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London saw greatest number of homes bought in 2020

London was noted as recording the greatest number of property purchases across the UK in 2020, according to reallymoving.

The data shows that the capital saw 13.7% of all completions, followed by Leeds at 1.7% and Birmingham at 1.6%.

Between July and December 2020, the proportion of first-time buyers in the market fell by 12% compared to the same period last year.

Over 2020, FTBs made up 51% of all buyers in the market, compared to 56% in 2019.

While 16% of FTBs opted for a new build home over an older property, almost half of those (46%) used a Help to Buy equity loan enabling them to buy with a deposit of just 5%.

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The average house price in England and Wales increased by from £293,819 in January 2020 to £352,239 in December 2020.

However, reallymoving predict that prices will fall by 1.2% in January and 2.5% in February 2021.

Home movers sold their homes for an average price of £313,149 and bought for an average price of £379,191.

Meanwhile, FTBs paid an average price of £262,180 for their first home.

Furthermore, the proportion of FTBs in England liable to pay stamp duty fell from 25% to just 5%, following the announcement of a stamp duty holiday.

Nine out of ten (91%) transactions by all homebuyers, including FTBs, have avoided the tax since July, prompting a surge in market activity and prices.

The data also shows that the cost of moving home dropped by 39% in 2020 from an average of £10,911 before the stamp duty holiday came into effect to £6,669 after.

According to reallymoving, costs such as legal fees rose however, as a consequence of being directly tied to rising house prices.

Those buying and selling a home typically paid £1,682 in legal fees, while FTBs paid £1,100, up 15% and 11%, respectively.

This data is based on 910,000 quotes generated on the reallymoving site throughout the year.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

Rob Houghton, chief executive of reallymoving, said: “The property market took us on a rollercoaster in 2020, from shock and despair when thousands of home movers were forced to press pause back in March, to the extraordinary resurgence in demand that began in the early summer and continued right through to the end of the year.

“Most concerning however, has been the decline in the proportion of FTBs in the market. They largely didn’t benefit from the stamp duty holiday and faced huge challenges securing finance as higher loan-to-value mortgages disappeared overnight and several high street lenders banned gifted deposits.

“Yet there are reasons to be optimistic that 2021 could see a reversal in fortunes for FTBs as lenders return to the market, competition for homes is reduced and price inflation readjusts downwards.

“Reallymoving is on a mission over the coming year to help homebuyers upskill with a series of live webinars and content designed to help inform and educate about the process, ensuring buyers have everything they need to navigate a successful home purchase.”

By Jake Carter

Source: Mortgage Introducer

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Rents shoot up in South of England

The cost of renting has risen in the South of England outside London, research from Homlet shows.

Rents have risen by 10% to £942 in the South West, by 7.7% in the East of England to £983, and by 6.1% in the South East to £1,085.

The cost of renting has fallen by 4.5% in London to £1,556, signalling people moving out of the city.

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Andy Halstead, chief executive of HomeLet, said: “At a national level the latest data shows a continuation of the trends we’ve seen emerging since the national lockdown ended, with rents for new tenancies increasing across the UK, with the exception of London.”

“In the regions surrounding London, the annualised variations in rental values for new tenancies looks significant, especially in the South West (10%), East of England (7.7%) and South East (6.1%). In reality this is a theme that we’ve seen grow gradually month on month, since July 2020.

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“In the South West average rents are now £83 per month higher than the same time last year. The upward pressure on the regions around the capital, particularly commuter towns, is coming from a broad range of tenants looking for more space, both inside and outside the property.

“The trends we’ve seen in the past 12 months highlight the responsiveness of the private rented sector, and the crucial role it plays in supporting the changing needs of a significant proportion of households in the UK.”

BY RYAN BEMBRIDGE

Source: Property Wire

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Housing market remains open during new national lockdown

The housing market will remain open during the new lockdown in England.

Boris Johnson has announced a set of new national restrictions for England, similar to the March lockdown.

But unlike the first lockdown, the housing market is to remain open for business.

Government advice on home moving during the coronavirus remains unchanged. Consequently, people in England will be able to move and removal firms, tradespeople, and estate agents can still operate by going inside homes. Adherence to safety and social distancing remains crucial.

