Landlord immigration checks, the good the bad & the ugly – Part two.

Richard Blanco, the NLA’s Regional Representative for London

Richard Blanco, the NLA’s Regional Representative for London

If you read part one yesterday our London Representative Richard Blanco spoke about proper tenant checks and the media reaction to the immigration bill. Today he touches upon what landlords face in the future, what if any support landlords are getting from the government and the NLA campaign to revise the bill.

‘So what are the concerns?  Well let’s look first at the main technical one – the requirement to report tenants whose immigration paperwork expires during the course of the tenancy.  If this happens to an employer, assuming the employee has been with them for less than two years, they can summarily dismiss them without being accused of unfair dismissal.  Although the member of staff would have to leave employment that day, there are no risks to the employer.  But as landlords we are subject to housing legislation and cannot summarily evict a tenant, even if we wanted to, for losing the right of abode in the UK.  The government says that we should simply report them to the home office.  But we know that much of our business relies on good tenant relations, and asking our tenants repeatedly about their immigration status is unlikely to play well.  Also tenants could understandably become aggrieved if the landlord reports them to the home office.  They may feel desperate, stop paying rent and even become hostile and take out their frustration on the landlord or the property.

NLA campaign

The NLA is campaigning to get the government to change these requirements.  I am particularly concerned that landlords would avoid taking tenants with restricted immigration status for fear of repercussions.  This is hopeless for prospective tenants who happen to have short visas and hope to renew them and could be unlawful discrimination on the grounds of ethnicity or race.  It also flies in the face of a number of other government policies, such as a desire to attract overseas students and the best talent for global businesses based in the UK.

I have worked for many years as a trainer and diversity consultant and I know that lots of people confuse issues of immigration status and ethnicity. A BBC report last week demonstrated the blatant discrimination that black applicants can experience.  A white applicant for a flat was offered a viewing by an agent where the black tenant was wrongly told that the same flat had been taken.  The agent said that they were complying with the landlord’s instructions, but this is unlawful.  I hear many anecdotes from landlords who say that they prefer not to house people from certain ethnicities because of one bad experience.  Apart from the social injustice, this attitude just makes bad business sense because the landlord is restricting their pool of applicants and perpetuating their own fixed attitude.

I worry that these immigration checks will make finding rented property for black and ethnic minority tenants even more difficult.  One of my tenants, who kindly allowed the Channel 4 crew to film in their home, put it well when she said: “it feels like people are being asked to snoop on one another.”

Many landlords complain that we are all being turned into the border police. This is not good for community relations.

Government support?

The government argues that there is a lot of support for these measures and that it is simply not fair that people who pay nothing into the system should be able to enjoy the benefits of living in the UK.

This argument is flawed as many people here illegally work extremely hard in the shadow economy and are helping to regenerate the UK.  Measures like these checks will push them even further underground and into the hands of exploitative criminal landlords. I would challenge the notion that the threat of a £3,000 fine will be a deterrent. ‘

Do you agree with Richard’s comments over the last few days? Let us know what you think about the immigration bill.

Immigration Bill – The good, the bad & the ugly. Part one

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

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

NLA London Representative Richard Blanco has provided us with his thoughts on the Immigration Bill that had its second reading this week. Today he talks about proper tenant’s checks, the legality of the bill and the media’s reaction.

‘I did a piece for Channel 4 news recently about the government’s proposed landlord immigration checks.  It was clear that the news team sent to make the film thought this was a cynical attempt by the government to pull in votes and turn us all into UK border police. I support the NLA line which is that if you’re a good landlord, you should be carrying out checks anyway and that this new regime will not be particularly onerous.  My NLA colleague, Yvonne Baisden, appeared on Channel 5 and BBC News and it was interesting to note that media outlets used snippets of us being less than positive: they really wanted us to complain about the measure. I do have serious reservations and the NLA is also campaigning for some important changes.

This new measure, due to make its way through parliament and come into force in October 2014, will require anybody renting out accommodation in the UK to check that the prospective tenant is legally entitled to live here.

Failure to comply will result in a fine of up to £3,000.

Landlords or border police?

