Should tenants have to pay letting agent fees?

This week Shelter published a report on their investigation into letting agent fees. Chris Norris shares the NLA’s reaction.

This week Shelter published a report on their investigation into letting agent fees. Chris Norris, the NLA’s Head of Policy, shares our reaction.

The report found that letting agency fees could be pushing renters into debt or cutting back on food and heating and as a consequence, the charity has called for an end to letting agency fees to renters in England.

So fees traditionally charged to tenants to set up a tenancy, including ‘administration’ fees, ‘holding’ fees, credit check fees and ‘check-in’ fees could soon be charged to landlords.  Shelter suggests that  asking landlords to cover the costs of setting up a tenancy is a fairer way of doing business. They say “it is landlords, not renters, who have the power to choose one agency over another, to negotiate the fees charged and to terminate a contract”.

The NLA agrees that essentially, a landlord using an agent has agreed to pay for their services, including the establishment of a tenancy and a variety of due diligence activity, which is intended to reduce the risk of the tenancy failing. And from their point of view it is unhelpful for prospective tenants to be faced with unpredictable or excessive fees for accessing their property as it reduces the prospects of finding a tenant.

However, there is good reason for some initial costs to be incurred by a prospective tenant before they have committed to a property. Before agreeing a tenancy it is important that an agent is able to verify that an applicant is who they purport to be and that the information they have provided is truthful and accurate. In the NLA’s view it is appropriate that the applicant contributes towards the cost of this early verification as it provides a safeguard against speculative attempts to rent property and attempts at deception. It also means that the landlord is not left to cover the cost of applicants withdrawing from the process once costs have been incurred.

Of course it is vitally important that all costs are made clear before any commitment to proceed is made and that no further undisclosed fees materialise once the tenancy is agreed.

What are your thoughts on the issue of letting agent fees for tenants?

 

 

Packs increase your survival chances

Sue from Shelter Scotland has written a blog about the new Tenant Information Packs that landlords are legally obliged to provide to new tenants in Scotland

Sue from Shelter Scotland has written a blog about the new Tenant Information Packs that landlords are legally obliged to provide to new tenants in Scotland

Have you rented your property out or renewed a lease since 1 May? I’m guessing most landlords will have heard about the Tenant Information Pack. From 1 May 2013 you have to give your assured and short assured tenants a copy of this pack from the Scottish Government, if you’re a private landlord in Scotland. Now that all deposits should be registered safely in a tenancy deposit scheme this month, there’s another thing on your to do list. Private landlords have a lot of things to remember and do and that’s why organisations such as the National Landlords Association exist, but landlords who don’t hand over a copy of the Tenant Information Pack (TIP) can find themselves facing a £500 fine.

We’ve long been talking about tenants’ rights, that’s nothing new. Our ongoing campaign, rethink renting, is for a private rented sector that gives tenants more security than the current legal minimum of six months. So we were pleased when Shelter Scotland was asked by the Scottish Government to create a website to support the Tenant Information Pack, called www.RentingScotland.org, which includes guides on:

• Renting your property out
• Starting a tenancy as a landlord
• Dealing with disputes with tenants
• Dealing with antisocial behaviour as a landlord
• Ending a tenancy as a landlord

www.RentingScotland.org has industry-wide support, with the governance group containing the NLA, NUS and the Scottish Association of Landlords, among others. The guides break the pack down into step-by-step stages for landlords and tenants and let you create your own online checklists and further reading. Basics, like getting yourself registered, keeping your property safe and dealing with rent and deposits are core to the guides. But the site also explains some of the more technical aspects like what is an AT5 and what should a tenancy agreement include? Answers on a postcard please…

Shelter Scotland is really excited about the potential of the pack and the site for supporting engaged, empowered tenants. On the flipside, it’s a reminder that the responsibility to get things right in the end lies with landlords – not your letting agent – on various fronts. You’re still responsible if your letting agent doesn’t give your tenant a TIP, just as you are if they charge them illegal fees or don’t try to stop anti social behaviour. Apart from giving tenants the TIP, what would you say is the best tip you’ve got for a new landlord?

This blog was provided by Shelter Scotland.

Notes: NLA members can also access information and guidance about the above from the NLA’s Online Library.

