More & More Regulations but little by way of Enforcement…

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Letting Laws:

There are over 145 legal rules and regulation affecting the residential lettings sector, but so many of them cause confusion or are not enforced. That’s one conclusion of a report produced for the Tenancy Deposit Scheme (TDS) by property expert Kate Faulkner.

TDS & Kate Faulkner are calling for stronger enforcement and streamlining of the legislation affecting landlords in the private rental sector (PRS) throughout the UK.

Ms Faulkner who is the founder of propertychecklists.co.uk and the consultancy firm Designs on Property Ltd., is urging the Government to look into reforms in the sector: a rationalisation of the myriad rules and regulations in the sector which she says is creating confusion among landlords, rental agencies, tenants and enforcement bodies.

The report sets out the laws and regulations applying across the United Kingdom highlighting some huge differences in the various regimes, leading to more and more confusion as devolution has taken hold. For example, a typical English landlord must comply with around 150 rules and regulations, even more if they let property to housing benefit tenants. In Scotland, Northern Ireland and increasingly Wales, many of the rules are different.

Kate Faulkner thinks that in order to deliver safe properties complying with the law there needs to be a properly funded campaign to raise awareness of the existence of the rules and regulations and much better enforcement.

Kate Faulkner says:

“There are 4.4 million rental properties in England alone so reforming the market would help millions of people. Legislation should be streamlined and funding should be put in place to support enforcement,”

“Legislation varies dramatically across the UK, with different rules for England, Scotland, Wales and Northern Ireland. Landlords are typically over 55, and employed full-time, so often struggle to keep up with what constantly changing legislation they need to be aware of, and what bodies are responsible for enforcing them.

“Trading Standards, the Home Office, the Competition and Markets Authority, and local councils all enforce elements of private rental policy, and there is no single point of guidance for landlords and agencies to make sense of where jurisdictions begin and end.

“As well as a disparity between enforcement bodies, there are geographical differences from county to county. In London alone, there is a huge difference in rates of rogue landlord prosecutions; according to the most recent figures available, Newham prosecuted 359, while Lambeth and Hammersmith each only managed nine.

“Local authorities, however, are not necessarily to blame. The issue needs to be tackled on a national level to ensure uniformity in enforcing laws designed to protect both tenants and landlords.

“Law-abiding agents and landlords are jumping through not inconsiderable hoops, and forking out to meet regulations, while the cowboys know enforcement is lax, and are cutting corners and costs.”

The Tenancy Deposit Scheme is owned and run by several of the key bodies in the PRS: ARLA Propertymark, NAEA Propertymark, Royal Institute of Chartered Surveyors (RICS) and the Residential Landlords Association (RLA). The TDS Charitable Foundation is funded by the Tenancy Deposit Scheme and aims to promote better standards in the PRS.

Read the full report here

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TDS backs Zero Deposit

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Tenancy deposit protection and dispute resolution company The Dispute Service (TDS) today (Monday September 4) announces a long-term strategic partnership with Zero Deposit, a new company which aims to help tenants by replacing the traditional tenancy deposit with an affordable insurance policy.

TDS has entered into an exclusive contract to provide dispute resolution services to Zero Deposit, run by former ZPG chief commercial officer Jon Notley, when it plans to commence trading later in 2017.

TDS, as one of the UK’s leading providers of deposit protection, is the longest-serving and most experienced provider of adjudication services in tenancy deposit disputes. As part of its strategic partnership with Zero Deposit, the Hemel Hempstead based company has made an investment in the new business and takes a seat on the board.

Deposit replacement insurance products involve tenants buying an insurance policy in lieu of a deposit which guarantees to landlords any approved losses incurred as a result of action by the tenant up to a specified value. Tenants remain fully responsible for any damage or outstanding rent payments at the end of the tenancy, but the landlord is protected in case these debts are not honoured by the tenant, with Zero Deposit paying the landlord within 48 hours of the disputed claim being accepted or confirmed by TDS.

Steve Harriott, Group Chief Executive of The Dispute Service, said: “While deposit protection is the core of TDS’s business through our insured and custodial schemes we recognise the merits of a different kind of scheme where no deposit is taken and one that addresses the affordability/mobility issues that may arise with deposits.

“Whatever option tenants, landlords and agents choose, we are determined to ensure that claims can be assessed with impartiality and professionalism. Our experience of dispute resolution and the robust procedures that we follow make us well placed to support this new direction in tenant deposit replacement.

“We chose to partner with Zero Deposit as it is a credible scheme with a number of agents already committed as launch partners. It has raised a significant sum of money in start-up capital and has the backing of Munich Re as the insurer.

“We feel that Zero Deposit’s ethos mirrors our own: their approach is open and transparent for tenants and provides assurance to landlords that they will be able to claim for any losses”

Jon Notley, CEO of Zero Deposit, said: “To have TDS with us as a launch partner is an incredibly important development. The TDS team have unparalleled experience of deposit protection and dispute resolution and their knowledge of the intricacies of the private rental sector gives us a significant edge on our competitors.

