SAFEagent reminds Government of Client Money Protection promise

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SAFEagent, the Kitemark scheme for letting agents, has written to, Alok Sharma MP, the housing minister, reminding him of government plans to make Client Money Protection (CMP) insurance compulsory for letting agents.

This is part forms part of the commitments to regulate the lettings and management industry and SAFEagent are asking that CMP forms a compulsory part of any new regulations.

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Big Changes for Scottish Residential Tenancies

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New Tenancies Scotland:

This week the Scottish Government published the new “Model Tenancy” agreement for residential lets in preparation for major reforms of the private rented sector (PRS) due to commence 1^st December.

The Private Housing (Tenancies) (Scotland) Act 2016 recently passed by the Scottish Parliament will mean a new private residential tenancy in Scotland replacing all existing tenancy agreements which are currently based on the English assured shorthold tenancies, which in Scotland are known as Short Assured tenancies.

A new Tribunal will be set up as an alternative to the courts with the aim of dealing with tenancy disputes in a more tenant friendly and informal manner.

The main changes will be:

• No more fixed terms – all new tenancies will be of indefinite length until brought to an end by the tenant with a 28 day notice, or by the landlord relying on one of 18 grounds for repossession incorporated in to the Act.
• There will be no more “no-fault” “Section 21” type possession procedure in Scotland. Instead, landlords will be obliged to prove breach of contract in the case of damage or rent arrears, using one or more of the 18 grounds for repossession.
• The tenant will have to be three or more months in arrears of rent before the landlord can apply for possession.
• Other grounds include when the landlord genuinely wishes to sell and market the property within 3 months, or if the landlord wishes to live in the property.

For giving notice when the tenant has been in the property 6 months or less, or for breaches of tenancy including rent arrears, anti-social behaviour or criminal convictions, 28 days’ notice is required.

In the case of selling or the landlord wanting to live in the property, the landlord must give at least 84 days’ notice.

Tenants will be able to terminate the tenancy at any time on giving the landlord 28 days’ notice. This will mean that a tenant can give the landlord notice to leave soon after the start of a tenancy.

3 months’ notice must be served for increases of rent, which is restricted to one increase request every 12 months, which in turn is subject to rent officer for adjudication, if the tenant refers it.

Scottish Ministers will also be given powers under the legislation to implement “rent pressure zones” (RPZs) where, for any given district (usually major cities), a rent cap will be set to restrict rents to a maximum level.

Purpose built student accommodation, holiday lets, social housing, police and military housing will all be exempt from this new regime.

The stated aim of the legislation is to improve security of tenure for tenants, protected by the 18 grounds for possession, most of which are similar to the current Scottish Short Assured tenancy grounds (the English Section 8), giving a mix of mandatory and discretionary grounds.

The 18 grounds for eviction will include:

• The landlord intends to sell the property.
• The landlord intends a major refurbishment where it would be impracticable for the tenant to occupy.
• The landlord intends to use the property for a non-residential or commercial purpose.
• The landlord or a family member of the landlord – spouse, civil partner, cohabitant, parent, grandparent, child, grandchild or sibling – intends to live in the property.
• The tenant is in rent arrears for 3 or more consecutive months, all of the arrears totalling at least 1 month’s rent. The tribunal will have discretion on whether to evict if the rent is less than one month in arrears.
• The tenant is involved in criminal or anti-social activity at or near the rental property
• The tenant is in breach of the tenancy contract (agreement). This might include but would not be limited to: subletting or assigning the lease without permission.
• The tenant is failing to give the landlord reasonable access on when served notice.

There are “safeguards” in the legislation to prevent landlords from getting around the some of the eviction grounds, such as putting the property on the market and not intending to sell (pricing it too high), doing a sham refurbishment or landlord occupation. If they are caught out on this, they will be forced to offer the previous tenant a new tenancy or give compensation of 6 months’ rent.

Given that landlords are unable to end a tenancy when the term has expired, or gain possession on a “no fault” basis when trouble arises, it is thought that landlords may in future be deterred from investing in rentals, knowing they don’t have the old safeguards afforded by the Short Assured tenancy.

Private Residential Tenancies Scotland

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Signing a contract without a completion date and authority to exchange

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Q1 If we sign and return the contract (completion date left blank on it) to the solicitor, can he proceed with exchange of contracts without any further instructions/agreement from us? Can he wait until we have a completion date agreed before we return it?

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May announces end to Local Housing Allowance freeze

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In today’s Prime Ministers Questions (PMQs) Theresa May announced that the government would be ending the freeze on Local Housing Allowance (LHA), which affects the poorer renters in the Private Rental Sector (PRS).

Local Housing Allowance, the name given to housing benefit for private renters

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ICIBI to inspect Right to Rent

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The Independent Chief Inspector of Borders and Immigration (ICIBI) has announced the start of an official inspection of the Right to Rent legislation implementation.

