Homeswaps & Landlord Accreditation

1. Homeswaps&Landlord Accreditation presentation to Environment Scrutiny CommitteeDecember 2001

2. 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

3. Collapsed Housing Market • Traditionally Starter Homes built pre 1919 • Early 90s - values @ £25-30K • Now - Values @ £5-15K

4. Regeneration Strategy • Revitalised Urban Areas • Reduce Oversupply • Remodel & Reconfigure • Renovate • Clearance is a component of this process

5. Regeneration Strategy • Reduce oversupply of terrace housing • Acquire and demolish properties • However some people trapped in Negative Equity

6. 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

7. Solution? • Within the Law • Maintain Community Spirit • Avoid Debt • Retain Home Ownership • Strategic Use of Investment

8. Homeswap • Owner swaps home in clearance area for home elsewhere • Continues to pay existing mortgage

9. 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

10. Homeswap Example • Ms Smith lives at 1a Bad Road • The property is in proposed Clearance Area

11. Homeswap Example • 1a Bad Rd is valued at £7k • Ms Smiths’s mortgage is £25k

12. Homeswap Example • Ms Smith is entitled to market value and homeloss • £7k + £1.5k = £8.5k • Leaving debt to mortgage company of over £15k

13. Homeswap Example • The Council purchases 2 Good Road • Good Road is in better part of the regeneration area • Value = £13k

14. 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

15. Homeswap ExampleBefore the swap • Bad Road value = £7k • (owned by Ms S) • Good Rd value = £14k • (owned by council)

16. 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

17. 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

18. Owners Benefit • House in “better” area • Structurally sound • Greater equity

19. The Local Authority • Facilitate Clearance • Strategic investment in surrounding area (Good Rd) • Public Support

20. Mortgage Company • Greater Equity • Reduced potential bad debts • Reduced risk of future defaulters

21. Mutual Benefits • Reduction of oversupply • Strategic Investment in surrounding area • Creates increase in house values

22. 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

23. 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

24. 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

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

26. 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

27. Why Accreditation? • No powers to license at this stage • Professionalises the amateurs • Gains some control over the market • Some Landlords very poor

28. 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.

29. Objectives of the Landlord Accreditation Service

30. Referencing service • To facilitate better management of ‘problem’ tenants and to reduce incidences of damage to property by tenants

31. 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.

32. Access to funding to improve property and security • Facilitate regeneration and help to promote good future management and sustainability

33. Marketing Service • Raising profile and image of area. Reducing numbers of vacant properties

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

35. 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

36. 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

37. 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

38. 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.

39. 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.

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

41. 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.

42. 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.

43. Current Position • Pilot Underway • Report back to Cabinet in February