Magic Roundabout, or Puss in Boots?

Matt Oliver, NLA Public Affairs Officer, explains the latest government reshuffle

Matt Oliver, NLA Public Affairs Officer, explains the latest government reshuffle

It shouldn’t have escaped anyone’s attention that the Prime Minister recently made his most comprehensive reshuffle to date, just 10 months before Polling Day.  Barring any unexpected ‘events’, it’s clear this is the team that he wants to remain in place until May and convince the public to give the Conservatives a majority at the polls.

With this in mind, the promotion of Brandon Lewis to Minister of State for Housing and Planning, signifies a serious and welcome elevation for housing in current government thinking.

Mr Lewis has been promoted from his previous role as the Parliamentary Under-Secretary of State (wonderfully abbreviated to PUSS).  He now combines the roles of former housing minister Kris Hopkins and planning Minister, Nick Boles, which have been separate roles since 2009.  The DCLG has said housing and planning were being combined as they are ‘two sides of the same coin’.  With Labour’s plans for the PRS, it is obvious that housing will be a massive battleground over the next few months, and the NLA welcomes this move by the Government.

At the same time the outgoing housing minister, Kris Hopkins, continues to ride the ministerial roundabout – taking on responsibility for local government and homelessness.

Whilst housing is an issue for which Government seemingly recognise the need to get on the front foot, it’s all change at the Department of Energy and Climate Change.  One of the most passionate advocates of green policy in the coalition government, Gregory Barker, has resigned as Energy and Climate Change Minister.  He is also to stand down from Parliament at the next election.

Despite their determination to “get rid of green crap” there is reason to be mildly optimistic of continued Government support for the Green Deal.  Responsibility for the project has been delegated to a junior minister in comparison, Amber Rudd, the new department’s new PUSS.  However, she has previously spoken highly of the project prior to its launch, and is known to be supportive of the PRS as a whole. It can only be hoped that the PUSS will put her boot to good use by kick-starting the much maligned project into life.

Time will tell…

Revenge Evictions – The New Crisis That Isn’t

Richard Lambert Chief Executive at the National Landlords Association discusses the reality of section 21 notices

Shelter issued new figures recently suggesting there is a crisis in the private rented sector due to landlords evicting tenants for complaining about standards of their rented property –“revenge evictions” as they now call them. However, if you look more closely at these figures, their argument starts to unravel.

Retaliatory evictions

Shelter’s figures suggest there has been a rise in complaints concerning retaliatory or revenge evictions. The difficulty is how to prove that issuing possession proceedings really is an act of retaliation against a tenant.  Simply serving a Section 21 notice should not be classed as a revenge eviction. There are many reasons a landlord would need or want to serve one, and so long as they do it the right way, it is their right to do so for whatever reason they think fit. 

The overwhelming majority of landlords want their property occupied, rent paid and for their tenants to have a comfortable long-term tenancy. Like any other business they want happy customers and steady income. They’re not out for revenge; we don’t talk about any other service provider seeking revenge from their customers and there is no reason to suspect landlords are any different. 

Landlords want stable tenancies and NLA statistics show that most are. The average tenancy lasts just over two and a half years and in reality the vast majority of tenancy durations are terminated by the tenant, not the landlord.  When the landlord does terminate the tenancy, the cause more often than not is rent arrears. A property will inevitably have some problems during its lifetime as a rental property – indeed, a quarter of landlords’ rental income is spent on repairs and maintenance – but most would think evicting to avoid repairing creates two problems instead of one.  The repairs are still needed, but now there is a void, so no income coming in.

Seeking possession can be an expensive business, often stressful for the landlord as well as the tenant.  Nor is it automatically the best business option.  Ending a tenancy, re-marketing and letting all cost.

Crisis it is not

 We are all worldly enough to know that retaliatory evictions do happen, and it is terrible that anyone should lose their home due to the poor, or even criminal, behaviour of their landlord.  Nevertheless, the NLA does not believe that the figures cited by Shelter represent a ‘crisis’.

Their figure of 7,600 renters at risk of eviction equates to 0.19% of renters in England (9m), implying that that 99.81% are not experiencing these problems. 

Furthermore, the 4,000 renters ‘losing their homes’ represents 0.1% of households in England who rent privately. You have to question whether one tenth of one per cent of tenancies coming to an end is an indication of market failure.

The question remains: is a failure rate of between 0.1 and 0.19% of the market a ‘crisis’? A situation which needs improving, yes, but ‘crisis’ is stretching it too far. 