“With a company as trusted and respected as TDS providing our adjudication services, tenants, landlords and agents using our new product can be assured that any end of tenancy disputes can be dealt with professionally and fairly.”

The announcement of this strategic partnership with TDS follows the news that Zero Deposit had entered an exclusive, global insurance partnership with Munich Re, agreed a long term promotional deal with Zoopla and had received the financial backing of leading investors including Jamjar, the venture fund set up by the founders of innocent drinks, and Grenville Turner.

Along with a highly-experienced management team, and with further partnership announcements planned in the coming weeks, we believe Zero Deposit is well placed to lead the deposit replacement market following its planned launch later in 2017.

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No Letting Fees For Landlords

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Typically, letting agents charge around one months rent to find you a tenant. If you use an online letting agent you might get the service cheaper but then you will have to deal with viewings and will probably pay extra for referencing, inventories etc.

LettingSupermarket.com give you a choice. They can charge their letting fees (which are extremely competitive by the way) to your tenants. These are properly disclosed in their advertising on Rightmove and the Zoopla group of property portals of course. Sadly, this facility will disappear when the new laws regarding tenant fees come into place. Landlords will have to pay the fees and recover them by increasing rents.

The only condition of the “Fee Free Letting Service For Landlords” is that you sign up with LettingSupermarket.com for 12 months of their full letting and management package, which costs just 5% of rent + VAT. By way of example; if you are renting a property for say £895 a month their fee is just £44.75 per month plus VAT, which is also incredibly competitive when you look at what you get for your money: –

• Visiting your property to take particulars
• Setting up a system to store your documentation securely, online of course so that it can be accessed at any time and wherever you are
• Advertising your property on the major property portals, Rightmove, Zoopla, Prime Location etc.
• Organising weekly block viewings (one off viewings charged an extra £20 + VAT per viewing)
• Referencing tenants and guarantors
• Getting an inventory and schedule of condition prepared by an AIIC qualified inventory professional
• Using the correct Tenancy and Guarantor Agreements
• Taking meter readings on check in and check out and informing utility companies of tenancy change over
• Protecting deposits and serving prescribed information and tenancy deposit certificates within 30 days of the commencement of each new tenancy
• Arranging annual Gas Safety Certificates
• Checking rental payments are received on the due date and taking appropriate action if they are not
• Issuing the correct notices at the correct time and in the correct way as necessary
• Responding to and dealing with maintenance issues quickly
• Performing periodic inspections
• Organising Rent Guarantee insurance
• Check Out at the end of the tenancy
• Timely return of tenants deposit
• Negotiating with tenants and dealing with ADR (Alternative Dispute Resolution) or Court cases if necessary

Fees charged to tenants are £100 per tenant (£150 inside the M25). There are no charges at all for tenancy renewal.

For an additional £10 a month plus VAT per tenant (guarantors are not charged) rent guarantee and legal protection insurance is also included. With this additional protection, if your tenant falls into arrears the insurance will pay your rent until the tenant is evicted. The insurance will also cover all costs associated with eviction.

Is it really worth the hassle of letting and managing a property yourself for that price?

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Options to release a restrictive covenant (Housing Act 1985 section 610?)

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Hi folks

Does anyone have any experience of using Housing Act 1985 section 610 to have a restrictive covenant removed, thereby allowing a house to be converted to flats?

Thanks in advance

Neil

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Section 21 notice date – Will it be thrown out by the courts?

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I have an AST created on 15/06/2016 for a 12 month period where rent is paid monthly on the 15th of the month.

I have given a Section 21 notice (Form 6A) on 05/04/2017 with a notice date of 16/06/2017.

As this date is not technically ‘the last day of a period of the tenancy’ I am concerned that it might be be thrown out by the Courts.

Am I right to be concerned?

Is there anything I can do?

Many thanks

Mo

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New penalties for landlords and agents under the Housing Act 2016

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This is the sixth post in my 2017 Legal Update series.

The Housing & Planning Act 2016

The most recent piece of housing legislation to come out of Parliament is the Housing & Planning Act 2016. This introduces a new enforcement regime aimed at ‘rogue’ landlords and letting agents.

Although you will probably not come into the ‘rogue’ category – you could still get caught out. So, you need to know about the new rules.

In this post, I will be giving a brief outline.

Not all the measures in the Act are in force yet – but they are coming. Even those currently in force carry draconian and very expensive penalties which you will not want to incur!

The new rules only apply in England, so if you just have property in Wales, this post will not apply to you. But if you have or manage property in England – read on!

This is an important post so I would urge you to at least skim read it.

These new penalties are the reason why it is CRITICAL that from now on you take care to be up to date with the law and comply with it fully. This email series will help.

Let’s now take a look at these new rules.

Banning Orders

These are not yet in force but when they are they will be a BIG deal. Effectively, if a banning order is made, it will close down your business.

Banning orders (when they come in) will be made against both landlords and letting agents (and also presumably property managers) by the First Tier Tribunal on application by the Local Authority – after the landlord / agent has been convicted of a ‘banning order offence’.

