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!

Landlords and tenants to be pawns in Westminster show?

Are landlords becoming political pawns?

Are landlords and private-renters becoming political pawns?

The NLA, and many others with an interest in the private-rented sector, have over the years had reason to complain that the tenure has been neglected by politicians keen to pin their colours to the twin ideals of aspirational owner-occupation and the security of lifelong social housing.

On the one hand this is understandable,  few aspire to rent given multiple options and landlords occupy a position in the public consciousness usually reserved for politicians themselves. However, on the other hand it has become harder and harder for those in power and/or seeking power to ignore almost 1.5 million landlords and approximately 9 million people who rent their home privately.

Which is why in May 2014 – only 12 months away from the first guaranteed, pre-scheduled General Election in British political history –  the PRS looks to be far from a forgotten third tenure.

Following his announcement last week  of ‘policies’ to cap rent increases, guarantee security and ban letting agent charges Labour Leader, Ed Miliband, pressed David Cameron in Parliament to back his proposals. The PM’s response to which went something (exactly) like this:

The Prime Minister: I have not had the time to study the rent control proposals, but I am sure the right hon. Gentleman will be able to lay them out for the House. Let me be clear about my view. If there is an opportunity to find longer-term tenancy agreements to give greater stability—a proposal made at last year’s Conservative conference—I am sure we can work together. If, however, the proposal is for rent controls that have been tried all over the world, including in Britain, and have been shown to fail, I think it would be a very bad idea.

The Prime Minister: Actually, I have got some very good briefing on these proposals—from Labour MPs. Here they are. Let us start with Labour’s Housing Minister. You would think she would support Labour’s policy. She says:

“I do not think it will work in practice”.

The shadow Secretary of State for Communities and Local Government says this:

“We don’t want to return to rent controls because the rental sector is meeting a demand for housing.”

There we are—the authentic voice of Bennism.

Then we come to the Chairman of the Communities and Local Government Committee, a Labour MP, the hon. Member for Sheffield South East (Mr Betts). He said this:

“We concluded that rent control was not feasible.”

So there we have a Labour policy, completely unclear about what it is; but the one thing that is clear is that Labour MPs do not back it.

Which you could be mistaken for believing was the end of the discussion but apparently you would be wrong. Unfortunately, rumour in the Westminster bubble has it that the Opposition has decided that with a year to go the Coalition is not using its time in government to full effect – dubbing it a “zombie government”.

To combat this ‘lack of legislating’ it seems that Labour plans to begin tabling amendments to bills already before Parliament to force debate and even votes on issues close to their manifesto pledges. Starting with rent control and a ban on letting agent fees.

Miliband hopes to force a vote on an amendment to the Consumer Rights Bill in the House of Commons on Tuesday.

While very unlikely to form part of the final bill, it will be interesting to see the Coalitions response to this challenge. It is of course perfectly right for Parliament to debate and vote on important issues which are in the public interest. However, academic interest aside, it is difficult to avoid concluding that political posturing like this on matters so important to peoples’ homes, businesses and lives is callous and more than a little unfair.

 

Labour Party housing policy is flawed

Richard Blanco, NLA London Rep distills Labour’s private renting reforms.

Richard Blanco, London Representative for the National Landlords Association (NLA)

Richard Blanco, London Representative for the National Landlords Association (NLA)

Labour leader Ed Milliband announced a change in Labour Party policy today in a London Borough where I rent two properties, Redbridge.  The proposals turn previous policy musings into concrete manifesto ideas, most notably the idea for a National Register of landlords in England.  I was sad to hear Ed speak in favour of local authority licensing schemes, now championed by many labour authorities, however his reference to them as registers shows he fails to understand the complexities of this area of policy.

After extolling the virtues of five year tenancy agreements in their PRS policy review in December 2012, the Labour leader has settled on the idea of a default three year AST which will probably mirror arrangements in Northern Ireland where initial agreements last six months, past which you’re tied down to a further 29 months .  Other proposals include indexation of rents and rent capping, and a ban on letting agent charges.

