industry news
Councils call for rethink on Universal Credit
Numbers of available homes for rent starts to drop, research finds
Actions taken by the Government to cool the buy to let housing market appear to be reducing the supply of properties available for private renting. According to research by property
crowdfunding platform Property Partner, new rental properties listed by landlords in May were down 5.7 per cent on March levels, before the 3 per cent stamp duty hike on second homes was introduced. New rental properties listed in London
Councils are calling on the Government to review its flagship reform of welfare benefits as new research highlights a huge impact on rent arrears. Housing benefit is one of six benefits
being amalgamated into Universal Credit. But one year after the rollout of Universal Credit (UC), research has found 79 per cent of tenants on UC are in rent arrears compared to 31 per cent of other tenants. The National Federation of Arms Length
Management Organisations (NFA) and the Association for Retained Council Housing (ARCH) conducted a survey of councils and ALMOs. Following this John Bibby, chief executive of ARCH said: “A review of current policy is imperative if we are to reduce unnecessary hardship within our communities.”
Arrears
The NFA and ARCH are calling for the government to abandon the seven day waiting period for Universal Credit, to review the in-arrears policy to see if this is causing “unnecessary hardship and long term disadvantage” for UC entitlement and to speed up the assessment process to three weeks. Their research found households in
receipt of UC are more likely to be in arrears and on average, to have larger levels of arrears than tenants in general. On average tenants on UC owe £321.05, compared to £294.57, the average arrears level for all tenants. The six-week wait before tenants receive
their first UC payment is cited as a common problem in pushing claimants into rent arrears. Councils said they are seeing an increase in the demand for money and debt advice services, food banks and hardship funds, as well as increasing numbers of tenants using loan sharks and pay day loan companies.
“A year after the rollout of Universal Credit, research has found 79 per cent of tenants on UC are in rent arrears”
dropped by 14.1 per cent in May, but it was not just the capital’s housing supply that was hit as an estimated 90 per cent of surveyed towns and cities experienced similar or bigger falls. Places as diverse as Worcester, Derby and
Bedford all experienced big falls in property listings in May, taking them well below March levels. In some cases the reductions have been in the range of 30 to 40%.
Difficulties
Some of this movement was expected after investors rushed to beat the stamp duty changes in April but the size of the reversal has surprised many and could lead to difficulties for tenants as rents are pushed up and properties in poor conditions come on to the market. Dan Gandesha, chief executive at Property
Partner, said “The rush of investors buying before April’s stamp duty hike caused a temporary spike in rental supply, but this now seems to have been swiftly reversed. “With high and rising demand, any
prolonged fall in rental supply can only have negative consequences for tenants. It’s likely that rents will increase as landlords, facing less competition, pass on their additional purchase costs to tenants” he added.
Mr Gandesha warned that a lack of available
properties will also force more tenants into accepting poorer quality accommodation, particularly in areas with an acute shortage of stock. “April’s stamp duty changes are just the first
in a series of additional costs being piled on traditional buy to let. In the longer term, the private rented sector must be professionalised, to provide Generation Rent with enough good quality homes at rents they can afford.”
“The rush of investors buying before April’s stamp duty hike caused a temporary spike in rental supply, but this now seems to have been swiftly reversed” – Dan Gandesha, chief executive at Property Partner”
HCA downgrades two housing providers amid compliance concerns
The Homes and Communities Agency has
downgraded two housing associations due to regulatory concerns. Bath based Curo Group, with 12,600 homes
in Somerset and Bristol, has had its governance rating downgraded to ‘G2’, which means it complies with standards but needs to improve. The Joseph Rowntree Housing Trust (JRHT)
in York has had its financial viability rating downgraded to ‘V2’, meaning it complies but needs to manage risks to ensure continued compliance. The HCA raised concerns with the Curo
Group about its ability to effectively manage its own affairs. In response Curo Group has produced an action plan including reducing
16 | HMM July 2016 |
www.housingmmonline.co.uk
the size of its board and streamlining committees. A spokesman said they aim to get the ‘G1’ rating back later in the year. In its judgement on JRHT, the HCA said the
association was too reliant on property disposals to comply with its loan conditions. “Underlying its forecasts are significant efficiency savings and increasing rental income from new developments. Failure to realise these savings or the benefits of growth would exacerbate the existing pressures on the business.” A JRHT spokesperson said: “We are in the
process of reviewing all our options to ensure we are running the organisation as efficiently and effectively as possible.”
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