Tag Archives: renting

Right to rent checks are being rolled out – how will you be affected?

Matthew Oliver, NLA’s Parliamentary Officer, outlines what the changes will mean.

Matt Oliver, NLA Public Affairs Officer, explains the Immigration Act Landlords Scheme

Matt Oliver, NLA Public Affairs Officer, explains the Immigration Act Landlords Scheme

In a written ministerial statement, the government yesterday announced the areas where they will be piloting the Immigration Act Landlords Scheme.  This is the scheme where landlords are required to check the immigration status of tenants, as prescribed in the Immigration Act.

What do you need to know?

From 1 December 2014, landlords in these areas will need to check that someone has the right to live in the UK before letting a property to them. This includes landlords who take in lodgers or sub-let property.

Therefore, the right to rent checks will only apply to:

  • landlords in Birmingham, Walsall, Sandwell, Dudley and Wolverhampton
  • all adults aged 18 and over living at the property (children under 18 will not need to be checked)
  • only new tenancy agreements starting on or after 1 December 2014

Landlords will need to see evidence of a person’s identity and citizenship, for example a passport or biometric residence permit. Copies of the documentation will need to be taken as evidence the checks have been carried out and retained for one year after the tenancy ends.

Importantly, if landlords let a property after 1 December to someone who doesn’t have the right to rent, then they could be fined up to £3,000.

The landlords code of practice

The Home Office have released guidance to support landlords with the changes. The Landlords Code of Practice explains:

  • if your property is affected
  • if any exemptions apply
  • how to carry out a right to rent check
  • what documents individuals can show you as evidence of their right to rent
  • when and how to request a right to rent check from the Home Office

Our thoughts

We have to take a practical approach to the issue and it would be fruitless to make any more sweeping statements about our opposition to the plans – we’re far past that point.

However, right to rent checks bring about significant changes for landlords, so we hope that the pilot roll-out provides an opportunity for the Home Office to test the changes and to understand the implications they will have on the process of securing private rented housing.

Combatting illegal immigration is important, but we’ve always been concerned that if landlords are made responsible for making initial immigration checks then the process must be simple to carry out. And on the face of it, the system for checking and verifying a tenant’s right to rent seems both practical and workable, but only where someone’s right to rent is clear cut. Where there is doubt, landlords will need to check with the Home Office which could take up to two working days.

The changes could therefore make it harder for tenants with question marks over their eligibility to rent property in the UK, regardless of their legal status to remain,; any delay to verifying the immigration status of a given individual will hinder the usually expedient process of securing a home in the private rented sector, thus making them less desirable to let to.

What’s next?

The Home Office expects to continue with the phased introduction of checks across the UK next year.  To advise the implementation and evaluation of the measures, the Government is convening a Consultative Panel, consisting of key stakeholders, including the NLA.

We trust that our presence and feedback to the panel on the first phase of the roll-out will be thoroughly evaluated and considered to ensure a smooth transition for landlords.

Our new Housing Minister is keen to stress the positive role of the PRS

Pity the minister re-shuffled in July.  While you or I spent our summer holiday reading for pleasure, they resign themselves to packing a stack of briefing papers next to the must-read political biography and the highly recommended literary novel that they told the Sunday heavyweights were on their summer booklists.

CEO Richard Lambert on the NLA's meeting with the Housing Minister

CEO Richard Lambert on the NLA’s meeting with the Housing Minister

The new Minister for Housing and Planning Brandon Lewis doesn’t appear to have been tempted to slip a couple of thrillers surreptitiously into his suitcase.  When NLA Chairman, Carolyn Uphill and I met him yesterday, he was well on top of the subject – interested, engaged and keen to stress to us the positive role he saw the private rented sector playing in the provision of housing.

This was very much an introductory meeting.  We wanted to ensure Mr Lewis could put faces and names to the NLA when it came up in future, and that he had a sense of who we represent and what we are trying to achieve. Equally, we wanted to get a feel for how Mr Lewis was approaching the issues and to put some thoughts into his mind for the future.

Retaliatory eviction

We hoped that we would get some pointers on the Government’s attitude towards Sarah Teather’s private member’s bill on retaliatory eviction.  However, the Minister was carefully non-committal, saying that the Government was “not yet ready” to declare its position on the Bill.  Questioning whether there was the evidence that retaliatory eviction was as widespread as is often perceived, Carolyn Uphill stressed the importance the NLA and landlords in general attached to the no-fault possession procedure, and expressed our concerns over any call to reduce the flexibility section 21 gave to the market without good reason and sound evidence.

