to meet the
needs of older people. They also offer some support services, such as a 24-hour
care line and have a manager on site. Renting can make financial sense, too, as
people no longer have to contend with maintenance costs or service charges, and,
if they have sold a property, they can use the capital to invest or spend and
enjoy their retirement.”
“As pointed out in the paper, the pursuit of
age-friendly housing is important, because very few variables have as much
power to support or derail healthy, productive ageing and the related quality
of life,” adds Girling.
On a more eco-conscious
level, a recent study highlighted the homes of the future that homeowners and tenants are interested in – do the requirements
align with the whitepaper?
The number of families calling Scotland’s private rental
sector home has increased, according to the latest Quarterly Report from
Citylets, covering the fourth quarter (Q4) of last year.
The letting agent has revealed that rent prices on family
homes in the country recorded the greatest growth during the quarter, as
Scotland’s private rental sector has become a significant tenure for adults
with children.
In Q4 2018, rent prices continued to rise on an annual basis
across Scotland, at an average of 5.0%. Strong demand for properties of all
sizes in major cities underpinned growth, with larger three and four-bedroom homes
recording the strongest gains, as an increasing number of families settle in
the private rental sector.
The average property to let in Scotland now costs £771 per
month and takes just over a month to let, at 32 days.
Gillian Semmler, the Communications Manager at Citylets, comments:
“It has been interesting to note that the largest
rises in Scotland’s PRS [private rental sector] in recent quarters have been
for the larger three and four-bed properties.
“With an estimated 90,000 families in
Scotland, representing around a quarter of the rented sector, the PRS has
become a significant tenure for adults with children.”
Edinburgh
Rent prices in Edinburgh once again moved
upwards, recording a significant increase of 7.8% over the year to Q4, to an
average of £1,095 a month. Citylets believes that tenants will almost certainly
experience further rises over the course of 2019, however, it remains to be
seen whether the growth of over 7% will be sustained.
The steepest rise was recorded for four-bed
homes, at an average of 10.3% over the year and 48.6% on the ten-year view. Overall,
Edinburgh has recorded average growth of 6.5% over five years and 4.3% over
ten.
The market continues to move very quickly,
with an average time to let of just 23 days.
Number of Families Calling Scotland’s PRS Home Increases
Glasgow
The private rental sector in Glasgow continues
to experience strong demand, with larger properties, as per Edinburgh,
recording the greatest gains. Overall, rent prices in the city rose by an
average of 3.9% over the year to Q4, to £771 per month.
With Aberdeen continuing to fall, the gap
between Scotland’s largest city and the Granite City widened to £56 a month,
and is expected to widen further in 2019.
The market is moving swiftly, at an average of
25 days, with one and two-bed homes in particular letting quickly, at 20 and 25
days.
Aberdeen
The northeast posted several positive economic
indicators for 2018, such as office space uptake, but, as yet, this has not
fully stabilised the rental market. Rent prices continued to ease down in Q4, at
-5.3% over the year. Private rental properties in Aberdeen now cost an average
of £715 per month.
While falls have been steep in recent years,
from the ten-year view, the Aberdeen rental market averages just -1.8% a year
on the whole. Three-bed homes recorded a 2% increase in rent prices over the
year, to an average of £972.
The time to let remains high, at an average of
53 days.
Dundee/West
Lothian
Dundee had a strong end to 2018, with annual
growth of 4.7% continuing a year that saw positive increases throughout. Properties
are also letting faster, at just 25 days on average, and it remains to be seen
whether this represents a step change in a hitherto predictable and stable
market.
Two thirds of homes in Dundee now let within a
month, at an average price of £578.
Properties to let in West Lothian again
recorded positive annual growth, of 5.1% in Q4, to hit £699 a month. A
substantial reduction in the time to let was witnessed over the same period, to
26 days – 13 days faster than the previous year.
Adrian Sangster, of estate agent Aberdein
Considine, comments on the figures: “2018 was very much a year of transition
for the Scottish PRS. Agents, landlords and tenants were continuing to adapt to
changes brought about by the new PRT [Private Rental Tenancy],
which went live at the end of 2017.
“Agents also had to prepare for the
introduction of the Letting Agent Register during Q4. Any
agent who has not applied and continues to trade, does so illegally. Therefore,
landlords and tenants need to carry out due diligence to ensure the agent
they’re using is fully compliant. All this took place at a time when more
landlords left the sector, in part due to the phased tax changes announced in the 2015 UK
Budget.”