Councils to tackle the issue

The one thing we can agree with Shelter on is that there are some bad landlords, who may end a tenancy if they think they can get away with a new tenant putting up with the problems, and these landlords need to be tackled. Councils need to target bad landlords and force them out of the private rented sector. It is down to local and central government to prosecute publicly and effectively to make it clear that ignoring property standards is already illegal. 

Public prosecutions can really help to drill home that bad practice is unacceptable and that there are consequences. Unfortunately, in 2012, fewer than 500 landlords were prosecuted; compare this with the 155,000 people prosecuted for not having a TV licence. Councils should also receive a proportion of prosecution fines in order to incentivise future enforcement activity to protect tenants from the few who think they can get away with poor or illegal property practices.

Are you having abandonment issues?

Lucy Regan, London Representative for the NLA advises landlords on the issue of tenant abandonment.

Abandonment isn’t something that happens often in the private rented sector but when it does it can be distressing and confusing. But how do you know if your proREGAN Lperty has been abandoned and what are the steps you need to take?

Things you need to consider

Has the property been abandoned?

First of all a landlord must decide if the property has been abandoned. If a tenant has given notice or handed back the keys this is then termed ‘surrender of tenancy’. Secondly a landlord must establish the reason: there may be a valid reason as to why a property is left unattended, for instance a hospital stay, an extended holiday or the tenant has gone to prison.

Insurance

Your insurance may not be valid if the property has been left unattended for more that the stipulated period. This could prove costly as empty properties are susceptible to squatters and vandals.

How to check that property has been abandoned

  • Contact – A landlord should first attempt to contact the tenant. If they do not respond to calls, voicemails, text messages or emails, it could be the first bit of evidence that the property has been abandoned?
  • Is the tenant still making rent payments? – When did they stop? Is that normal or have they been late with payments before?
  • Are the tenant’s possessions still at the property? If they have been removed, it could be another tick in the box of abandonment. Checking for possessions can be difficult. In some cases a landlord may be able to see through a window, but if this is not possible, they must then seek permission from the tenant to access the property. But with the suspicion of abandonment this may not be possible. However if a landlord thinks the property is in an unsafe state they may enter, but they must be cautious and make sure there is a clear reason for entering. It would also be a good idea to have a witness come along.
  • Is the tenant claiming housing benefits? If so, then a landlord can contact the Housing Department. They may even be in contact with the tenant and could shed some light on the situation.

Where do you stand legally?
A landlord needs to be aware that the tenant is legally entitled to return and take up residence again, and that the landlord is responsible for the tenant’s possessions.

If a landlord takes over the property and re-lets it, there could be serious trouble as it is a civil offence relating to the breach of the existing tenancy contract. It is also a criminal offence to prevent the continuation of the tenancy.
There have been cases where landlords have been fined up to £20,000 for re-letting their properties when then tenant is clearly not coming back.

The safest way to deal with abandonment is to get a court possession order before taking over the property.

What to do next

If a landlord has established significant evidence that the property has potentially been abandoned they should follow these steps:

  • Remember to ensure that all communications and actions are documented.
  • Make sure that there is a witness available and willing to give a statement at any time when at or dealing with the property and tenant. A local authority’s Tenant Relations Officer can help with this.
  • Serve an Abandonment Notice. This note must be placed on the tenant’s door. However, be aware that this may attract squatters, so do it as discreetly as possible. It is advisable to take a picture of this with a newspaper to show the date. To be safe, post a copy through the door. After five days, the locks may then be changed (unless already done so to secure the property or see to any present dangers).
  • Any possessions remaining in the property must be stored for a reasonable amount of time.
  • Under no circumstance must you deprive the tenant of their rights to access.
  • Inform the local authority rent officer of your actions in writing.
  • Seek expert advice: the NLA advice line is on hand for NLA members.
  • Always obtain a court possession order before taking over the property or re-letting if there is any doubt.

To avoid getting into this kind of situation it is best practice to get a thorough reference on the tenant at the start of the tenancy. Check for rent payments, and visit the property regularly. If you are on good terms with a neighbour, you could ask them to keep an eye on any suspicious movements, or provide a weekly cleaning service.

Finally, it is a good idea to build up a relationship with the tenant and make them aware that if they do go away for an extended period of time that they can let you know.

New guidance to promote successful tenancies

Make sure you know your rights as a renter

Make sure you know your rights as a renter

New guidance has been produced to help private renters in England who are looking for a house or flat to rent.

The guidance has been produced by the Department for Communities and Local Government (DCLG) and provides a checklist of the most important and common aspects to help protect renters from problems at every stage of looking for, and moving in to, private rented property.

