Northern Ireland landlords to face new legislation

Asking rents rise for residential property by +0.7% in March

Government changes how council houses are to be run

Mortgage approvals drop to nine month low

Tenancy deposit disputes increasingly favours landlords

Nine out of ten businesses unhappy with the 2010 Budget

Landlords in Northern Ireland are to become regulated under proposals for the buy-to-let property market by Margaret Ritchie, the social development minister for the Northern Ireland Assembly.

Ritchie has stated that in order to raise standards in the private rented sector (PRS) the following regulations need to be implemented:

• A mandatory landlord registration scheme, which will see landlords provide details for a Northern Ireland register for the first time
• Rent deposit scheme to protect deposit agreements between tenants and landlords
• An education and awareness programme to ensure that landlords and tenants are aware of their respective rights and responsibilities
• An enhancement of the current fitness standard for private rented properties

Ritchie said: “Almost one in six dwellings in Northern Ireland are now in the PRS. That accounts for more than the total of all social housing dwellings put together. As such, I felt that it was hugely important to ensure that the sector is properly regulated.

“The introduction of a landlord register will help ensure that all private landlords are held accountable, that they are made aware of their responsibilities, and also of their rights. The strategy will also ensure a higher standard of home in the private rented sector, and that those more vulnerable people living in private rented homes are better supported to help them sustain tenancies."

The plans have been announced as part of a new private rented strategy, entitled ‘Building Sound Foundations’, and have resulted after a public consultation held in 2009. Ritchie will present these proposals and any further ones for legislation to the Assembly in the next three to four months with a view to them becoming law by spring 2011.

Grainia Long from The Chartered Institute of Housing (CIH) said: "Its focus on making the PRS a more sustainable, professional and attractive option is particularly relevant because of the recent growth in the number of private rented properties.

“The CIH strongly supports the department's plans for the introduction of a tenancy deposit scheme which will provide protection for both landlord and tenant should a dispute arise. We look forward to working with landlords through our learning and development services to implement the strategy for the benefit of communities."

Asking rents rise for residential property by +0.7% in March

Advertised rents rose for the second consecutive month in March 2010, with an increase of +0.7% taking them to £820pcm, according to Findaproperty.

Rents for houses increased by +0.7% to £846pcm, with rents for flats going up +0.8% to £767pcm, the highest they have been since February 2009. Despite these increases rents are still -6% below their peak levels, with the increases attributed to the lowest stock levels since October 2008.

Nigel Lewis of FindaProperty said: “The rental market has had a tumultuous two years but those landlords who managed to hang on despite the oversupply of properties and falling rents can now see the light at the end of the tunnel.

“While rents are still a long way off the peak seen in early 2008, they are slowly rising and the current tightening supply levels as accidental landlords leave the market coupled with strong demand should ensure that returns for serious landlords continue to improve over the course of the year.”

The number of properties available to rent fell -4.2% in March 2010 and has dropped -7.6% since January 2010. The supply of houses available to rent fell -6.9% in March, the lowest level since August 2008 and the availability of flats to let also decreased by -2.7%, the lowest level since December 2008.

Five regions across the UK saw increases in rents during March with the South East leading the way with an increase of +2.3% followed by the East with a rise of +2%, however the West Midlands and the North East both saw declines of -1.4% and -2.3% respectively.

Government changes how council houses are to be run

The current Housing Revenue Account (HRA) scheme is to be revamped by Housing Minister John Healey and will be replaced by a new self-financing system in 177 local authority (LA) areas.

It will give councils the freedom to fund and run their council homes, without any subsidies from central Government and also create the funding capacity to build over 10,000 new council homes a year.

Healey said: "This is a once and for all settlement between central and local government. It will bring council house funding up to date - replacing a system which was introduced before the Second World War. Councils will get the freedom to fund and run their council homes, without central Government subsidy. Not a single penny from rents or sales will go to Whitehall and not a single penny will subsidise other councils as the current system dictates.

"The deal will release at least +10% more money in every council for maintaining and managing their homes. Above all, it will mean that four million tenants living in 1.8 million homes will get better homes and better housing services from their council.

"This is a change which councils have been calling for, and which has cross party support. This is an opportunity for radical change which will allow councils to do much more to provide better services and better meet the needs of local people."

Under this new self-financing system, councils will retain all the rent they collect from the homes they run as well as all the receipts from any sales of houses or land. None of the money will go to the Government or will subsidise other councils as the current system dictates. In return, councils will accept a share of an additional £3.65bn debt. With no council taking on a level of debt that is not sustainable for the long term.