Controversially, if the tenant’s right to reside expires before the end of the tenancy, the landlord is expected to conduct a further check and report the tenant to the home office, if they do not renew their immigration paperwork.

The government argues that these provisions parallel those required of employers.  Typically they will check a prospective employee’s passport along with taking a photocopy and landlords are expected to do the same.  The consultation document states that landlords are not expected to be experts in detecting fraud.

Unless they accept documents that are readily apparent to an untrained eye as being forged or fraudulent, they will have a ‘statutory excuse’ from paying the penalty.  The home office will operate a helpline to assist landlords with any verification queries.

Check your tenants

I am amazed at the number of landlords I meet who do not carry out proper checks on tenants.  I always use the NLA Tenant Check to carry out ID and credit file checks plus landlord and employment references.   I have great relationships with all of my tenants and have rarely had problems.  You should never forget that in most cases the tenant has exclusive possession of your asset for a minimum of six months and on the rare occasions when court action is required to evict a tenant, it can take up to four or five months.

Under these circumstances it is essential to carry out proper pre-tenancy checks.  I imagine that reference agencies will add immigration checks to their list of tasks and as there is considerable competition and demand in the sector, I don’t see a likelihood of costs increasing.  Remember reference and letting agencies will be carrying out high volumes of checks and they will become very familiar with which documentation is acceptable.  In many ways we have bigger battles to fight with the government, like the growth of Selective Licensing and Article 4 directions that ban shared housing.

The government’s claims that this new measure will add to local authority’s enforcement armoury are also persuasive.  Many rogue and criminal operators prey on vulnerable tenants who do not have legal status, so the prospect of a fine could be a deterrent.’

Make sure you read part two tomorrow. Richard discusses what the future holds for landlords and the NLA campaign to revise the bill.

What difference a differential?

All landlords and agents in Scotland will now have to protect a tenant's deposit money.

Differentials are not usually a controversial topic of conversation

There is a lot of talk about tracker differentials in the market place at the moment.

For the uninitiated and, given the circumstances, fortunate amongst you, these differentials are the difference between an established reference rate (usually the Bank of England Base Rate or LIBOR) and your product’s rate of interest. For example Bank of England Base Rate + 0.95 per cent.

Differentials are not usually a controversial topic of conversation and generally only create debate when borrowers are trying to decide whether to accept a fixed rate or risk taking their chances with a variable mortgage.

However, this has all changed in recent months as first the Bank of Ireland and then West Bromwich Mortgage Company Limited announced large increases in the differential connected to existing buy-to-let loans. Unsurprisingly this has led to consternation, anger and disbelief within the landlord community, particularly as many of these loans were labelled ‘life-time trackers’ or indicated that their differentials or premiums would remain unchanged for the lifetime of the loan.

The NLA has been as dismayed, and frankly disgusted, at the behaviour of these lenders, especially where loyal borrowers have been treated with such open distain by financial institutions with which they have a long history of custom. Understandably, many of our members affected by these changes have looked to us to explain what is happening and for advice on how to deal with the impact.

Although the issue is complex, the explanation is relatively simple. Lenders did not expect the Bank of England to reduce its rate to 0.5 per cent or to hold it there for such a long period of time. Doing so has forced down their tracker rates and therefore their income. As a result they are enacting terms and conditions which allow them to increase their differentials to compensate on the basis that the low base rate is an unexpected economic condition and/or it has the potential to harm their ability to continue to operate.

Whether this is ‘fair’ or even legal is another question, but contractually they are permitted to act in this way.

What landlords should do is much trickier. There are those advocating direct legal action, which may or may not succeed. What is certain is that it will be very costly, perhaps more costly than the potential savings in the long-run but this is an assessment for individuals to make based on their circumstances.

Aside from legal action, landlords need to complain directly to their lenders and read their terms and conditions thoroughly. The two banks involved to date are both required, by their own terms and the restrictions of fair contract legislation, to waive certain fees associated with moving between products or repaying loans early. If you are in a position to do so then it is certainly worth shopping around for a better rate and demonstrating that customers will vote with their feet and leave those banks failing to show borrows the respect they deserve.

