Homeswaps
&
Landlord Accreditation
presentation to Environment
Scrutiny Committee
December 2001
Homeswaps



Innovative Model for helping homeowners 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?



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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



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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 Example
Before 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


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Facilitate Clearance
Strategic investment in surrounding
area (Good Rd)
Public Support
Mortgage Company

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Greater Equity
Reduced potential bad debts
Reduced risk of future
defaulters
Mutual Benefits

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Reduction of oversupply
Strategic Investment in surrounding
area
Creates increase in house values
Salford’s Progress

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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

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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

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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

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Simple solution
Does not create debt
Suits our wider investment strategy
Landlord Accreditation

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
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?

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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
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Pilot Underway
Report back to Cabinet in February