Tim Hamilton-Miller of Knight Frank’s Affordable Housing Consultancy team, said: “Under the previous system rents were put into the local authority’s HRA for pooling and redistribution by central government according to complex rules. Funds were not reserved solely for housing and were not retained at a local level.

“The shake up of the old system with the introduction of a self financing model will enable councils to take advantage of the land they already own to build new homes for local people, using locally collected rents. Many authorities will not currently have staff with the necessary development experience but by working closely with housing associations and consultants such as ourselves I can see great possibilities for homes, jobs and regeneration on the horizon.”

Mortgage approvals drop to nine month low

Mortgage approvals for house purchases fell to a nine-month low and -21% below the recent peak in November 2009, according to Capital Economics.

Figures from the Bank of England (BoE) indicate that they dropped by -2.1% in February 2010 to 47,094 having already fallen by -17.4 in January, the third month in a row they have declined.

Ed Stansfield, Capital Economics’ chief property economist, said: ‘The figures make it harder to argue that January’s fall was partly a one-off hit from the poor weather, as that would have suggested that at least some recovery was due in February. However, it is still plausible that the weakness of the data in February is a reflection of the end of the previous stamp duty holiday at the turn of the year.’

However, despite these falls there was a +3.3% rise in buyer enquiries during March 2010, although this was only just over half the average increase (6%) seen between 2004-07, according to Hometrack. This indicates that buyer confidence is fragile and is unsurprising give the weak state of the labour market.

Stansfield said: ‘We are not convinced that the Budget stamp duty changes will rapidly revive the market. Their effectiveness will be limited by the weak outlook for the economy and the lack of mortgage credit. Moreover, experience strongly suggests that the impact of such measures tends to be heavily concentrated in the final two or three months before a lower tax rate expires or a higher tax rate comes in to force. Thus, a strong recovery in mortgage approvals seems unlikely in 2010.’

Tenancy deposit disputes increasingly favours landlords

Although 99.4% of tenants’ deposits are returned by landlords without any problems, those which go on to be disputed are increasingly being found in favour of landlords, according to Mydeposits.

In the year to March 2010, landlords have been awarded part or all of disputed amounts in 51% of cases, with 41% being split with the tenant and just 8% awarded in full to the landlord. This compares to the previous year where 42% of cases were found in favour of the landlord with them receiving part or all of disputed amount, 36% split with the tenant and 7% awarded in full to the landlord.

Eddie Hooker, chief executive of Mydeposits, said: “The more equitable balance between tenant and landlord has come about because landlords have improved the quality of the evidence they are providing to substantiate claims.

“The law starts with the principle that the money is the tenant’s. It’s up to the landlord to justify withholding all or part of a deposit.”

Since tenancy deposit protection became law in April 2007 the scheme has received about 19,000 calls from tenants about possible complaints, with around 11,000 being settled amicably between landlord and tenant without the need for referral of a dispute to formal adjudication.

Nine out of ten businesses unhappy with the 2010 Budget

Over nine out of ten businesses have been left disappointed by the recent Budget announcement, with just 5% believing that Alistair Darling’s proposals will create an environment for their businesses to develop, according to the Forum of Private Business (FPB).

The FPB survey discovered that 87% don’t think the Chancellor’s measures will increase business and consumer confidence, whilst 70% of respondents said they expected a more realistic budget to be delivered after the general election. Only 10% of FPB members rated the budget as ‘good’ or ‘very good’, with 52% branding it ‘average’ and 38% describing it as ‘poor’ or ‘very poor’. 

Some 45% of respondents believed the Budget had a negative impact on employment due to the planned hike in National Insurance rates.

Phil Orford, FPB’s chief executive, said: “This research appears to support our initial assessment of the Budget - overall, it fell far short of what we were hoping for and there was a sense that it was very much a budget for the election.

“Judging from the feedback our members have given us, smaller firms don’t feel that the Chancellor laid the foundations for a better environment in which to do business. At the same time, they’re not taking the Budget too seriously because of the imminent election. 

However, just under 9% of those surveyed stated that they felt the Budget was designed to encourage short-term recovery, with around 19% stating the Chancellor’s measures would have a positive impact on both cash-flow support and business investment.

Meanwhile 18% said the Budget would have a positive effect on business growth support and 14% thought it would improve access to finance.

Orford said: “However, there were some specific measures included in the Budget which should help some SMEs – things like the creation of a credit adjudicator for small firms, the extension to HMRC’s Time to Pay scheme and new targets aimed at helping small businesses get more public sector contracts.

“As long as they are administered properly, these schemes should provide tangible, on-the-ground support to smaller firms and the Forum’s members appear to appreciate that.”

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