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Government advice on moving home: 

You can still move home. People outside your household or support
bubble should not help with moving house unless absolutely necessary.

Estate and letting agents and removals firms can continue to work. If you
are looking to move, you can go to property viewings.

Follow the national guidance on moving home safely, which includes
advice on social distancing, letting fresh air in, and wearing a face
covering.

Industry reaction: 

Ben Taylor, CEO of Keller Williams UK, said: “With immense caution I welcome the fact that the property market remains open albeit that viewings and the physical moving process itself must be met with extreme diligence. Why have the government chosen to ‘exempt’ the UK housing market and estate agents?

“Think of it as a string to the broader economy rather than it doing us estate agents a particular favour especially with billions of pounds in accelerated property transactions currently competing to complete by the end of the stamp duty deadline on March 31st.”

The managing director of Enness Global Mortgages, Hugh Wade-Jones, commented: “It remains business as usual for the UK property market and as a result, it’s unlikely we will see any decline in the huge levels of buyer activity seen since last year, nor should we see property prices detract from their current upward trend.

“Billions of pounds in property transactions are also currently waiting to be dragged through the system prior to the stamp duty holiday ending. It would have been a disastrous move for the government to have slammed the door in the face of these aspirational homebuyers so close to the finish line and would have no doubt caused a landslide of property transaction fall throughs and a drop in values.

“Of course, the industry must continue to operate with immense caution and all physical aspects of the home buying journey itself must be treated with kid-gloves. Literally.”

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

Mark Hayward, chief policy adviser, Propertymark, said: “We welcome the news that the housing market is to remain open throughout this new lockdown period, but it is essential that all agents continue to play their part in reducing the spread of the virus through following all relevant guidance on how to safely conduct viewings.

“It is vital that agents operate in accordance with government and Propertymark guidelines to help prevent the spread of Covid-19, keep movers and buyers safe and keep the housing market moving through these uncertain times.”

Director of Behnham and Reeves, Marc von Grundherr, commented: “The latest news of another national lockdown should do little to slow the momentum of the UK property market, given that official government advice still deems it ok to transact and move home.

“As a result, the industry will continue to service the vast number of homebuyers who have entered the market since last spring and this will ensure that many more will benefit from the current stamp duty holiday.

“With no speed bumps in sight for the time being, the market is now clear to accelerate through the gears throughout the coming year and we should see a healthy increase in transactions and price growth over the coming months, if not, across the remainder of the year.”

You can view the full government guidance for the lockdown in England by clicking here.

By MARC DA SILVA

Source: Property Industry Eye

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Almost half of BTL landlords remain optimistic despite potential tax hikes

Property investors have been the target of many recent tax changes and may feel unfairly targeted at a time when they are facing potential Covid-related tax hikes to pay for the pandemic, and yet almost half of those who invest in the private rented sector remain optimistic going into 2021.

Despite the challenges of the coronavirus, almost half – 45% – of landlords say they are currently optimistic about the buy-to-let market, according to a new survey released today by Property Master.

The online buy-to-let mortgage broker found that less than a third – 29% – of those surveyed were pessimistic about the buy-to-let market, despite fears that the chancellor Rishi Sunak could increase taxes for those with additional homes, as part of the government’s attempts to claw back the cost of extra spending during the coronavirus pandemic.

Mortgage interest relief changes, the scrapping of the ‘wear and tear’ allowance and the introduction of the 3% stamp duty surcharge have hit landlords’ profits over the past few of years, which partly explains why so many people are exiting the BTL market and thus reducing the supply of much needed private rented stock.

Tax and regulation changes continue to have a negative impact on the buy-to-let market, with a number of landlords selling properties with a view to reducing their portfolio, or exiting the market altogether.

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But despite the concern that yet another proposed tax hike could see buy-to-let landlords exiting the market in droves before it is introduced, just 10% of the landlords surveyed by Property Master planned to exit the buy-to-let market in 2021 and almost 70% said they were not about to sell any of their properties in the new year.

Angus Stewart, Property Master’s chief executive, said: “For landlords, as for many other sectors, 2020 is a year that brought plenty of challenges. But in the case of landlords Coronavirus and the resulting economic uncertainty came on the back of a raft of regulatory and tax changes over recent years that have left the sector battered and which saw smaller landlords in their thousands throw in the towel.”

