ROOF Blog

Thousands of tenants, students and buy-to-let investors will be hit by new laws forcing landlords to apply for planning permission if they want to rent a property to three or more people. Landlord associations have criticised the Government’s proposals, which will bring down from six to three the number of unrelated people who can rent a property together before planning permission is needed from local authorities. The legislation will affect only properties that register for a ‘change of use’ (for example, converting a family home into flats), and will not affect pre-existing houses of multiple occupation (HMOs) that are rented out to three or more tenants. There are more than 400,000 registered HMOs, and these will fall within the new legislation only if their landlords change the tenancy arrangements.

Hundreds of out-of-work families who have been living in expensive homes at the taxpayers’ expense are facing eviction after changes to housing benefit announced yesterday. Alistair Darling said that from October next year the most expensive properties would be removed from the housing benefit calculation. Housing benefit, which can be as much as £1,800 a week, discouraged people from working and was unfair on those who accepted smaller, cheaper homes, he said. Housing benefit will be capped at £1,100 a week, meaning that 13,000 families, mostly in London, will have to move out of their current properties and into somewhere more modest.

Council taxes will rise in the next financial year by 1.8%, the lowest figure since the levy was introduced nearly two decades ago. John Denham, communities secretary, claimed that the slightly below-inflation rise had been made possible by a 4% increase in central funding for councils from next month. But he acknowledged that there would be growing pressures on town hall budgets in the coming months against the wider backdrop of the UK’s large deficit. ‘Local people will rightly be intolerant of any council if they are told that care, libraries or youth services will be cut because they have not followed our radical reforms to protect the frontline services, which matter most to people,’ he said. The increase, the most modest since the tax was introduced in 1993-94, brings the bill for an average band D property to £1,439, from £1,414 this year.

The Government has informed the National Landlords Association (NLA) that the Assured shorthold tenancy (AST) threshold will rise to £100,000 on October 1 2010. The proposal to increase the threshold had been broadly welcomed by the NLA as an attempt to offer greater clarity and transparency for landlords and tenants. But it seems that a quirk of the process means the change will be retrospective and will be applied to existing tenancies. As a result, any tenancy with an annual rent between £25,000 and £100,000 in existence on 1 October 2023 will become an AST overnight. The NLA says the proposals have the potential to be damaging to a significant number of landlords who entered into contractual tenancy agreements in good faith. Landlords and tenants will no longer be able to negotiate individual terms for their tenancy and the rights and responsibilities associated with the Housing Act 1988 will be extended to these higher rent properties.

Higher unemployment is forcing more young people into further education, increasing demand for short-term flats and providing a boost for Unite, the student accommodation developer. Demand is expected to accelerate at such a rate that Unite yesterday told investors it would continue to buy properties in student hotspots such as London and would not be reinstating the dividend — last paid in the middle of 2008 — until it had returned to ‘meaningful’ profit, even though the group announced a profit of £600,000 after a loss of £5.8 million in 2008. A lack of job opportunities was partly behind a 23% rise in the number of university applications between February 2009 and the same month this year, Mark Allan, chief executive of Unite, said yesterday.

The British housing market is improving at a faster rate than property prices across most of the rest of Europe, a report by the Royal Institution of Chartered Surveyors (RICS) has found. House prices rose in only five European countries, including Britain, during 2009. But other countries continued to suffer a sharp market correction, with prices diving by up to 53%. RICS warned that countries with vulnerable economies would continue to suffer from price falls and depressed markets during 2010. Norway led the revival, with property prices in the country rising by 12% during 2009, followed by Finland at 8% and Sweden at 7%. Britain was the fourth best performing country, with the average cost of a home ending the year 1% higher than it started it, although house prices had risen by 10% from their lowest point in April.

The UK industry should develop more products to help builders and property owners make the 5.5 million properties at flood risk in England and Wales more resistant and resilient to flooding, Environment Agency chairman Lord Chris Smith says. Speaking at the National Flood Forum annual conference, Lord Smith also encouraged building merchants and DIY stores to offer advice to builders and members of the public on how to make properties more resilient to floods, so that drying out and cleaning up is faster and cheaper following any flooding. A recent Environment Agency study into the devastating floods of summer 2007 found the average cost per flooded home was between £23,000 and £30,000 and a quarter of homeowners were not fully covered by insurance.

Two of the biggest bellwethers of the housing market yesterday provided mixed messages on the recovery of the UK property sector. While the housebuilder Barratt Developments boasted an improved trading performance and an uplift in selling prices over the six months to 31 December, Travis Perkins, the owner of the DIY retail chain Wickes, reported a slump in annual sales at its eponymous builders’ merchants, and warned that it was unable to predict when the group will return to growth. Barratt Developments’ buoyant update came against the backdrop of stark warnings on the economy and housing market by Kate Barker, a member of the Monetary Policy Committee, on Monday, that the rally over the last 12 months cannot continue.

The National Audit Office (NAO) has expressed concerns over the strength of the information collected on Decent Homes progress. It is estimated that over a million social homes have been improved by CLG’s Decent Homes Programme. The original target was that all social sector homes would be decent by 2010, but by November 2009, CLG was estimating that approximately 92 per cent of social housing would meet the standard by 2010, leaving 305,000 properties ‘non-decent’. 100 per cent decency would not be achieved until 2018-19.

Deloitte, Britain’s second-biggest professional services group, is to seize a foothold in the £2 billion commercial property consulting market by acquiring one of Britain’s oldest real estate firms. The ‘big four’ accountant will merge its real estate practice with Drivers Jonas, the UK’s eighth-biggest commercial property adviser. The new unit will have revenue of £110 million and 700 staff, but John Connolly, Deloitte’s chief executive, who forged the deal, said that fee income is expected to more than double to £250 million within three years. Mr Connolly said that Deloitte identified Drivers Jonas as the most attractive target in the commercial property market because of its size, profitability and reputation.