We don’t yet know for sure what these will be. However, they will almost certainly include:

• Illegal eviction offences
• Breach of improvement orders
• Failure to obtain an HMO license (where this is required)
• Breach of the HMO management regulations
• Convictions under the Immigration Acts regarding the right to rent rules
• Serious criminal offences such as fraud, possession or supply of drugs; and
• Specified violent or sexual offences – where carried out against occupiers of rented property

Banning orders were scheduled to come into force in October 2017 but they could be delayed until April 2018. We don’t know yet.

Rent Repayment Orders (IN FORCE NOW)

These have been around for a while but only for failure to obtain an HMO license. However, they can now also be made

• Where a landlord has used violence for securing entry under the Criminal Law Act 1977
• For eviction or harassment of occupiers under the Protection from Eviction Act 1977
• For failure to obtain an HMO license,
• Failure to comply with an improvement order, and
• (When they come into force) breach of a banning order

Both tenants (to recover rent paid) and Local Authorities (to recover benefit paid) can apply to the First Tier Tribunal for a rent repayment order.

The amount awarded will be set by the Tribunal under principles set out in the Act and any guidance issued by the Government – save that if the landlord has been convicted of a relevant offence the Tribunal must make the full award of 12 months’ rent.

Rent repayment orders therefore can be VERY EXPENSIVE – imagine having to pay back a whole years rent!

As tenants can apply for them too – you may find yourself in difficulties even if your Local Authority has decided not to prosecute. Another reason to stay compliant with the law.

Rogue Landlord Database

This is not in force yet but is intended to be a list of landlords and agents who have breached the legislation, to help Local Authority Enforcement Officers with their enforcement work.

For example, so a rogue landlord or agent will not be able to hide by moving to another area of the country.

Civil Penalties (IN FORCE NOW)

These came into force on 6 April. Local Authorities can now impose Civil penalties of up to £30,000 as an alternative to prosecution for the following:

• Failure to comply with an Improvement Notice
• Offences in relation to licensing of Houses in Multiple Occupation
• Offences in relation to licensing of houses under Part 3 of the Act
• Offences of contravention of an overcrowding notice
• Failure to comply with management regulations in respect of Houses in Multiple Occupation

Note that the penalty can be up to £30,000 PER OFFENCE (although at least to start with it is more likely to be in the region of £5,000 per offence).

So, if a landlord has (for example) breached several of the HMO management regulations – the total amount charged could be significant.

Very significant.

The big advantage of Civil Penalties for Local Authorities is that they will be able to keep the money to fund further enforcement work – so these powers are going to be used!

Further information:

Because these new rules carry such severe penalties which – although aimed at ‘rogue landlords’ can also impact on normal landlords and agents – I am making available to Property118 readers our ‘Conference Course 2017’ at a 30% discount.

This course (which includes the 10 recorded talks from our recent Landlord Law Conference plus 5 bonus talks and 10 hours CPD) includes a talk from barrister Sam Madge Wyld where he goes into a lot more detail about the Housing & Planning Act 2016 (including the new abandonment procedure coming later, which I have not had space to discuss today).

You will find the information page for the course here.

To claim your 30% discount, you need to use the Coupon Code pp118cc30.  Note however that this is only available to Property118 readers, cannot be used in conjunction with any other offer, and will expire on 16 September 2017.

That’s all for now – but I will be back on Monday – looking at the scary topic of Consumer law.

Tessa Shepperson is a specialist landlord & tenant lawyer and runs the popular Landlord Law online information service.

To see all the articles in my series please Click Here

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House price growth slows along with the wider economy

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Home Sales:

The latest figures from the Nationwide Building Society show that house prices began to slow down in August as further evidence of a wider cooling trend along with the economy as a whole.

Nationwide reported that the annual fall in house prices showed a decline for 2.9% in July to 2.1% in August, – that’s a month-by-month basis fall of O.l%, which compares to a growth of 0.2% in July.

The Nationwide report also showed that revenues from stamp duty had reached an all-time high of £12.8bn in the year to June, and increase to Government coffers of over £2bn over and above the previous high of £10.6bn reached in 2007.

Robert Gardner, Nationwide’s chief economist, told the Daily Telegraph that growing pressure on household budgets has weakened consumer sentiment, this he said is despite the un-employment rate falling to its lowest level for more than 40 years.

“Ultimately, housing market developments will depend on wider economic performance.

“The UK economy slowed noticeably in the first half of the year, and there has been little to suggest a significant rebound in the months ahead. While employment growth has remained robust, household budgets are under pressure. This suggests that housing market activity will remain subdued,” said Mr Gardner

The fall is also reflected in a decline in the number of mortgage approvals, falling to a nine-month low and with chartered surveyors also reporting a slowdown in inquiries from new buyers.

Chief property economist at Capital Economics Ed Stansfield, told the Daily Telegraph:

“We suspect the already high level of prices is also weighing on demand, as growing numbers of households find themselves priced out. We expect the economy to strengthen a little in the second half of the year. But it is less clear that, as rate rises move back on the agenda, lenders will reverse their recent, more cautious approach.”

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