Stewart continued: “However, our survey shows the buy to let sector as a whole is a resilient one. Those landlords that have survived may well be stronger and our survey shows them as giving buy to let the thumbs up as we move into 2021.

“We see the year as being one of two halves. There is clearly continued turbulence forecast for the first half of the year as coronavirus and Brexit play out. But the fundamentals of the private rented sector remain and now more than ever an increased number of people need a good quality roof over their heads, and this will create plenty of opportunity for landlords to do well.”

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The number of landlords surveyed by Property Master who planned to add to their portfolio in the new year was evenly split with those who had decided in 2021 to stick with their existing property portfolio.

Almost 43% of landlords said they planned to buy more property in 2021 and the same number planned to stick with the properties they already had. Almost 13% were undecided.

In terms of buy to let mortgage rates, landlords seemed more relaxed about the outlook although many commentators have recorded an increase in rates in recent months.

Almost 54% of landlords surveyed thought that buy to let mortgage rates would stay the same as opposed to almost 38% who thought they would increase further. Just under nine per cent thought rates would decrease despite the rumours about a possible negative Bank of England base rate.

Stewart added: “A competitive and innovative buy-to-let mortgage market has proved to be a big plus for the private rented sector. Inevitably, the coronavirus has led to some caution amongst lenders especially around loan to value ratios, but we see this as easing as the year plays out.”

By MARC DA SILVA

Source: Property Industry Eye

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Mortgage approvals reach to highest level since 2007

The number of mortgage approvals in November 2020 increased to the highest level since August 2007, according to the Bank of England Money & Credit data.

The number of mortgage approvals reached 105,000 in November, with net mortgage borrowing also increasing to £5.7bn.

In addition, effective interest rates on new mortgage borrowing ticked up to 1.83%.

Household deposits increased by £17.6bn in November, however there were significant withdrawals from national savings and investment accounts according to the data.

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Bank borrowing by small and medium-sized businesses was noted at £1.8bn, while net borrowing by large businesses was £0.2bn.

Tomer Aboody, director of property lender MT Finance, said: “The Bank of England figures provide further confirmation of the prevailing strength and confidence in the housing market, with the highest mortgage approval levels and further borrowings in over a decade.

“Households are looking to maximise space in their current homes by extending, converting lofts and refurbishing, as more time is spent at home.

“With mortgage rates so low, taking advantage of existing equity in homes has enabled people to borrow more for living expenses as they also deal with concerns over future employment and income, with so many industries affected by the pandemic.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

“Household deposits have increased with people saving, due to not being able to go away, out for dinners or even shopping.

“Consumers are being frugal with their spending and considering the threat of a possible recession on the horizon.

“How the government will look to tackle any forthcoming concerns with the Budget, the end of furlough and stamp duty relief will be interesting, since this new wave of the virus has come as a surprise and therefore further potential assistance is desperately needed.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, added: “Not surprisingly, the mortgage market improved considerably at the end of the year but we shouldn’t look too closely at these figures because they reflect a period of particular improvement in market activity of the previous few months.

“Moves have slowed since although many are still trying hard to take advantage of the stamp duty holiday, which will be ending very soon.

“The likelihood of further lockdown restrictions will bring short-term pain to the market which hopefully won’t be reflected in reduced values.

“Certainly the greater availability of a vaccine, on the other hand, will provide some optimism.”

By Jake Carter

Source: Mortgage Introducer

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Manchester and Leeds see strongest UK house price growth

Throughout the past year, Manchester and Leeds has led UK house price growth. The north of England is expected to continue performing the strongest during 2021 as well.

The north of England is dominating UK house price growth. The latest house price index from Zoopla revealed Manchester saw the largest increase in average house prices during the past year, rising by 5.7%. Leeds followed closely behind with 5.6% growth. Then, Nottingham and Liverpool had a rise of 5.4% and 5.3%, respectively.

The index also revealed the north-west of England led the way regionally in UK house price growth with a 5% increase year-on-year. Yorkshire and the Humber and Wales followed jointly with 4.9%. As a whole, UK house price growth was 3.9%. This is the strongest growth seen since August 2017 and is up from 1.3% last year.