The guidance is for renters who are entering in to an assured shorthold tenancy (AST) agreement – the most commonly used tenancy agreement in the private sector – but doesn’t cover lodgers or people with licences , nor tenants where the property is not their main or only home.

What’s in it?

It provides a host of information that should enable a better understanding about the rights of the tenant, and their responsibilities so that a positive relationship with their landlord can be maintained. It contains lots of detailed information about what to consider:

  • before searching for a property –  whether through  letting agent or directly from a landlord;
  • once you’ve found a place –information about the important documentation tenants should receive from their landlord or agent;
  • during the tenancy –  including the rights and what’s expected of tenants, and how to deal with problems or issues;
  • When the tenancy is coming to an end –how to renew or extend the tenancy and how the property should be left upon tenancy expiry to ensure no issues arise.

What if problems arise?

The guidance also contains important information about tenant’s legal rights and offers further sources of information and support for renters who experience problems during the tenancy, such as:

  • financial problems
  • Concerns over the safety of the property
  • Fear of or actual harassment by the landlord/ illegal eviction.

Download the full guide now

You can download the guidance from he DCLG’s website here.

Most of it will equally apply if you are in a shared property but in certain cases your rights and responsibilities will vary.

HM Revenue and Customs online tax guidance

 

tax_return2HMRC have launched an online service offering landlords training in tax matters which is part of their Let Property campaign.

It is a computer based tutorial aimed to make it easier for landlords to understand when and how to pay tax on their rental properties. We, The Association of Residential Letting Agents and the Residential Landlord Association will make the training available to members.

What is the purpose?

HMRC want to make sure that landlords have their tax affairs right from day one, whether it is because they have not declared before or have under­-declared their earnings they will now be able to make sure that it is done correctly without confusion.

This is a great idea and it is nice to see that they have taken the approach to help people comply with the tax rules. HMRC are urging landlords to register and have contacted 40,000 to make them aware. There is always a risk that as a landlord you may get audited, which is exactly what HMRC are planning to do by targeting those who have not registered and investigate their affairs. The NLA offers tax investigation insurance which all members receive as standard when they join.

With 2,500 people renting out residential property already having voluntarily contacted HMRC, there is obviously a need for the service.

What is it?

The bite-sized modules will explain to landlords:

  • when and how property letting starts, and what to do
  • the various types of property income – furnished, unfurnished, holiday lets, Rent-a-Room, the Non Resident landlord Scheme – and how they are taxed
  • the correct treatment of income and expenditure, both revenue and capital
  • tips on record-keeping
  • property disposal, Capital Gains and Inheritance Tax
  • tax return filing and paying dates – and when and how
  • PAYE and VAT obligations

Details of the Let Property campaign and the tutorials themselves are both available online.

To get the best terms, landlords must tell HMRC that they want to take part by filling in a notification form or calling the Let Property Campaign helpline on 03000 514 479. They then have three months to calculate and pay what they owe.

People who have undeclared tax can get help through an HMRC YouTube video:  www.youtube.com/watch?v=hP6xMaiiYw4

Accreditation forges ahead

Renee Young, Landlord Development and Accreditation Officer at the NLA points to the growing trend of landlord accreditation.

lady_readingThere have been increasing calls for regulation of the private rented sector, and the landlords who operate within it, in order to improve standards of late.

However, this narrow-minded approach to better the sector is overshadowing another significant option which works in a much more productive way with local landlords, and which many local councils already reap the benefits of.

Penalising the good makes no sense

In most cases local landlord licensing schemes or even national registers – as already exist in Scotland and Northern Ireland – amounts to little more than names on a list and very little evidence supporting their necessity exists. The vast majority of landlords are responsible and provide well managed properties so in our mind it has always seemed totally unfair to penalise the good, in hope of catching the negative minority of who are failing their tenants.

A more productive solution – landlord accreditation and education

The NLA believes that landlord accreditation and education is a better way to give landlords the opportunity to stay on top of the ever changing regulations and, importantly, to enable them to better maintain their properties.

Our aim is to have all landlords work to this agreed standard. NLA Accreditation is purely based on landlord development and it offers greater consistency for all landlords, tenants and councils to recognise. Importantly it is an earmark of good practice which tenants can rely on.

Recent research from the NLA shows that about 70% of tenants said they’d be more likely to accept a property from a landlord if they knew they were committed to completing an annual programme of accreditation or training.

Taking off

Encouragingly, it’s not just tenants who see the benefits – a number of local councils seem to be getting the message, too. Many want to improve standards but ultimately don’t want to alienate the majority of good landlords in the area by imposing more red tape or costly measures.