The NLA is speaking with the regulators and government about the changes and their potential impact. However, it must be noted that as buy-to-let is unregulated, the Financial Conduct Authority does not have a remit to intervene substantially into the terms of these loans – although it looks as though this episode has re-kindled their interest in expanding that remit.

We are working on a case to present to the Office of Fair Trading, arguing that the terms used by these lenders are unfair and therefore unenforceable. We are hopeful that this will eventually bear fruit, but the process is likely to be long and does not guarantee success.

To help us to build as comprehensive a case as possible I would ask that any landlord effected by either of these cases (or any other not mentioned) who has copies of their terms and conditions, offer letters or marketing material, email them to policy@landlords.org.uk or send photocopies to the NLA. These will of course be treated in complete confidence.

Increased costs for tenants living in Doncaster

Carl Agar, the NLA Local Representative for Doncaster

Carl Agar, the NLA Local Representative for Doncaster

Carl Agar, the NLA Local Representative for Doncaster provides the latest blog speaking about Selective Licensing in his City.

The introduction of Selective Licensing can have positive impacts in many communities that have problems.

The NLA fully supports the introduction of Selective Licensing but only when it’s matched with the resources to resolve the problems.

The concern for landlords is that the introduction will be a political show and will not deliver the positive outcomes that tenants and landlords wish to see. It is in the best interest of all parties to work together to fix the problems that arise.

We welcome the additional resources that will be allocated through the introduction of Selective Licensing to tackle anti-social behaviour, litter and criminal activity.

In order to introduce Selective Licensing, an authority will have to show how such a designation will be part of the overall strategic borough wide approach, and how it fits with existing policies on homelessness, empty homes, regeneration and Anti-social behaviour.

This condition is also highlighted in the explanatory note to the Housing Act 2004, which states:

‘In order for a scheme to be approved, such a selective licensing scheme must be shown to be co-ordinated with an authority’s wider strategies to deal with anti-social behaviour and regeneration.’

The concern the NLA have is that the introduction of Selective licensing will increase the cost of living for those tenants in rented housing in Doncaster as some landlords will pass the costs through to the tenants. Therefore, tenants and landlords will have increased cost with very little improvement in the community. The increase in costs for renting property in Doncaster would affect the accessibility of rented property for many hard pressed people.

-  Do you have any thoughts on what Carl has said or indeed on Selective Licensing on a whole? We’ll be happy to hear your comments. 

Landlord and Letting Show 2013

The NLA stand at the Landlord and Letting Show 2013A new blog from the NLA Marketing team who were present at the Landlord and Letting show last week, which was a roaring success. Did you go? Let’s hear your thoughts.

The National Landlords Association (NLA) exhibited at the Landlord and Letting Show at the Barbican on 11 and 12 September 2013, providing a great opportunity to our current and prospective members to engage with the association face-to-face. It was great to meet with so many NLA members, some seeking our view on the latest developments in the industry, others benefitted from information on our services and some just came to say hi!

The exhibition was very well attended with around 3000 online pre-registrations, keeping the NLA stand busy at all times. All visitors showed great interest in the benefits of an NLA Membership and the range of services provided by the NLA. We also received feedback from existing members, which is very valuable, as it helps us in continuing to improve our services, to better meet your needs.

The NLA Stand was manned by our staff members from different departments to ensure we are able to offer maximum support to the visitors. A new stand design reflected the changes to the Membership Categories, which were welcomed by the visitors. The stand exhibited a comprehensive range of discounted products and services including NLA Mortgages, NLA Tenant Check, NLA EPCs and much more.

Some of our Recognised Suppliers, including British Gas, Landlord Action, Envirovent, Loft Interiors and Mattressman, were also present at the show.

The show provided access to free seminars covering a wide range of topics delivered by leading industry experts. The NLA also presented some interesting seminars; Richard Lambert, Chief Executive Officer of the NLA presented on ‘Sustainable Renting’, providing market updates and possible future changes to the public sector; Ken Staunton, Head of Regions, provided everyone with information on legislative updates, while Richard Blanco, NLA Representative of London spoke about ‘financing your portfolio in the current financial climate’. All seminars were very well attended and were followed by productive question and answer session.