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The north continues to be in high demand

There has been strong demand across the UK as the property market has defied the traditional seasonal slowdown. According to Zoopla, buyer demand soared by 40% across the whole of 2020. And the north of England has seen a particularly strong level of demand.

Even though property prices are on the rise in the north, prices are still much more affordable, especially when compared to much of the south. Because of the savings buyers can achieve there, demand is expected to continue even after the stamp duty holiday comes to an end.

Many people have reprioritised their housing needs due to the COVID-19 pandemic and successive lockdowns. This is expected to continue impacting demand. People are in search for larger properties and locations closer to public parks.

Because of this, more buyers, tenants and investors will likely look to the north to be able to get more space for their money. Demand and property prices in the north, especially the north-west, will likely continue to increase in 2021 and the coming years as well.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

House price predictions moving forward

While property price growth across the UK is expected to be more subdued in 2021, many experts feel property prices will still rise next year. Zoopla is forecasting a particularly strong start to 2021. This is due to buyers and investors rushing to beat the stamp duty holiday deadline in the spring. Additionally, buyers who have reassessed their home priorities are still itching to move.

In the house price index, Zoopla states: “Stamp duty is a factor supporting demand, but we have questioned the scale of the importance. A recent consumer survey by Zoopla found that 44% of movers’ plans were not influenced by the stamp duty holiday – they remain focused on the need to relocate and find more space and a better location.”

Despite the uncertainty surrounding COVID-19 and Brexit, the UK property market is expected to remain resilient throughout 2021. Savills recently revised its future property price predictions. The north-west is expected to see the strongest growth in 2021 with home values forecast to increase by 8.5%. Additionally, across five years, prices are predicted to rise by 24.1% in the north-west. This is the largest increase predicted out of any UK region.

The north will likely continue leading the way in house price growth. It’s an attractive area to buy property for both homebuyers and buy-to-let landlords. And 2021 could prove to be a good time to lock in lower mortgage rates.

Source: Buy Association

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UK house prices up 7.3 per cent – strongest annual growth in six years

UK house prices enjoyed their strongest annual growth for six years in 2020 as the market was spurred on by tax breaks and changing demand amid the pandemic, according to latest figures from Nationwide Building Society.

The average UK house price jumped 7.3 per cent this year to £230,920 after rising 0.8 per cent in December alone.

Broken down by region, England saw prices rising 6.9 per cent year-on-year in the fourth quarter.

Wales was the next best price performer, with a 6.6 per cent rise, followed by Northern Ireland (up 5.9 per cent) and Scotland (up 3.2 per cent).

The report revealed that prices have jumped 5.3 per cent since March, when the pandemic struck, after demand was sent surging by a stamp duty holiday and the shift to homeworking.

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Nationwide said the stamp duty boost had brought forward people’s home-moving plans, while changing working patterns had increased demand for larger homes in less densely populated locations.

Robert Gardner, Nationwide’s chief economist, said: “The resilience seen in recent quarters seemed unlikely at the start of the pandemic.

“Indeed, housing market activity almost ground to a complete halt during the first lockdown as the wider economy shrank by an unprecedented 26 per cent.

“But, since then, housing demand has been buoyed by a raft of policy measures and changing preferences in the wake of the pandemic.”

However, he added that the outlook for the housing market remains “highly uncertain” as restrictions to control the virus tighten across the UK and with government support measures and the stamp duty holiday set to end in the spring.

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He said: “Housing market activity is likely to slow in the coming quarters, perhaps sharply, if the labour market weakens as most analysts expect, especially once the stamp duty holiday expires at the end of March.”

Howard Archer, chief economist at the EY Item Club, also warned that the property market will see a reversal of fortunes in 2021 and could fall by around 5 per cent by the end of next year.

He said: “We believe that the housing market is likely to come under mounting near-term pressure as the economy is hampered by pandemic-related restrictions, while there may well still be a significant rise in unemployment despite the furlough scheme being extended until April.”

Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors, said: “We are in a very different place now as optimism following the initial rollout of a vaccine and the possibility of a Brexit deal has been replaced by realisation that the effects of the virus will get worse before they improve, as well as recognition of the negative impact on confidence and values.

“However, the determination of the overwhelming majority of buyers and sellers to conclude sales agreed prior to Christmas, relatively few price renegotiations and approval of the Oxford/AstraZeneca vaccine bodes well, provided present constraints prove relatively short term.”

Source: The Irish News

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House prices rose at twice the rate of flats in 2020

The rate at which the price of houses is rising is more than double that for flats as lockdown-weary Britons look for more space.

Annual property price growth for houses in the UK is currently running at 4.3%, while price growth for flats is just 1.8%, according to our latest House Price Index.

The trend is being seen across the country, with all regions reporting significantly stronger increases in the value of houses than those of flats.

Richard Donnell, our director of research and insight, said: “The search for space has been a key feature of the rebound in market activity as households re-evaluate their housing requirements.

“Demand for family homes with gardens, parking and extra space to work from home has continued to rise.”

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Why is this happening?

The coronavirus pandemic triggered a ‘once-in-a-lifetime reassessment of housing’ in 2019, as lockdowns and social distancing created a greater appetite for home offices and outdoor space.

Analysis of our advanced search property tool over the past 12 months found that ‘garden’ was the top feature buyers looked for, while ‘detached’, ‘rural’ and ‘secluded’ all also made it into the top 10.

The high level of demand for houses is putting upward pressure on prices, as demand outstrips supply.

By contrast, flats are suddenly in less demand than they were before the pandemic, leading to slower price growth.

Who does it affect?

The rise in the value of houses was strongest in Wales, followed by the North West and Yorkshire and the Humber, all regions in which affordability is less of a barrier to price growth.

By contrast, the price of flats was broadly unchanged year-on-year in the East, while they edged ahead by less than 1% in the West Midlands and the South West.

The current trend could make it harder for sellers trying to trade up the property ladder from a flat to a house. This is because they are not only likely to find their current property takes longer to sell, but they will also face increased competition for their next home and an enlarged gap between the price of the two properties, if they are staying in the same region.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

What’s the background?

The quest for more space has contributed to a shift in the demographic profile of home movers, and there has been a notable increase in sales in more affluent demographics, where house prices are typically higher.

This shift, along with a high level of transactions, has contributed to a 26% rise in the value of property that changed hands in 2020, with sales rising by £62 billion to £300 billion.

Moving into 2021, older, equity rich, long-time homeowners are expected to continue to take a growing share of sales.

Top three takeaways

  • The rate at which the price of houses is rising is more than double that for flats as lockdown-weary Britons look for more space
  • Annual property price growth for houses in the UK is currently running at 4.3%, while price growth for flats is just 1.8
  • The trend is being see across the country, with all regions reporting significantly stronger increases in the value of houses than those of flats.

By Nicky Burridge

Source: Zoopla

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Tenant rent arrears decline but industry urged to remain cautious

The percentage of tenants in rent arrears decreased during October and November, according to research from PayProp.

Payment data from the rental payment platform also shows that the typical percentage of rent in arrears fell consistently from August to November.

However, with strict COVID-19 restrictions across large parts of the country set to remain in place for the foreseeable future, PayProp said letting agents and landlords should prepare themselves for arrears increasing again in the first few months of 2021.

PayProp’s platform data offers financial evidence that the percentage of tenants in arrears dropped to 11.8% in November, down from 12.2% in October.

This is the lowest percentage recorded since before the spring lockdown in March when 9.6% of tenants were in arrears.

The number of tenants in arrears spiked during September, to 15.1%, although this remains below the 2020 peak of 15.5% recorded in May. A rise in September could be due to increased redundancies as official figures showed that 11.3 people per 1,000 employees were made redundant as the pandemic continued to hit businesses.

Neil Cobbold, chief sales officer at PayProp, said: “The general downward trend of tenants in arrears over the autumn and winter months of 2020 is positive news for letting agencies and landlords.

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“Falling arrears suggest that even though restrictions were tightened once more towards the end of the year, society has adapted to the ‘new normal’.”

The research shows that the percentage of rent owed by tenants in arrears fell to 121.1% in November, down from 124.4% in October and 125.5% in September.