NLA gives evidence at Parliamentary Select Committees

Dean Velani, the NLA’s Parliamentary Officer, looks back at the NLA’s contribution to the recent Select Committees.

Dean Velani, the NLA’s Parliamentary Officer, looks back at the NLA’s contribution to the recent Select Committees.

Recently the National Landlords Association (NLA) was invited to give evidence to Parliamentary Select Committees.

Select Committees hold inquiries and report their findings to Parliament. Investigations can examine an existing or proposed policy, an area of public concern, or the work of one of the bodies associated with their department. As part of their investigations, the Committee calls for written evidence within the terms of reference for the inquiry. Based on this written evidence and who the Committee believe to be key stakeholders they will then put together a list of witnesses to take oral evidence from. Oral evidence is almost always held in public and the public are welcome to attend. The witnesses are questioned by the committee and their testimony taken down verbatim, to be published.

The NLA gave evidence to the Communities and Local Government Select Committee at their inquiry into the Private Rented Sector. Richard Lambert, CEO of the NLA, responded to questions on rogue operators in housing, licensing in Newham, investment to increase supply and regulating landlords. Members of Parliament are not known to be shrinking violets and their lines of enquiry were robust. However, it must be said that the NLA made simple, coherent arguments that buttressed our policy positions.

Likewise, the evidence given to the Welsh Affairs Select Committee on the impact of changes to housing benefit in Wales was a resounding success. Lee Cecil, the NLA’s representative for Wales, gave examples of the impact of welfare reform on landlords and tenants in Merthyr Tydfil. What particularly impressed the Committee and those watching were the practical solutions to current problems put forward by the NLA.

As an organisation which aims to improve the private-rented sector for everyone, it was a privilege to be given the opportunity to explain our policy position, to talk about our industry and to provide practical solutions to some of the UK’s housing problems.

Links – NLA evidence to DCLG Select Committee

NLA evidence to the Welsh Affairs Select Committee (10.34)

UKALA evidence to DCLG Select Committee

Birmingham City Council supports good landlords

Senior Policy Officer at the NLA, David Cox, shares some good news for NLA members and accredited landlords in Birmingham

Senior Policy Officer at the NLA, David Cox, shares some good news for NLA members and accredited landlords in Birmingham

Birmingham City Council has sent a strong message to landlords who let in the city. They have committed to supporting good landlords by offering significant HMO license discounts to NLA members and accredited landlords.

Landlords who belong to a professional body such as the NLA and landlords accredited with the NLA or the Midlands Landlord Accreditation Scheme (MLAS) will pay reduced fees for their first five year HMO license applications and their five year license renewals.

For accredited landlords and members of the NLA, the cost of a new five year HMO license application will be £700. The cost of a five year renewal will now be £400. In contrast, those landlords who have chosen not to become accredited through MLAS or the NLA and those who are not members of a professional organisation will pay £1,150 for a new 5 year licence (£450 more than NLA members and accredited landlords) and £850 for a 5 year renewal (£450 more than NLA members and accredited landlords).

And landlords who fail to meet the legal requirement to apply for a licence will only be given a one year licence and will be made to pay the full fee again one year later in order to get a 5 year licence.

These significant discounts are thanks to the hard work of the NLA’s West Midlands Regional Representative, Mary Latham, who has been working with Senior Officers at the Council since 2011.

Mary proposed an alternative approach to the fee structure when the first HMO licenses were due for renewal over two years ago. The proposal was based on offering discounts to those landlords who have taken the trouble to learn, through an education based accreditation scheme, and ensure that they are supported by joining a recognised landlords’ association. On the other side of the coin, those landlords who have broken the law by not applying for a HMO licence on time would be expected to cover the extra costs involved in tracing and chasing them.  With the Council recovering their costs from the bad landlords, the good landlords could be licensed at a much lower fee and the council would still balance their books.

After many discussions, Birmingham City Council accepted the proposal in a report. It said:

“The fee structure for the HMO licensing scheme has been reviewed in the light of a proposal submitted by the National Landlord Association on behalf of their members operating in the city.

“The headline cost of the fee has not been altered but the levels of discount to members of certain professional organisations and members of the Midland Landlord Accreditation scheme have been increased. This will encourage landlords to respond more rapidly and penalise those who fail to comply. Those providing incomplete applications will be penalised as will owners and managers of unlicensed properties.”

