Industry news

Consultation on single housing ombudsman begins

The Government has launched its consultation exercise on setting up a single ombudsman service to improve customer rights across all parts of the housing sector, including all tenants, leaseholders and home buyers. While other possible outcomes exist, a

single ombudsman is clearly the favoured option of Housing Secretary Sajid Javid who originally announced plans for a consultation exercise last November. The current consultation was launched in February and is open until 16 April. At present a patchwork of protection and

redress services operate across different parts of housing, causing confusion among the public while also leaving gaps of uncertainty. Membership of the Housing Ombudsman scheme is compulsory for all social landlords, but private landlords do not have to be part of a scheme.

Mr Javid described the existing mechanisms of redress in the housing sector as “confusing and unco-ordinated”.

There are currently four different bodies

that can deal with complaints: the Housing Ombudsman, the Property Ombudsman, Ombudsman Services: Property and the Property Redress scheme. In addition the Charity Commission deals with charitable bodies like the National Trust who own and let properties. The largest of the current providers,

Ombudsman Services announced earlier in the New Year that it would complete its withdrawal from complaints handling by early August as it did not want to interfere with the Government’s plans. Mr Javid said getting cases considered took

too long and there are all kinds of barriers to doing so. He said the proposed streamling “could help drive up standards across the whole industry and increase protections for consumers.” He added “Research in other sectors has

shown that redress works more efficiently for consumers when there’s a single ombudsman in place. We’re going to see if it’s right for the housing sector too.” The consultation exercise consists of 31

questions but respondents only need answer those relevant to themselves.

Big rise in BTL landlords with serious mortgage arrears

raising twin fears over the supply of rental homes and the rate of future rent increases. Latest figures from UK Finance – the new trade


body representing over 300 banking and financial institutions – revealed that 1,200 BTL mortgages were in "significant arrears" in the last quarter of 2017, a fifth higher than in the same quarter in 2016. At the same time, the number of homeowners

with significant arrears fell by one per cent. Significant arrears means the borrower owes more than 10 per cent of the outstanding loan balance. In the same quarter at the end of 2017 some 600

buy to let properties were re-possessed by banks as landlords defaulted. This was the same number that were re-possessed in the same quarter of 2016, whereas re-possessions in the owner-occupation market have significantly fallen to stand at a 36 year low. This could reflect a harder approach being taken towards small BTL landlords (often referred to as hobby or amateur landlords) by banks and the courts. In addition a further 5,100 BTL mortgages were

in less serious arrears of 2.5 per cent. This was two per cent higher than 2016, while the number of homeowners with arrears of more than 2.5 per cent fell by seven per cent.

STRUGGLING TO COPE The figures indicate that a growing number of private landlords are struggling to cope with recent tax changes (directly targeted at their businesses by the current and previous chancellors) as well as more of their tenants’ falling into rent arrears. As growing numbers of benefit claimants are moving on to Universal Credit, this is causing problems by

6 | HMM March 2018 |

he number of private landlords who are struggling to pay their ‘Buy to Let’ mortgages has jumped by 20 per cent,

delaying benefit payments to tenants, who in turn then default on their rent. In a further sign of the strains facing the BTL

sector, the UK Finance figures show the number of new buy to let mortgages fell to 5,300 in December, down by 17.2 per cent year-on-year, while the number of landlords remortgaging was also down by nearly 12 per cent. Interest rates are forecast to rise in 2018 from their historic low levels and this will add further pressure on landlords who are struggling on tight margins. "Landlords are facing increased burdens placed

on them by the Government, which is significantly increasing financial compliance requirements," said David Cox, chief executive of the Association of Residential Landlords (Arla) Propertymark. "This is, in turn, is causing landlords to fall into financial difficulties." Arla has highlighted that one of the biggest

problems which landlords face is the length of time it can take to get a tenant evicted if they stop paying their rent. Typically it can take up to nine or ten months and during this time, the landlord has to continue paying their mortgage, but may receive no rent. While the Government is planning to introduce

new specialist housing courts, to try to speed up the eviction process, this may come too late for many investors. The Royal Institution of Chartered Surveyors has already warned that growing numbers of landlords are pulling out of the market as a result of the problems. It said rents may rise as a result and David Cox says that he agrees with RICS. Among the tax changes facing landlords have

been a surcharge on Stamp Duty for any property they buy, and a gradual reduction in the amount they are able to claim in tax relief. Compliance costs have also increased with further tax changes expected in the new financial year.

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