Over 40 councils have already taken the initiative to offer the NLA accreditation scheme in its areas and the London Rental Standard, launched by Mayor Boris Johnson recently, is also closely based on the NLA’s accreditation framework. South Staffordshire and Crawley Council agreed to work with the NLA and have picked our accreditation scheme over other existing schemes in their regions. Cumbria City Council recently launched accreditation across the region – known as Cumbria Landlords Accreditation Scheme (CLAS).

Hastings and Rother, Breckland and Norfolk and Dorset Council are just some of the other authorities that offer accreditation based on the NLA’s model, too. These schemes have been in place for some years. Bournemouth who took the lead with Poole, Christchurch, East Dorset and Purbeck Council all signed up to provide this service.

Join the growing number of accredited landlords

For more information about the local accreditation schemes contact your local council. Here are some examples of what some of the aforementioned councils offer:

London Rental Standard

Bournemouth

South Staffordshire

Cumbria

If you’re yet to become accredited then visit the NLA’s website for more information about how it will benefit you. There are a number of reasons to become accredited (including potential discounts on other existing local licensing fees and grants for property improvement works) and, as well as standard chalk and talk style courses you can become accredited online, meaning you take it all at your own pace.

The future

Accreditation is becoming increasingly important and is increasingly being adopted by councils as a way of ensuring that the goods and services offered by landlords are safe and managed well.

We hope that this is the start of a wider rollout of our accreditation scheme, so that no matter where you are, tenants will know what standards landlords are held to.  If we expect local or central government to recognise and absorb the truth – that the rogues are in a minority and that landlords are of real value to the economy – then a commitment to operating professionally can only strengthen the argument. And if the silent majority of good landlords are prepared to demonstrate that they know how to operate as professionals, then surely more and more councils will see this as a positive step towards guaranteeing standards of property management and follow suit.

Stop landlord licensing in Liverpool

Tom Reynolds, NLA Representative for Merseyside, outlines how landlords and tenants can help halt proposals to introduce citywide licensing in Liverpool.Tom Reynolds, NLA representative in Merseyside

Plans published by Liverpool City Council threaten further regulations and cost for landlords in the area. The Council is consulting on its wish to introduce Selective Licensing across the whole city, giving landlords and tenants living and working in the private-rented sector in Liverpool until 16th June to have their say.

There are approximately 5000 landlords with 50,000 properties in the City area and the proposed cost of a licence has been set at £500.00 per property. Over the course of a license’s five-year lifespan, this would raise a very healthy £25 million from law abiding landlords and tenants.

If approved, anyone found to be letting property without a valid license would be subject to a fine of £20,000. Any landlord with a license found to have breached relevant conditions could also find themselves faced with a lower, but still substantial, £5,000 penalty.

According to the Housing Act 2004, the Council has the option to introduce a licensing scheme if they can prove it is necessary to combat anti social behaviour (ASB) or that conditions of low-demand exist in the area. In the case of Liverpool, the Council has opted to hang their case on the view that declining population in the City has resulted in low-demand. In fact they have based their entire business case on the need to demonstrate that low-demand exists.

I am sorry to say that as landlords we have little opportunity to argue against licensing at this stage, the necessary burden of proof is low and stacked in favour of local authorities determined to license their respective areas.

However, all is not lost and there are still ways in which we can shape the form of licensing, its scope and spread. What we need to do now is prove that there is a healthy demand for rental properties across most of the wards within the City boundary. It would seem to me to be difficult to say that there was a low demand from tenants for properties in; City Centre properties, the Dock Apartments, Childwall, Woolton, Aigburth, Allerton, any of the Queens Drive wards. Living and working in Liverpool I certainly see plenty of demand for property in much of the City.

We need to tell the council about the true state of the private-rented sector in Liverpool. There will be areas of low- demand, of course, but there are also vibrant and desirable areas where people want to live and landlords want to go about their business without the burden of further regulation.

This is why we also need to look to our tenants to strengthen the case against arbitrary licensing. It is they who will ultimately carry the cost, by way of rents, of the licence fees. This will likely be worsened by a marked reduction in available properties in the private rented sector as landlords leave the area in search of better investment opportunities.

Tenants are invited to take part in the consultation and their voices will be listened to, the NLA has produced a fact sheet to advise to landlords regarding the consultation and a sample letter to encourage tenants to participate. You can receive a copy of these free of charge by calling   Liverpool Representative Tom Reynolds on 07771734128.

Remember this licensing scheme is going to affect every landlord in the Liverpool City Council area and will probably spread across neighbouring towns in future. Do not ignore this. Act now!