In addition, Jacqui Kennedy, former Director of Regulation and Enforcement at Birmingham City Council who endorsed the proposal, recognised the need to encourage good landlords to work with the city:

“To continue with the structure of fees and discounts set in February 2012 will cause damage to the reputation of Birmingham City Council in its dealings with the body of reputable private landlords and have a negative impact on dialogue intended to encourage owners to provide decent secure homes for the vulnerable and in need.”

This just goes to show what we can achieve when working in conjunction with our local authorities.

Mary Latham, Regional Representative for Birmingham, says:

“I am delighted that Birmingham City Council is supporting the good landlords. Professional landlords, who provide much needed affordable HMO accommodation, will really appreciate this recognition of their efforts.

“The NLA have an excellent relationship with this Birmingham City Council and we will continue to work with them to meet the housing needs of people living in the city.”

A Student Perspective On Renting In The Private Rented Sector

Chloe Bryer, a student from the University of Kent, shares her tips for student tenants.

Chloe Bryer, a student from the University of Kent, shares her tips for student tenants.

Over the past week I have dipped into the wonderful NLA PR Office, gathering information about the private landlord sector, writing blogs, news and press releases. With my experience of renting for a year combined with work experience for the NLA, I thought I might be well placed to pass on some tips to students renting for the first time…

Most of the student accommodation in Canterbury is relatively nice however you can find a few places not quite up to scratch. Our house was relatively new and came with unlimited bills, internet and a TV package – this seemed a good deal at the time. We opted out of the hassle of paying individual bills but we were soon to learn we had chosen a more expensive year for ourselves, and as Christmas approached we had an epiphany: we would be paying for heating, gas, and electricity throughout the holidays! It definitely would have been cheaper and more sustainable to have had normal bills, especially as we were feeling optimistic about the weather during the summer term.

• Students beware! This is not a money-saving option! Of course there are perks, living in a sauna throughout the winter was luxury, but not if you’ve only got little dollar in your pocket!

We also had a revelation that we were liaising with an agent, not the landlord of our sweet little house. Having an agent shouldn’t be problematic, but trying to contact them and never hearing a reply is. On the whole our agent was relatively good in solving our problems; however it appeared he was juggling other properties as well as his own property portfolio, meaning he had little time left for us. In addition, if it was a parent who rang him instead of us students, the issue would be resolved in a matter of hours.

• Students it is okay to pester your landlord if you need something fixing urgently.
• You’re allowed to be persistent. It is also okay to act professionally.
• They are running a business and are getting paid to provide you a service.
• However, you are using their service and should want them to trust you, e.g. care for the house!

Students you should also know where money is going – especially your deposit! If you DONT have mummy and daddy paying for you then make sure you know who your paying and when!

• Try to plan, save and don’t leave your payments outstanding! You may receive a reminder, but not all agents/landlords are this kind.
• The better you are at this the better your credit history will be.
• Do not hand over unprotected money up front, it is absolutely necessary to check if your deposit is protected and part of a Tenancy Deposit Scheme, like my|deposits.

Hope this has given a few pointers, but remember student tenants; you have the right to question and liaise with whoever you’re renting from, just like any other tenant.

Rent control is not the answer

Richard Blanco, London Representative for the National Landlords Association (NLA) explains why the UK must not return to Rent Control.

Richard Blanco, London Representative for the National Landlords Association (NLA) explains why the UK must not return to Rent Control.

There has been a worrying increase in calls for rent controls recently.  In December 2012 the Labour Party Private Housing Policy Review called for annual indexation of rent increases once the initial rent has been set.  More worryingly, MPs including Jeremy Corbyn, and this week David Lammy, seem to be calling for a return to something akin to 1970s housing policy.  Lammy’s comments were in response to the testing of the Government’s overall benefit caps, equivalent to a benefit ceiling of £350 per week for single individuals and £500 for families.

During an interview about the caps on LBC Radio, David Lammy stated that rents in London had risen by 7% in 2012. This is indeed the case and it is so because house prices also rose by 6.8% in the capital during the same period; increasing rents merely reflects the increasing cost of buying and maintaining rental property.

