TV’s Paul Shamplina reveals latest landlord advice
If you’re a landlord, you wouldn’t be faulted for feeling a little puzzled at the moment.
Since lockdown, many landlords have been faced with a totally unique set of challenges and, as things have changed so fast, it may have been difficult for you to stay up-to-date with all the latest developments.
We spoke with lettings expert Paul Shamplina, a well-known face on the telly and founder of Landlord Action, an organisation that champions landlords’ rights and offers them support and advice.
Often referred to as “the landlord’s friend”, we asked Paul to share his thoughts on what landlords are up against today, and how they can best navigate the current set of circumstances.
What are the main challenges landlords are facing right now?
Over the last few years, landlords have been hampered by mounting regulation, including the introduction of Section 24, which means the amount of income tax relief landlords can claim is now restricted to the basic rate of tax. In addition, on the horizon in the near future is the banning of Section 21.
However, the biggest challenge for landlords at this moment in time is, of course, the COVID-19 crisis. I, like many of you, have been in this industry for many years. We have faced the ups and downs, ridden out recessions and adjusted to every change sent our way, but NEVER did any of us ever foresee something quite as seismic as this.
Throughout the pandemic, we at Landlord Action have seen a surge of enquiries to our free helpline. Many landlords are working with tenants facing difficulties paying rent as a result of COVID-19, but naturally, there is growing concern about the long-term implications on landlords’ own finances as many are also facing the prospect of reduced work hours or even loss of employment.
Does the tenant evictions ban mean literally NO evictions, or are there any exceptions?
Yes, it is a blanket ban. On the 18 of March 2020, the government announced a “complete ban on evictions” for renters in the wake of the coronavirus outbreak.
Following that announcement, the Coronavirus Act 2020 (‘the Act’) was introduced which suspended all ongoing possession actions from 27 March 2020 for 90 days; this has since been extended until 23 August 2020. The announcement regarding suspension of all current actions meant that cases progressing through the courts or about to be listed were suspended.
Under the Act, the notice period for Section 21 notices and Section 8 notices has been temporarily extended to three months for both, rather than the previous two months or 14 days, respectively. This is currently in place until 30th September 2020.
Such drastic measures were taken to protect tenants who are unable to pay their rent because of job losses or having to look after their children as a result of coronavirus. In support of landlords, many lenders also offered 12-week mortgage breaks, but landlords with possession cases for rent arrears going through the courts prior to the ban have been hit the hardest.
There are an estimated 25,000 cases stuck in the legal system, of which 10,000 are from private landlords. Landlord Action has over 500 live possession claims on hold.
What can landlords do if tenants are causing problems? What are their options?
The main problem is that there simply is not a ‘one size fits all’ approach to this. Many tenants are facing reduced hours at work or even unemployment, whilst the vast majority of private landlords, many with mortgages, rely on their rental income to pay their own bills and support their own families. They too are facing the same challenges of job losses.
We have been urging landlords to, where possible, work collaboratively with their tenants to come to agreements over rent.
However, the other big problem is anti-social behaviour. Landlords are unable to address cases of antisocial behaviour or domestic abuse, which causes further misery to neighbours or tenants living in an HMO (House of Multiple Occupation) who are forced to continue living with the consequences of anti-social tenants. These cases need to be given priority when the courts re-open.
Whether you have an issue with rent arrears or anti-social behaviour, the reality is that life will not return to ‘normal’ for some time, and it is possible landlords will not be able to gain possession of their properties for 9-12 months. The best advice I can offer to landlords who were already struggling to communicate with the tenants before lockdown is to consider mediation.
With our support [Landlord Action], the Property Redress Scheme has recently launched a mediation service for residential and commercial landlords, or their appointed letting agent, and tenants, to aid finding a resolution over issues which have arisen during a tenancy.
Mediation is a voluntary, without prejudice and confidential process, which allows disputes to be resolved much quicker and with less cost than court. As a landlord, it also enables you to demonstrate to the court that you have attempted to resolve your issues before coming to them. Professional mediators are completely impartial and if your tenant is willing to engage with them, it can be an efficient way to reach a fair agreement.