Overall we were delighted for the opportunity to attend the show and to speak to our members and the wider landlord community.

The NLA will be next exhibiting at Property and Investor Show on 11th – 12th October 2013, so come and see us at the stand number 110! The show will take place at the ExCel Exhibition Centre. You can find more information on www.propertyinvestor.co.uk.

For information on becoming an NLA Member visit: www.landlords.org.uk/membership

 

Publication of the Select Committee report

Dean Velani, the NLA's Parliamentary Officer, comments on the publication of the Select Committee report.

Dean Velani, the NLA’s Parliamentary Officer, comments on the publication of the Select Committee report.

It took nine months to produce and it was delivered on the 18th July 2013. The creators were subjected to constant advice and lecturing and the participants opined like old wives carefully regaling their tales.

…and there it was, the birth of the Select Committee’s report into the private rented sector.

As all Parliamentarians know, the gestation period for any report can often run into lengths that would make a large mammal wince.

One month has elapsed since its release and now reflections can be made:

  • The report, initially, set out to seek solutions to raising standards and helping to mature the PRS market to cater for families and those wanting stability. It is clear from the publication, press releases and subsequent media fall out that the focus has been on letting agents. The Committee views the unregulated practices of letting agents as a problem affecting both tenants and landlords. The Committee regards regulating letting agents as an accessible way to reform the PRS market for the better. This conclusion is supported by ample evidence given from all sides of the industry of bad practice from letting agents.
  • Clarity is a theme that ran through the report. The Committee wants letting agents to publish fees in a transparent manner so the landlord and tenant are aware of what they have to pay to secure the property. The Committee called for the legislation covering the private-rented sector to be consolidated and made easier to understand. The report also recommends that the Government work with groups representing tenants, landlords and agents to bring forward a standard, plain language tenancy agreement on which all agreements should be based.  Included within this standard agreement should be an easy-to-read fact sheet, setting out the key rights and responsibilities of the landlord and the tenant.
  • The Committee has called for a housing Consolidation bill which would streamline several pieces of legislation into a single act. This ambitious plan would be difficult to implement, especially within this Parliament. The Government has shown itself to be keen on reducing regulation and equally keen not to legislate on the PRS. The dichotomy between the two positions could result in guidance issued surrounding aspects of current legislation. This would allow tinkering without wholesale change to be completed before the end of the Parliament.

Of course the Government has few obligations to react to the Committee’s recommendations beyond issuing a formal response. The Department for Communities and Local Government has discussed this with the NLA and other bodies and looks likely to welcome a number of the points raised – but certainly not all.

With cross-party support, several workable solutions and the support of the majority within the Industry, the Government would find it hard to justify not implementing parts of the Committee’s recommendations.

It will be interesting to see which parts find favour and which join countless other reviews on the political scrapheap.

Government “urgently exploring whether new legislation is required to clarify (the Superstrike) situation.”

Mark Prisk MP suggests that landlords could take precautions and reissue the prescribed information 

You may have read our recent blog and information pages on the implications of the recent Superstrike Ltd vs Rodrigues tenancy deposit dispute Court of Appeal ruling. If you are not familiar with the case then please click here for more information.

In light of the confusion, concern, and indeed, large sums of money at stake as a result of this ruling, the NLA wrote to Mark Prisk MP, Minister for Housing, calling for clarity on the situation.

On the 30th July we received the following response:Mark Prisk MP suggests that landlords could take precautions and reissue the prescribed information

Mark Prisk MP suggests that landlords could take precautions and reissue the prescribed information

As you will see, Mr Prisk suggests that landlords could take precautions and reissue the prescribed information as a result of the ruling. 

In addition to writing to the minister, be assured that our Policy team are busy briefing MPs from across the political spectrum to ensure they are aware of the need to clarify the law.

To help us continue to keep up this pressure, the industry has collaborated to conduct a short survey to demonstrate how many landlords are affected by this misinterpretation of the law.

Please, if you haven’t already; take two minutes to complete the survey.