The government hopes that the relaxation of planning constraints will encourage more house building and it has set local authorities ambitious targets.  The Bank of England’s funding for lending scheme has increased the flow of mortgage finance and the government hopes its help to buy scheme will enable buyers with small deposits to gain access to home ownership.  However, fundamentally we need to build more housing and free up mortgage finance to take pressure off rents.  The private rented sector now stands at just below 18% of all housing stock while social housing’s role continues to decline.

All of the government measures – if they are successful – could take years to feed through into the housing market.  Meanwhile, benefit claimants affected by the welfare cap are, on average, £93 per week short of the amount they need to pay their rent. The answer according to many is for landlords to reduce their rents accordingly.

But we forget that landlords need to cover their costs to stay in business and will only continue to invest if there is the possibility of profit.  Why is it that shops, garages, plumbers and other small enterprises can make a profit but landlords shouldn’t?

The idea that landlords are raising rents just because they can also seems to be gaining currency at the moment.  Yet according to the NLA’s latest tenant survey, 67% of tenants say their rents had not risen in the last twelve months. Many landlords opt not to raise rents once the tenant is in situ, only reassessing rents between tenancies.

So, are rents controls really a viable solution?

Residential letting contracts were de-regulated by the Housing Act of 1988 and the 1989 introduction of the Assured Shorthold Tenancy.  Prior to that, rent controls were the norm and the private rented sector shrank to 8% of all housing stock.  A re-introduction of rent controls would cause the sector to shrink back into decline.

In addition, lenders would be less likely to offer buy-to-let mortgage finance if there uncertainty over whether rents could cover mortgage payments. Landlords would stop buying and many would withdraw from the market as their businesses cease to be viable.

And institutional investors who work on a 20 to 30 year timescale and are just starting to take an interest in building to let on a large scale would certainly about-turn on any investment proposals.

Indeed, the artificial suppression of rents sounds like an easy solution.  But it would reduce the stock available through the private-rented sector.  The lack of growth in the social sector means that demand would not be met, so we would see an increase in homelessness and families would be placed in temporary accommodation at huge cost to the public purse.

Rent is a product of the value of housing, which is in turn a consequence of its availability and the cost of provision. You cannot influence the former without addressing the latter. Rent control is not the answer.

Things are looking up: Arrears are down!

Good news for landlords and tenants alike

There’s good news for landlords and tenants alike with rent arrears at their lowest level since March 2010.

According to the latest NLA Landlords’ Panel, 41 per cent of landlords have experienced instances of rental arrears in the last 12 months, down nine per cent year on year and back to levels previously seen in quarter one 2010.

This is great news for all parties and shows that tenants are coping financially, despite the welfare changes.

And in more good news for landlords, void periods in private-residential property have fallen to their lowest level in over a year, helped by strong and consistent tenant demand.

According to the research, enduring tenancies are on the rise with only 33 per cent of landlords experiencing vacant periods in the last three months, down 13 per cent year on year.

At a regional level, voids are greatest in the North East of England where 54 per cent of landlords have experienced empty periods in the last three months and lowest in London where only 20 per cent of landlords have experienced voids over the same time frame.

Additionally, the average duration of a void has reduced to 60 days from 63 days in quarter three and 69 days earlier in 2012.

It is in every landlords’ business interest to maintain good, long lasting tenancies and avoid arrears.

To keep instances of arrears at bay, be sure to carry out the appropriate tenant checks when recruiting tenants to ensure they are in a position to meet their rental commitment. It is also wise to build a good, open relationship upon meeting new tenants to ensure tenants feel able to approach you if they are experiencing problems. This open relationship will allow you to work through the situation to help ensure an enduring tenancy using a short term repayment plan or reduced rent arrangement.

Issuing a Section 8 Notice to initiate possession proceedings as a result of long term arrears must always be a last resort – professional landlords will favour good, sustainable tenancies over short lived tenancies that result in periods in which their property will lie vacant.

And at a time when demand far outstrips supply, it is imperative that empty properties are filled quickly, following any necessary maintenance and improvements.

The private-rented sector affords tenants flexibility, so as tenants’ circumstances change, there are occasions when a property might be empty.

The NLA’s advice to landlords looking to minimise void periods is to talk openly with their tenants about their future plans. This will give the landlord some idea of when the property might next be empty and allow them to make any improvements and plan advertising activity in good time.