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Industry news


New electrical tests considered for private rented sector


The Government is considering tougher standards for electrical safety in the private rented sector after experts recommended a series of measures to reduce fires and improve tenants’ safety. The Electrical Safety Standards Working


Group has recommended introducing regulations for mandatory electrical installation checks in PRS properties every five years. The cost of these checks and any associated repair or replacement costs would be borne by landlords. Other recommendations include undertaking


visual safety checks of the electrical installation at every change of tenancy, providing tenants with copies of reports on electrical installations at the property and setting up a private rented sector electrical testing competent person’s scheme. The Government is now consulting on the


recommendations, with responses required by 16 April. The report was commissioned after figures from the English Housing Survey showed that private tenants face a higher risk of electrical shock and fires caused by electrical faults in their homes than tenants in social housing. A Government response will take into


account consultation feedback and the findings of the Independent Review of Building Regulations and Fire Safety being led by Dame Judith Hackitt, which will submit its Final Report in spring 2018. It is estimated the average cost to landlords of


an electrical safety check will be around £160 per property every five years and that introducing mandatory five year electrical installation checks will cost landlords at least £100m per annum (or around £70 per landlord per annum) over ten years. This includes the cost of five yearly checks, hidden costs including those associated with researching and liaising with electrical testers, preparing the property and overseeing the checks, and one off familiarisation costs. Any installations which were deemed to be


unsafe for continued use would require remedial work to be funded by the landlord (estimated at around £140m per annum or £97 per landlord per annum). Further work will be needed to establish the


benefits of reduced instances of electric shock and electrical fires, such as the prevention of deaths and injuries and property damage. As well as making homes safer for tenants, electrical installation improvements benefit the landlord as a material improvement to their properties, helping prevent fires which could cause costly and significant damage.


Tenants pay record sum of £50bn in rents in 2017


more than twice the £22.6bn paid in 2007. As tenure levels in the housing market


T


continues to change with fewer owner-occupiers and more people renting privately, it is likely that the total amount of rent paid by tenants will soon overtake the entire sum paid out by homeowners for their mortgages, which currently stands at £57.4bn for 2017. The figures were compiled and reported by


Countrywide, the UK’s biggest estate agency and mortgage broker. They reveal a dramatic reshaping of the housing market, particularly in the last ten years as home ownership levels have fallen from 71 to 63 per cent, while private renting has doubled and now accounts for over 20 per cent of all housing. Over the same period, the total amount that


home buyers are paying for their mortgages has fallen, from a peak of £63.8bn in 2008 to £57.4bn in 2017 – largely the result of historically low interest rates and cheap fixed-rate deals which have benefitted buyers. A breakdown of the figures reveals that the


millennial generation, born between 1977 and 1995, are shouldering the largest part of the rise in rental costs. Countrywide estimated they spent £30.2bn on rent in 2017, or three times the £9.7bn paid in 2007. With many tenants paying more than half


of their take home pay in rents, campaigners have said rent controls are now urgently needed. This was a very popular policy suggestion when it was aired by Labour leader Jeremy Corbyn last year while Conservatives


enants in the private rented sector paid out a record amount of £51.6bn in rents in 2017, an increase of £1.8bn on 2016 and


say it risks deterring landlords.


DOUBLING Dan Wilson Craw of Generation Rent said: “The private rental market has not only doubled in size in the past decade, but it is costing the economy more. With social housing unavailable and home ownership out of reach, millions of people have no option but to rent from a private landlord. “This £30bn increase in the rent bill is money


that people would rather be using to pay off their own mortgage or simply put food on the table. The government should be taking urgent action to bring down rents, by investing in new homes and bringing in rent control.” Countrywide attributed the surge in overall rent


being paid to increases in the number of households renting, and inflation-busting rent increases in most years. “Despite average rents falling in 2008, the total amount of rent paid by tenants has risen in every year for the last decade as the number of people renting has grown,” it said. The latest English Housing Survey, published in


January, found that 46 per cent of 25-34 year olds now live in private rentals, compared with 27 per cent in 2006-07. In London, private renting is now the most common form of tenure. Home ownership levels peaked in the early 2000s, at 71 per cent of households, but have fallen to 63 per cent today, although the figure has levelled off in recent years. The typical private tenant in England paid rent


of £192 a week to their landlord in 2016-17, compared with £102 for tenants in the social housing sector. In London, private rents average £309 a week compared with the £132 paid by council tenants.


High cost of rents for the lowest paid


The growing unaffordability of private sector rents for low paid workers has been revealed in research published by the Joseph Rowntree Foundation. They found the proportion of people in the


poorest fifth of the working-age population of the UK who spend more than a third of their income (including Housing Benefit) on housing costs has risen from 39 to 47 per cent over the last 20 years. This has been driven in part by the rise in the number of people renting in the private sector, where costs are highest. Rent is more than a third of full-time local pay


in over half of English districts, when the least expensive quarter of private rents is compared to the earnings of the lowest paid quarter of employees. This ratio is highest in the London districts of Westminster and Kensington &


16 | HMM March 2018 | www.housingmmonline.co.uk


Chelsea, where these rents amount to 79 per cent and 77 per cent respectively of those earnings. Rent is also more than half of local full-time pay


in another 25 districts (again comparing the least expensive quarter of private rents to the earnings of the lowest paid quarter of employees). All but three of these are in Greater London with the exceptions all being elsewhere in South East England. The most affordable districts by this measure


are in the north of England but, even here, there are parts of Greater Manchester and North Yorkshire where rent is more than a third of full- time pay. For more information about housing costs and poverty you can visit https://www.jrf.org.uk/data/housing-costs


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