The lettings agency Winkworth has taken the unusual step of criticising policies of a series of councils.
The councils are all Labour controlled
Agents from the firm blame planners in one borough - Brent, north London - for a shortage of flat and house shares for young renters looking to keep down housing costs.
Brent council introduced a new rule for HMOs last year via the Article 4 Direction - requiring planning consent before an HMO is established.
The measure was introduced to improve standards and avoid overcrowding by rogue landlords, but the change has now created a bottleneck at planning level, according to Shilpa Bathija, director of Winkworth in Kingsbury in North London.
On the latest episode of Winkworth’s The Property Exchange podcast, Bathija says: “We understand the logic of making everything transparent and with the right protocol. However, the council isn’t able to handle the planning applications. It’s all become a bottleneck for any landlord who wants to rent out a house or flat to sharers.
“People are having to compromise on the size and quality of the property they need to live in to fit their budgets because you can’t have more than two households in one property. That great experience of sharing a house and living in London does not exist in Brent anymore unless the stringent legislation is adhered to.”
A lack of social housing is also putting more pressure on the rental sector in Brent.
Bathija continues: “Vulnerable people on benefits are being forced to rely on the private rented sector. Social housing stock has not been replenished.
“We now have people calling us to say that the council has directed them to us to try to find rental accommodation, which doesn’t make sense with their inability to afford current costs of renting.
“On the sales end, there has been a 22 per cent drop in first-time buyers able to enter the property market because rents are so high and they cannot save as much as they used to. It’s just becoming a big pressure cooker that’s waiting to explode. The whole point of the government penalising landlords with additional stamp duty and abolishing mortgage interest relief was to boost the first-time buyer market. We are going round in circles.”
Tom Street, lettings director of Winkworth, says three other London boroughs of Tower Hamlets, Islington and Hackney - all Labour controlled - operate licensing schemes for HMOs which can also affect sharers.
He tells the podcast: “Some landlords with two or three bedroom properties don’t want to have to pay the licensing fee with the additional costs they already have as a landlord so they just decide to focus on letting to families with children, where the licensing scheme doesn’t apply.”
Dominic Agace, chief executive of Winkworth, adds: “We are living in fairly extreme times in the private rental sector.
“We are seeing 15 per cent rental price growth in London for the past two years, with 10 per cent predicted for next year. While we wait for reform and the Election, prices have gone up. That means people are choosing smaller properties and not what they need in life. And that’s a bit sad.”
Despite the current gloom for renters, the future for property investment remains compelling, compared to stocks and shares.
Agace explains: “A buy to let property is still a great investment, compared to the stock market fluctuations. Property and bricks will stay here forever. The level of entry has gone up and in areas driven by debt, like London, where the prices are higher, that’s where the big problem is but we are seeing it grow in some parts,
“The East of England, however, is seeing more buy to let landlords now than last year where property prices are lower and there’s significant capital growth going on and less of a debt concern.”
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..and soon to join the growing list of councils teetering on bankruptcy due to massive rises in temporary housing costs due to a lack of rental properties.
You couldn't make this up! To call it a farce would be a gross understatement.
The council pretends it wants to "....improve standards and avoid overcrowding by rogue landlords....." but really just sees this market sector as another sort of safe, lucrative, perennial bunce for them to safely and increasingly milk, fleece, bleed etc... obviously without much effort or real attempt to actually "improve" anything....
....the unintended but very predictable consequence is in the process they drive away the good landlords - not the "rouge" ones who ignore these things - and reduce choice and access to accommodation for the tenants who need it, plus increase the cost of the reduced supply they must increasingly compete for....
Councils seem to do such a great job.... especially socialist ones claiming to be "for the people" when really they work for themselves and against everyone else's best interests.
Nothing new here... same old same old....
Yawn.
Why linit the criticism to just these councils? Waltham Forest and Newham to name just two more have form for this.
As an agency, we been introduced to a number of prospective new landlords this year who were previously self-managing and in too many cases for our liking, the first thing we have to tell them is that their current occupancy is non-compliant.
For example, a 2 bed flat in Waltham Forest occupied by a couple who then let the other bedroom to a friend who was made redundant is now a non-mandatory HMO. The definition is a property that that is occupied by three or four unrelated people which form two or more households.
Planning permission is required to change the use from C3 to C4 and we have repeatedly been told that permission will not be granted.
Similarly, in Newham, where there is a large student population attending UEL, 3 students who can’t afford to rent singly are prevented from sharing for the same reason. To make these properties compliant, the tenants in the 2 bed flat will have to be given notice to leave and be replaced with either a couple or multiple tenants but all from the same family. The same applies with the 3 students.
