homeswaps & landlord accreditation

Homeswaps&Landlord Accreditation

presentation to Environment Scrutiny CommitteeDecember 2001

Homeswaps

Innovative Model for helping home-owners trapped in Negative Equity in Clearance Areas

Recognised as a National Pilot by DTLR, CML and LGA

Being piloted in Seedley and Langworthy - if successful will be rolled out to Broughton and Kersal/Charlestown

Collapsed Housing Market

Traditionally Starter Homes built pre 1919

Early 90s - values @ £25-30K Now - Values @ £5-15K

Regeneration Strategy

Revitalised Urban Areas Reduce Oversupply Remodel & Reconfigure Renovate Clearance is a component of this

process

Regeneration Strategy

Reduce oversupply of terrace housing Acquire and demolish properties However some people trapped in

Negative Equity

Clearance Issues

Low Value compared to immediate locality Unable to buy similar home Mortgage Debt Moral Imperative to help Certain Public Opposition to Clearance if

support not provided

Solution?

Within the Law Maintain Community Spirit Avoid Debt Retain Home Ownership Strategic Use of Investment

Homeswap

Owner swaps home in clearance area for home elsewhere

Continues to pay existing mortgage

The Legal Position

Possible within existing Ministerial Consents

District Auditor has approved Specific Consent required for Council to

give incentives for owners to stay in Seedley/Langworthy

New powers next year will allow us to do it anyway

Homeswap Example

Ms Smith lives at 1a Bad Road

The property is in proposed Clearance Area

Homeswap Example

1a Bad Rd is valued at £7k

Ms Smiths’s mortgage is £25k

Homeswap Example

Ms Smith is entitled to market value and homeloss

£7k + £1.5k = £8.5k

Leaving debt to mortgage company of over £15k

Homeswap Example

The Council purchases 2 Good Road Good Road is in better part of the

regeneration area Value = £13k

Homeswap Example

We agree repair works to Good Rd with Ms Smith and her mortgage co.

Cost of works = £5k

New value of house = £14k

Homeswap ExampleBefore the swap

Bad Road value = £7k• (owned by Ms S)

Good Rd value = £14k• (owned by council)

Homeswap Example Ms Smith now owns Good Rd The council now owns Bad Road The council places a land charge

against the equity increase The Council discounts the sale over five

years to encourage Ms Smith to stay

Homeswap Example

Ms Smith continues to pay her £25k mortgage

Her property is valued at £14k She has a time limited land-charge

against the home

Owners Benefit

House in “better” area Structurally sound Greater equity

The Local Authority

Facilitate Clearance Strategic investment in surrounding

area (Good Rd) Public Support

Mortgage Company

Greater Equity Reduced potential bad debts Reduced risk of future

defaulters

Mutual Benefits

Reduction of oversupply Strategic Investment in surrounding

area Creates increase in house values

Salford’s Progress

We have had an ongoing dialogue with Council of Mortgage Lenders

They recognise the scale of the negative equity problem

They are keen to find solutions Major Lenders now actively participating

Current Position We want homeswaps The community demand homeswaps We have established a legal process Council of Mortgage Lenders’ Members

now assisting in pilot of homeswap

Conclusion

Regeneration involves strategic clearance

Unpopular low value housing is a key problem for the City

Imaginative solutions required We are piloting homeswaps this year We aim to expand across the City if

successful

Conclusion - Homeswaps Simple solution Does not create debt Suits our wider investment strategy

Landlord Accreditation

8,000 Private Sector Homes in the City Over 3,000 landlords Vary from

– Professional– to Good– to Poor– to Amateur– to Criminal

Why Accreditation?

No powers to license at this stage Professionalises the amateurs Gains some control over the market Some Landlords very poor

Current standards of management are very mixed. Some landlords do not have written tenancy agreements and others were not aware of the need for a gas safety certificate for all gas appliances in the property.

Objectives of the Landlord Accreditation Service

Referencing service

To facilitate better management of ‘problem’ tenants and to reduce incidences of damage to property by tenants

Housing Benefit

To promote understanding of the benefits system among landlords. By building up a good relationship with landlords will help to identify fraudulent claims and will facilitate more efficient processing of private sector claims.

Access to funding to improve property and security

Facilitate regeneration and help to promote good future management and sustainability

Marketing Service

Raising profile and image of area. Reducing numbers of vacant properties

Training

To increase landlords knowledge and understanding of renting and managing property. To facilitate better quality housing in the area for tenants

Landlords Information Pack/Code of Practice Establish a reliable information network

for landlords in the area. Facilitate effective management within the private sector. Promote awareness of housing issues and legislation and professional practice among landlords

Tackling nuisance

Encourage development of working group to examine nuisance cases and promote multi agency approach. Nominate landlord/agent to be on the group. Group to meet monthly – handle maximum four cases per session

Maintain links with DTLR with regard to accreditation and licensing

A well managed and integrated private rented sector. Promote landlords as a professional body. Exclude unscrupulous and criminal landlords

Making Accreditation Happen

To become members of the Accreditation Scheme landlords/agents will sign to say they understand and meet the code of standards for membership.

They will be asked to produce relevant documentation to prove that they meet the standards.

Membership will then be renewed annually and landlords will be asked to renew their commitment to the Code of Standards and produce valid documents that should be renewed on an annual basis such as gas safety certificates.

Officers will reserve the right to carry out ad hoc inspections to ensure compliance with the code where they consider it to be necessary.

It is likely that the Accreditation team will be notified of non-compliance when complaints are received from tenants or other landlords. To facilitate this the scheme will be publicised to tenants in the area. They will be notified that their landlord is accredited and of the code of standards associated with membership of the scheme.

Complaints will be managed initially through mediation by the Accreditation team. Persistent failure to conform to the code of standards will result in membership being reviewed. It is anticipated that this will be done by a panel including other landlords/agents.

Current Position

Pilot Underway Report back to Cabinet in February