Category: Lender News Feed

Thousands of renters could be evicted in June. Will the government protect them?

When the lockdown ends what will happen to tenants? Almost nine million households, more than a third of all families in Britain, rent from a private landlord, a council or a housing association.

Because of coronavirus, many are now in financial need. Nearly two million claims for universal credit have been made since lockdown measures were announced in the UK. Welfare claimants are entitled to payments equivalent to housing benefit. But, as a result of changes made to benefits over the last decade (like the bedroom tax and restrictions to local housing allowance), it is increasingly rare for housing benefit to pay all of a tenant’s rent.

Others, although ineligible for universal credit, are also in difficulty: because they have received a redundancy cheque that will soon be spent, or their self-employed grant hasn’t arrived yet. Then there are furloughed workers, paid now, but waiting for news of redundancies from their employer.

Right now, all possession hearings – the main step in evicting a tenant – are “stayed”. This is the legal equivalent of putting food in a freezer. The cases are still there, ready to be thawed out at any moment.

Where a tenant is behind with their rent, landlords can issue them with a notice instructing them to leave, but (for the moment) the tenant can ignore it. On 25 June the housing courts will reopen for business. Judges will have to determine thousands of stayed pre-coronavirus cases, and the even greater number of new claims for possession arising from the lockdown.

Ministers have grasped that hundreds of thousands of homes are at risk. Earlier this week the housing minister, Robert Jenrick, announced that the government was working closely with judges to draft a “pre-action protocol” for when the stay is lifted.

He told MPs that the protocol will “enable tenants to have an added degree of protection, because instead of embarking upon the eviction proceedings immediately, there will be a duty upon their landlords to reach out to them, discuss their situation, and try to find an affordable repayment plan”.

The problem with the protocol is that it is toothless – essentially depending on the benevolence of landlords.

The two most common ways landlords seek possession are under “section 21” and “ground 8”. Section 21 provides that where a landlord has complied with certain procedural requirements (like issuing a notice using the correct form and waiting for a prescribed time before applying to court) the court must order possession.

The statute does not require a landlord to have complied with the government’s proposed pre-action protocol. For that reason, even where landlords have rushed to issue proceedings, and have ignored requests from tenants to defer payments for a short time, judges will be required to approve evictions.

Ground 8 provides that where a tenant is in rent arrears (eight weeks if the rent is due weekly), both when the landlord serves a notice on them and when the hearing takes place, the court must order possession.

Again, the court takes no account of the landlord’s conduct; it focuses simply on the amount of the tenant’s arrears. In these circumstances, if the new protocol is as the minister describes it, it will not protect tenants at all.

There are alternatives. In last year’s general election, the Conservatives committed to abolish section 21 as part of their “better deal for renters”. The government reaffirmed that commitment in the Queen’s speech, announcing a renters’ reform bill to include the abolition of section 21. They should be held to that promise. As for ground 8, it too needs to be abolished. Or, if that is impossible, rescinded for such time until tenants have had a chance to reduce their debts once they’re able to go back to work.

Abolishing or rescinding ground 8 would not prevent landlords relying on other grounds of possession. But, without it in place, judges will be free to order possession only if reasonable – thereby giving effect to the tenant defences the government says that it wants in place. One further advantage of abolishing ground 8 is that courts can turn to other possession proceedings in which possession orders are made but suspended, while tenants are given the chance to repay arrears to a realistic plan.

Muddling on without the abolition of section 21 and ground 8 will lead to millions of people forced out of their homes. It will send those evicted scattering – some to stay with elderly relatives, some into local authority housing (although it is at breaking point) and many into homelessness.

The government accepts that street homelessness speeds the transmission of coronavirus: this is the grim calculation that underpins the government’s granting of resources to councils to house rough sleepers. Drifting into a future where huge numbers of people lose their homes needlessly would be just as dangerous – for those who are evicted, and for everyone else.

 David Renton is a housing barrister at Garden Court Chambers

Buy-To-Let Lenders Refresh Suite Of Products As Cost Of Landlord Borrowing Falls

New research from Property Master has found that the cost of buy-to-let mortgages has fallen year on year.

Lenders are continuing their support for individual and limited company landlords in anticipation of a busy few months ahead.

According to Property Master, five-year fixed rate buy-to-let mortgages for 65% loan-to-value (LTV) saw costs fall the most. Borrowers now save £48 per month on a £150,000 mortgage compared to 12 months ago.

Two-year fixed rates fell more modestly. The cost of a typical mortgage for £150,000 for 75% of the value of the property was down £25 per month year-on-year. The cost of a 65% LTV product fell by £19 per month.

The falling costs of buy-to-let mortgages are likely to continue. Lenders are reviewing and refreshing their buy-to-let ranges to support landlords keen to remain in the market but conscious of their squeezed profit margins.

Landbay reduces minimum income

Landlords can now access Landbay’s buy-to-let ranges with a minimum income of £15,000. The minimum property value is £75,000 for standard properties and HMOs in qualifying areas.

The lender has also reduced the minimum loan amount by £20,000 to £30,000. Further to this, the maximum standard property loan has increased to £2 million for up to 75% LTV mortgages.

Plus, landlords looking for an 80% LTV can benefit from their standard five-year rate available from 3.89%.

“These changes are part of our strategy to extend our product offering to an even wider range of borrowers, helping our partners support more landlords across the country.”

Support for limited company landlords

The Nottingham for Intermediaries has unveiled a new buy-to-let offer to support landlords restructuring to limited companies. Two-year fixes are now available at 2.76% with a £999 fee and at 2.79% with a 0.50% fee at 75% LTV.

Nikki Warren-Dean, head of intermediary sales at The Nottingham, said: “Judging from the conversations we’ve been having with our broker network, many landlords are considering structuring their portfolios on a limited company basis, if they haven’t already.”

She added that it is important to offer competitively priced products to suit landlords’ needs.

TSB offers landlords mortgage security

Another lender that is offering a refreshed BTL range is TSB. It has introduced its first 10-year fixed rate buy-to-let mortgage products, giving landlords the option of long-term security. For up to 60% LTV, borrowers can get a rate starting from 2.44%. With a 60-75% LTV, landlords can borrow for 3.19% upwards with a range of fee options.

With interest rates currently very low, especially for buy-to-let landlords, some will want the added reassurance of a long-term rate.

TSB has also reduced its rates for three and five-year fixed rate BTL products by up to 0.25%.

Beverley Bradford, TSB’s head of intermediary mortgages, said: “These changes, as well as the introduction of our new 10-year fixed buy-to-let mortgages, should go some way to offering peace of mind to those looking to fix their monthly payments for any length of time that suit their lifestyle.”

Lenders anticipate a busy April

Angus Stewart, chief executive of Property Master, said the company expects a busy few months.

“We suspect many of those landlords will be coming to the end of fixed-rate mortgages around now. They should be pleasantly surprised at what the market is prepared to offer them in terms of a good deal.”