The consequence of this is that many otherwise good tenants will have to be made homeless; in many cases, 3 people are needed to share the rent – even on a 2-bed flat - because for just two sharers, the rents in London are unaffordable but under the requirements driven by the Article 4 Declarations, this sharing will not be allowed and the penalties for non-compliance can be severe.
If ever there was one, this surely is an example of the law of unintended consequences
Does Waltham Forest, Newham and the other councils cited want to see perfectly good tenants renting perfectly good properties from perfectly good landlords having to be evicted through no fault of their own?
Our prospective new landlords were not happy to be told this even though our intention was simply to help them avoid financial penalties
Dare I say that the Renter’s Reform Bill would do more good if it sought to remove the artificial, policy-driven barriers to sharing.
I fully agree with all you're saying here, @JS....
I well remember when all this started long-long ago... everything was different then, with a huge amount of flexibility and trust between good landlords and tenants, plenty of choice for everyone and bargains galore for the tenants while it was paradoxically a very profitable time for us even so....
As well as several suburban properties we self-managed close to where we lived, we used to own several large 3-bedroom (2 doubles and 1 single) ex-council flats in Westminster (Churchill Gardens and Lillington Gardens) - they all had large living rooms, balconies and reasonable kitchen diners.
We typically rented them out to flats sharers - usually two couples but sometimes two couples and a single person (normally an old university friend or perhaps a work colleague), i.e. 5 in total.
Sometimes there were already 5 people - perfectly reasonably - in the 3 bedroom flat designed for 5 people, with "5 bed spaces" - when it happened that between them they wanted to squeeze an extra person in for some reason, e.g. because the single person was suddenly in a relationship, didn't want to move out (and anyhow probably couldn't afford to) and so after agreeing it with the others, begged us to let his/her new partner join their happy, incredibly affordable, well run and perfectly respectable flat share....
...whatever the arrangement, we found that usually one of the couples chose to use the big living room with a door to the balcony (and also usually another door to it from the kitchen) as a sort of "studio" and pay a higher share of the rent, which we were fine with. And then they might all share and use the single room as a kind of communal office, or diner or whatever they liked.
....sometimes we cautiously even allowed the 6 person to move in - after going round for a proper meeting with everyone to check they were all happy and agreed it and understood the practical and domestic compromises involved.... we've always been highly ethical, caring landlords doing our best to look after our tenants' interests and trying to keep them happy - as well looking after our own interests, i.e. our properties and running our business properly and legally.
Usually it turned out they were excited to give it a go plus liked the idea of splitting the bills even further and perhaps putting the saving towards some sort of "club fund" they'd all share... so it, i.e. ending up with 6 people in a 3 bedroom flat - but only 1 bathroom, however of these flats had separate toilets and we usually had tiny wash hand basins installed in them for added flexibility.
Then with the The Housing Act 2004 properties with 5 or more people with one or more unrelated to the others could technically become a "large HMOs" requiring mandatory licensing... technically there may have been an exemption unless the property was also over 3 or more floors but Westminster City Council decided to interpret it as any flat-share comprising 5 or more tenants, even if only over a single floor... and they were investigating whole estates and threatening enforcement action...
....so, with great reluctance we had to split a few excellent longstanding friends up who'd enjoyed living together for several years by then, loved the lifestyle, were having fun, saving money, living very conveniently right in the center of London, looking after our properties immaculately, paying the rent on time without fail and generally on excellent terms with us as well as their neighbours....
Absolutely nuts! But that's how it was....
Doing the same to smaller units of just 3 people is even more nuts.... intrusive, unnecessary "nanny-state" interference into people private lives and potentially messing those people around, screwing up perfectly respectable arrangements that they want to chose for themselves and are happy with - not forced on them by "evil" people they need "protection from" - and of course NOT "improving standards" or "driving our rouge landlords" - only driving our respectable tenants!!!!!
I wholeheartedly agree, @JS, with your closing suggestion that "....the Renter’s Reform Bill would do more good if it sought to remove the artificial, policy-driven barriers to sharing" but sadly its never going to happen.... the idiots behind all this legislative pollution are 100% fixated on intervention, interference and worst of all their extreme arrogance in believing they know best about everything - when in truth they seem to have next to no understanding or practical experience of any of it - and their obsession of trying to run other people's lives and businesses for them when the less they get involved the better off the vast majority would be....
They should look hard for something that is GENUINELY broken and concentrate on fixing JUST THAT without trying to make a name for themselves by breaking everything else around it that had all by itself been magically working just fine!
Just proves that at every level Gove is a muppet!!! He is an arrogant disaster who destroys everything he touches!!!
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