If a tenant is becoming troublesome and all attempts of mediation have failed then, unfortunately, you will have to serve notice and issue court proceedings but prepare yourself that it could take many months to evict your tenant.
What advice would you give landlords of tenants who are struggling financially and may not be able to pay rent, or full rent?
The most important thing is to communicate and try to engage with your tenant. Remember, good tenants do not become bad tenants overnight. These are extraordinary circumstances, and everyone is impacted in some way. It is really important that landlords do what they can to sustain the tenancy if possible, bearing in mind the court system is suspended and if a tenant vacates, there is a worry the property could be empty for a while. Those landlords who work with their tenants throughout this difficult time will strengthen their relationship and be far more likely to maintain the tenancy in the long-term.
For those landlords in a position to be flexible and come to some kind of payment agreement with their tenant over rents, Landlord Action has drawn up a Rent Repayment Agreement for landlords, providing a template which enables you to set out agreed terms of the repayment with your tenant.
I must say, in all my years of helping landlords, I have never seen as much positive engagement and empathy between landlords and tenants. We have heard some amazing stories of landlords writing off rents and doing all they can to help tenants. Similarly, many tenants appreciate that their landlords provide a home for them and are doing their very best to keep up with payments.
This is important as The Ministry of Housing, Communities and Local Government (MGCLG) is looking to strengthen pre-action protocol, which will put the onus on tenants and landlords to negotiate and reach an agreement, rather than go to court.
What are the latest rules when it comes to charging tenant fees?
The Tenant Fees Act 2019 brought about extensive changes to the fees which landlords or letting agents can charge a tenant of an Assured Shorthold Tenancy (“AST”) in England. In addition, the Act restricts a landlord’s ability to serve a valid notice under section 21 to terminate an AST until any prohibited payments have been returned to the tenant.
From 1 June 2019, the Act applied to all new ASTs, tenancies of student accommodation and licences to occupy private residential property. However, from since 1 June 2020, the Act now applies to all existing ASTs.
It means that all payments from a tenant are banned unless they are expressly permitted by the Act. Those allowed include rent, deposits, holding deposits and charges for defaulting on the contract – with caps on how much tenants must pay.
Landlords cannot charge for services such as referencing, cleaning, administration, or inventories.
In your view, what is the biggest challenge in the residential rental market right now?
For landlords, the biggest challenge, as it has always been, is non-payment of rent by tenants and naturally this has been exacerbated by the pandemic. Segments within the PRS which have been worst hit include the student market, as many students have returned home when their universities closed. Many students and their Guarantors are looking to get out of contracts and do not want to pay for accommodation which they have been unable to use for the last four months.
In addition, Rent Guarantee and Rent-to-Rent markets have experienced high levels of defaults, and the short-let market, such as Airbnb, saw demand fall by 90% because of the collapse in tourism. Many of these landlords have looked at returning to the PRS because they simply cannot afford to have their properties sitting empty.
Any other advice for landlords today?
Whether you own one or two properties or are scaling up to be a portfolio landlord, you must treat buy-to-let as a business and you must see your tenant as your customer.
Even though we are going through a bumpy ride with the possibility of significant job losses, demand for rental properties will remain strong as people still need homes. However, the only way to survive in this business is to be professional and compliant.
Put a price on your time. Landlords who don’t have the time or inclination to manage their rental properties properly should outsource it to a reputable letting agent. The difference between let-only service and a fully-managed service is minimal if you put a price on the time you will spend doing it yourself. So, if you don’t want calls in the middle of the night asking to drop over a spare key, or emails when you are on holiday about a broken toilet, outsource.
For those landlords who want to be hands-on, I would always recommend joining a landlord association such as National Residential Landlords Association (NRLA) so that you stay on top of legislative changes and benefit from professional advice.
Remember, from 1 July 2020 mandatory electrical safety checks for new tenancies now apply and keep an eye out for news on the Renters’ Reform Bill which includes plans to end Section 21 repossessions.
Catch Paul Shamplina in the upcoming 6th Series of Channel 5’s ‘Nightmare Tenants, Slum Landlords’, due to air this summer.