Model tenancies

We’ve been waiting through the summer for the launch of several initiatives which emerged from the Government’s response to last year’s Select Committee report, and he confirmed that we should see these shortly.  One of these will be a model tenancy agreement.  The Government’s aim was not to trump all existing tenancy agreements, but rather to change tenants’ understanding of how tenancies work, and raise awareness that longer tenancies are possible, and that they can ask for them.  This gave us the opportunity to outline the NLA’s recent campaigns which have highlighted the business benefits of long-term relationships between landlord and tenant.

Licensing

More generally, we wanted to stress our concerns over the way local authorities are using the power to introduce discretionary licensing schemes.   Over the past year or so, we’ve seen more and more councils propose selective or additional licensing schemes, and some worrying trends have emerged:

  • The growing number of proposals for blanket borough-wide licensing
  • Poorly drafted consultations, based on flimsy evidence, which do not demonstrate how the case for licensing meets the specific criteria of problems caused by low demand or anti-social behaviour
  • The imposition of additional property or management requirements as conditions of licences
  • The absence of an independent check on whether local authorities have made their case and properly justified their licensing proposals, which means that there is no scrutiny of or check on how the powers are used – or in many cases, abused.

Brandon Lewis was very sympathetic to these points and said that he was “very aware of blanket licensing as an issue, especially in London”.  We pointed out that in reality licensing is a burden on the law-abiding, as they are the ones who accept the obligation, and pressed the case for accreditation as a method to filter out the responsible landlords from those who do not comply with the law or standards, who should be subject to more rigorous enforcement.

Further reading

All in all, it was a very useful conversation.  And I’m afraid we are going to add to his reading pile: we promised a couple of recent issues of UK Landlord for his red box.

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.

Laying the foundations for private renting?

Alex Marsh, Professor of Public Policy at the University of Bristol, talks about the Government's Housing Strategy, published last month.

The long-awaited Housing Strategy for England Laying the foundations – has now arrived. The headlines were dominated by the mortgage indemnity guarantee, restarting “shovel ready” developments, and revitalising the Right to Buy. But what does the strategy have to say about private renting?

The chapter focusing on private renting opens with a statement of support for the sector, which the Government identifies as playing a key and increasingly important role in the housing market. The sector has witnessed significant recent growth, but high levels of demand mean affordability is deteriorating in some areas. The Government’s strategy has a dual focus: boosting overall supply by encouraging investment and tackling the minority of rogue landlords. In fact, rather more space is devoted to discussing investment.

Private renting in Britain is increasingly dominated by landlords operating on a small scale. So the Government continues to pursue the Holy Grail that has eluded housing policy for the last 30 years – greater institutional investment. We’ve had the BES, which gave the sector a short-term boost. We’ve had HITs, which sank without a trace. We’ve had the recent arrival of REITs, but largely to the benefit of commercial property investors. The Government is going back to the idea of REITs to see if it can be tweaked to entice investment into residential property.

It may be that this time things are different. The Chancellor’s Autumn Statement raised the possibility of new financial vehicles to encourage pension funds to invest in infrastructure. The broader investment environment is currently hostile. The risks associated with more exotic investment strategies are considerable. Residential property may be looking like an increasingly plausible option for a dependable income stream, especially as the Government strategy explicitly acknowledges the need to ensure that welfare reform does not unduly disrupt investors’ income expectations.

There are already some interesting developments occurring – such as the Build to Let Fund created by Bouygues and Grainger – in the search for appropriate vehicles for investing in private renting. The boundaries between tenures are blurring in other ways: for example, Sovereign, one of the largest housing associations in the country, have just announced an expansion of its operations in the market rental sector.

There is the potential for some large organisations to enter private renting, bringing with them professional property management expertise and the scope for brand recognition and reputation. This could alter the competitive climate in interesting ways.

The strategy reaffirms the Government’s commitment to avoid unnecessary regulation on landlords, but then goes on to state that:

we are … looking at measures to deal with rogue landlords and encouraging local authorities to make full use of the robust powers they already have to tackle dangerous and poorly maintained homes.

It says little more than that.

Pressure on the Government to act here is undoubtedly building. The Localism Act will mean more homeless people being housed in the private rented sector. Welfare Reform will mean those people are likely to have less money to pay the rent. Yet, budget cuts mean local authorities have less money available to take enforcement action. Any reputable landlord watching Channel 4’s Dispatches programme last Monday will no doubt be concerned that the action – or inaction – of rogue landlords puts the sector under the spotlight and damages its reputation.

We await further details of the Government’s thinking.

Alex Marsh is Professor of Public Policy at the University of Bristol

Rent Arrears: In the ‘normal course of business’ or ‘way too high’?