The level of rent owed by tenants in arrears in November was equivalent to the level recorded in May but didn’t quite reach the peak of 127% recorded in August.

Meanwhile, 77% of tenants paid off some or all of their arrears between September and October, while a further 50% paid back arrears between October and November.

Between August and November, the percentage of tenants reducing their arrears averaged between 44% and 48%, while the percentage increasing the amount they owed also remained high at an average of 45% to 49%.

Cobbold added: “Our research shows that on the whole, tenants who end up in arrears try to clear them. Even if they cannot afford to pay back the full amount, renters are generally open to reducing what they owe through affordable repayment plans.

“A particularly high level of tenants reducing their arrears during September could have been linked to a resumption of evictions in England and Wales, with renters agreeing to pay back what they owe in order to avoid their landlord seeking repossession.”

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Despite the reduction in arrears recorded between September and November, the situation could worsen again in the early part of 2021.

PayProp said nthis is partly due to a seasonal bump in arrears as people spend more over the festive period. Meanwhile, with millions of people under the strictest tier 4 restrictions, more jobs could be at risk.

Cobbold said: “Although the situation improved towards the end of 2020, current market conditions mean that letting agents and landlords should be cautious at the start of 2021 as things could get slightly worse before they get better.

“Agents must ensure they have the systems in place to deal with arrears, while facilitating effective communication between landlords and tenants.”

Although arrears could rise again in the coming months, 70% of tenants surveyed by PayProp said COVID-19 and subsequent lockdowns have not made it more difficult for them to pay rent.

“Restrictions put pressure on sectors such as hospitality, but they also give tenants the opportunity to save money which would otherwise have been spent on socialising.

“With the extension of the furlough scheme until the end of April, as well as the ongoing national rollout of a COVID-19 vaccine, there is optimism that tenant finances will be in a stronger position by the middle of 2021,” Cobbold concluded.

Source: Mortgage Introducer

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More Support Needed Landlords Tell Inquiry

Rather than concentrating on measures to block tenant evictions, Government focus should be on providing better support for the private rented sector, so as to help both landlords and tenants.

This is what National Residential Landlords Association chief executive Ben Beadle told a Housing, Communities and Local Government Select Committee’s Inquiry into the Impact of COVID-19 on homelessness and the private rented sector this week.

It was true that the Government had already provided unprecedented levels of support for the sector, Beadle told the inquiry. Even so, a solid commitment to prevent greater problems was needed, he said.

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While helping some tenants, changes made by the Government in response to the Coronavirus Crisis had also caused significant hardship to some landlords, in particular to those whose tenants had been in significant rent arrears prior to the crisis.

The NRLA has been campaigning for financial support to help tenants pay off arrears built up during the crisis along the lines of schemes already operating in Scotland and Wales.

The HCLG Committee inquiry was set up to consider both the immediate and long-term impact of the pandemic on the homeless, rough sleepers and those in the private rented sector. Current hearings are taking evidence from stakeholders about what is being done and what further support is needed. Besides hearing from the NRLA, the committee also heard this week from representatives of Citizens Advice and Shelter, organisations which have joined the NRLA in calling for financial help for renters forced into arrears by the Coronavirus Crisis.

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‘What we are lacking is a longer-term strategy to help the sector and I think the measures we have laid out with our colleagues from Crisis and Citizens Advice and others are a route to sustaining tenancies, which is what everyone wants’, said Beadle.

  • No eviction notices are to be served until 11 January at the earliest and, given the 14 day notice period required, no evictions are expected to be enforced until 25 January 2021 at the earliest. The only exceptions to this are the most serious circumstances: illegal occupation, false statement, anti-social behaviour, perpetrators of domestic abuse in social housing, where a property is unoccupied following the death of a tenant, and extreme rent arrears equivalent to nine months’ rent with any arrears accrued since 23 March discounted.

This is the advice contained in updated guidance published by the Government this week: COVID-19 and renting: guidance for landlords, tenants and local authorities. This provides advice to landlords and tenants on the provisions in the Coronavirus Act 2020, and about their rights and responsibilities during the COVID-19 outbreak.

Source: Residential Landlord

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