Labour’s vision

It was the lengthening of ASTs and rent controls which grabbed the headlines.  Ed Milliband argues that one million families and two million children in the PRS deserve more security of tenure.  Of course what landlords really want is for their tenants to stay as long as possible, and we already know the average tenancy is two and a half years anyway.  Four out of five tenants say they are happy with the length of their tenancy and most tenancies are ended by the tenant not the landlord. So where’s the need to change the current system?

Well, Labour and Shelter argue that landlords hike rents and evict tenants with section 21 notices if they object to rent rises.  This is why they want to control rents by pegging them to an index once a market rent is agreed at the start of the tenancy.

Have you ever forced your tenants out for a higher rent?  Most of my tenants stay for 2 to 3 years, I review the rent biannually and if I increase it I do so modestly.  The Evening Standard  responded in its leader column by arguing “in the present environment , with rents soaring in London, the move is likely to win popular support.” But despite rents rising  by 7% in 2012 in London, they rose by only 2% in 2013 and estate agent Chesterton Humberts reported last week that rental yields have declined in 9 out of 10 cities with large private rented sectors like London, Sheffield  and Manchester.  Soaring rents is old news, but the hyperbole continues to be used to create policy.

The impact

Longer default tenancies

What impact might longer ASTs have on the housing market?  For landlords like me who are in business for the long haul, it could be quite positive, unless I get a tenant that doesn’t work out.  Then we would be stuck in an inharmonious relationship for 3 years.  Certainly landlords would want to carry out very rigorous checks and I suspect that we might see the return of licenses to try and get around these market averse rules.  Two thirds of PRS homes are let by landlords with just one or two properties, often because they move for work temporarily or go to live abroad.  Will they want to commit to three years?

I fear we will see a huge increase in empty properties. I have seen it in cities like Madrid when minimum contracts were five years.   Most of our buy to let mortgage terms stipulate that contracts must be no longer than 12 months, so will Labour change all of these contracts too?  Institutions that were considering moving into residential letting will surely think twice now and many landlords will be put off from buying more properties, leading to a reduction of the PRS.  Labour are planning 200,000 new homes, which is fantastic, but will they manage to deliver this?  We know that in London developers deliberately drip feed new supply so as not to suppress prices.

Rent caps and indexation

On to the issue of rent caps. The housing market is cyclical; andrents rise and they fall depending on demand and supply in particular areas.  Currently the majority of rent increases are levied between new tenancies, not on those in situ. But with indexed rises, it encourages a culture of rent increases every year regardless of what is going on in the market.   The reality is that over the long term, rents rises are lower than the CPI measure of inflation, so rents actually fall anyway.  My policy to reward good tenants by keeping the rent the same will actually be disallowed.  Landlords will be incentivised to move tenants on after three years to get back to a market rent and we will see the return of the sitting tenant, with landlords reluctant to invest in their properties.  One landlord told me today that he has asked his lettings manager to make sure all rents are increased to market rent before the changes come in, assuming Labour or the Lib Dems come to power.

Banning fees

And while I’m on the subject of lettings agents, 81% of tenants say that their agent was upfront and transparent about fees they charge.  But if agents cannot charge fees then they are likely to increase their charges to landlords and that could put upward pressure on rents.

National register

A compulsory register will lead to the collection of data on 9 million properties in the UK.  Surely intelligence led enforcement by local authority staff getting out of their offices and finding criminal landlords would be so much more cost effective.

This announcement by Labour, albeit panned by most property experts, is very worrying.  Lenders, institutional investors and landlords across the UK will be thinking hard about their future and making contingency plans.  The Labour Party has been fed policy by Shelter and adopted it with little thought for the consequences.  Shelter does excellent work supporting tenants who have difficulties in the social and private sectors, but all they hear are the problems.  Nobody ever calls their advice line to tell them how fabulous their landlord is.

For a major political party to create policy based on the negative minority is an affront to the many hard working landlords I know who pride themselves on running innovative businesses and creating excellent homes for their tenants.  We need our policy makers to create policy that builds on good practice through accreditation and landlord engagement and working out why local authorities are failing to bring bad landlords to book using their existing powers.

This feels like short termist, populist policy and we need long term solutions.  The 1.4 million UK landlords and our 9 million households deserve a more balanced, intelligent and responsible approach to long term housing challenges.