Carolyn Uphill, NLA Director and Local Representative for Manchester, questions whether any other business would accept their customers failing to pay.

All businesses have bad debts and Buy to Let is, after all, a business. Albeit one the Government doesn’t truly recognises through the tax system. A ‘normal’ allowance for this is in the region of 5% of turnover but rent arrears are running at more than twice that figure.

According to one set of figures recently published 10.7% of all UK rent was either unpaid or late by the end of August. This is an increase from the July figure for unpaid or late rent, which stood at 9%. Another source found that tenant finances took a “turn for the worse” in October with 10.1% of all rent late or unpaid at the end of the month, compared to 8.6% by the end of September (LSL Buy-to-Let Index Oct 2011).

Which ever way you look at it, this is still a huge slice of income to write-off. As rents rise, benefits reduce, and unemployment grows things may only get worse. So is Buy to Let a viable business?

For the answer we need to look back to the business model. All businesses need to factor in the possibility of bad debts but take every possible step to avoid them.

Just as a business takes up trade references you should not let anyone into your property without fully referencing them and establishing that the property is affordable to them within their income bracket.

Never let a debt accumulate. Rent is in arrears the day after it is due; so monitor your payment receipts and contact the tenant as soon as a payment is overdue.

Whilst landlords must never harass a tenant it is always the case, just as in business, that he who ‘shouts loudest’ is more likely to be paid. So be firm but polite, enquire if there is a problem, offer to discuss and/or help with this as appropriate, perhaps they have changed job and have a different pay-day, and try to agree a definite date by which matters will be resolved.

Good communications, built right from the start of the relationship with your tenant, may help to resolve any problem which arises.

Taking the matter to court should always be a last resort. This will take time, indeed the closure of some county courts will make this slow process take even longer, and involve the landlord in extra costs whilst rent remains unpaid.

Statistics also show that an increasing number of tenants are raising a defence, at the last minute, which delays a possession order. Just as a business must get their paperwork right and provide no grounds for a counterclaim when seeking payment on a contract, landlords must make sure that they have met their maintenance and repair obligations towards the tenant.

Rent arrears will continue to be a problem but the wise landlord will take a very businesslike approach to his selection of tenants, and his relationship with them throughout the tenancy, to maximise the possibility of being paid on time and in full for the service he is providing.

 

Why hast thou Article Four-saken me?

Ken Staunton, NLA Head of Regions discusses the spread of Article Four Directions

Unless you’re an avid member of the National Trust (or happen to live in a conservation area) Article Four of the Town and Country Planning Act was probably not a major topic of conversation up until a year or two ago.

All of that has changed, thanks to some of the last actions of the previous Government in the Spring of 2010.

Up until April 2010 private homes housing fewer than six unrelated individuals, irrespective of their tenure or occupiers, were classed by planning regulations as ‘dwelling houses’. This was based on the notion that it does not make a great deal of difference to local infrastructure whether a household accommodates three unrelated sharers or an average sized family.

So far so good. Or so you would think….

Despite their own evidence to the contrary (see the 2008 Rugg Review of the Private Rented Sector anyone who is interested), the last Government decided that the over- concentration of Houses in Multiple Occupation (HMOs) was a problem of national significance. They then introduced legislation creating a whole new ‘use class’ for planning purposes. From that point onwards, a property could be either a ‘dwelling house’ or an ‘HMO’ dependent on who lives there.

Long story short, the Government changed colours and amended this legislation to remove the automatic need to obtain permission to change a house from definition to another, but allowed local authorities to require such an application in their area if they so choose.

The problem is that this is a little more than just a labelling exercise. Increasingly local authorities in England are using this new found option to arbitrarily limit new shared homes within their boundaries. So far, more than 30 have started down this path, with a few opting to forego the usual notice period and jump straight to implementing ‘Article Four’ notices (as the regulation is known) with immediate effect.

Some argue that this is social engineering of the worst kind; others describe it as nimbyism of the worst sort. Whatever the label the net impact is that the availability of shared housing is to drop at a time when demand is high and getting ever higher thanks to Government policy.

In January, single Local Housing Allowance recipients under the age of 35 will only be able to claim for a single room in a shared house (currently the threshold is 25.) This combined with other welfare reforms and an overall housing shortage is predicted to increase demand for shared accommodation by more than 60,000 individual units.

My question to Government, both local and central, is where are these homes supposed to come from? This at a time when so many local authorities simply want to push those on the lowest incomes and with the greatest need elsewhere.

Landlords around the country cannot afford to ignore this issue. To see if you’re affected, or to let us know that your area is considering an Article Four Direction, please visit the NLA’s website and help us to ‘Save Shared Housing’.