This controversial legislation places the responsibility for checking, proving and recording a potential tenant’s right to live in the country onto landlords and letting agents.

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Why buy when you can rent someone else’s property?

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Why purchase a property yourself when you can rent out someone else’s residence?

The benefits seem to be obvious:

• Less money-down.
• Less risk,
• Higher Return on Income
• Shorter-term commitment.

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Low interest rate era coming to an end…

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Interest Rate Rises:

John Bagshaw, corporate services director of Connells Survey & Valuation, comments relevant to this morning’s UK Finance High St Banking Statistics:

“Having benefited from a decade of low interest rates, consumers are sensing the risk that this era is nearing an end.

“Many older mortgage deals are expiring this autumn which will mean moving onto more expensive standard variable rates.

“As a result, homeowners on these deals are opting to refinance, taking advantage of the intense competition in the mortgage market right now.

“With so much economic uncertainty and hints of a base rate rise, many are choosing to lock into a lower rate to see them through the next few years.”

UK Finance:

High street banking statistics: re-mortgaging approvals of 29,570 were well up on the monthly average of 25,577 over the previous six months and 20% higher than in September 2016.

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Condensation – how to deal with it

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Damp & Condensation:

Condensation occurs in a property when warm moisture laden air (steam) comes into contact with cold surfaces. As winter arrives, the problems in rentals always recur.

To simplify this as much as possible, there are just two main causes:

1 – Not enough heating in the building

2 – Too much unvented steam being produced

Rented properties are particularly prone to condensation because tenants often try to economise on heating or they simply cannot afford to maintain sufficient heat in the property. All rooms should be kept to a minimum of 18 degrees day and night to prevent condensation.

Low heat means that people are reluctant to open windows or allow ventilation when cooking, washing and drying clothes inside the building – drying clothes on radiators is a common cause of condensation.

These two factors combine to become a vicious cycle: cold walls absorb moisture over time until the whole fabric of the building is moisture laden and even colder, condensing even more steam. This causes the formation of black mould and eventually mould spores which are injurious to health.

We constantly see pictures in the media of rental accommodation with black mould all over the tops of walls, particularly in the colder unheated rooms such as bedrooms and bathrooms. Invariably the finger is pointed at the “heartless” landlord who provides substandard accommodation for her long suffering tenants.

It can of course be the case that with older properties wall and roof insulation are not up to modern standards, therefore heating bills are excessive, or it can be that heating systems are inadequate or inefficient for the property, or there is insufficient mean of ventilating steam at source: cooking, cleaning, washing and drying.

However, these causes are not the norm: two times out of three when condensation becomes a problem in a rented property it is the lifestyle of the tenants that is the cause. Tenants sometimes need to be educated to the causes of this and how to prevent it.

Unfortunately for landlords, real understanding of the issue is sparse, even among the so called experts, so the finger is naturally pointed directly at them. If a tenant can’t afford to heat a property adequately, condensation is almost inevitable.

How to deal with Condensation

Unfortunately there is no easy and quick way to deal with it, and anyone doing so must take precautions as mould spore are injurious to health. Once mould spores have taken hold in a building, as the fabric, wallpaper, plaster, masonry have soaked up a lot of moisture over time, it takes months of applying adequate heating to dry them out thoroughly. Even then, if could conditions recur the dormant mould spores will re-invigorate, unless thorough chemical washing has been carried out.

In other words, occupants that allow condensation to occur potentially do a lot of damage to a building, and given enough time with these conditions the fabric (wallpaper, plaster and masonry and timber) of the building will start to crumble.

Measures landlords can take:

• Make sure the building is adequately insulated – loft, cavity wall and all wall lagging where the walls are solid. All rental properties should have an EPC rating of E or above by law.
• Make sure the heating system is adequate and efficient to run
• Make sure there is adequate ventilation particularly in kitchens and bathrooms, trickle vents on windows and automatic moisture sensitive fans if necessary. Tenants sometime block-up standard vents so check on these regularly.
• If all else fails, consider a full forced lofted installed ventilation system which circulates warm air and removes moisture from the whole building.

Landlords should be prepared to inspect their rentals regularly (a condition of most landlord insurance policies) and at the first signs of condensation mould they need to take action. First, to educate their tenants and secondly when necessary to consider changes as suggested above.

Condensation can often be confused with other forms or causes of damp by the inexperienced assessor. Rising damp or penetration damp exhibit different symptoms, but nevertheless landlords can be blamed for a smile case of lifestyle generated condensation. This often leads to misdiagnoses by housing offices when tenants complain and arguments in court if an eviction case ensues.

Condemnation never occurs in well heated and ventilated homes, so:

1. Landlords should try to build a record of tenants who have occupied a rental without problems such as by having an end of rental survey on every tenancy
2. If they do end up in court landlords should pre-empt arguments over condensation by having their own expert report available for the judge to see – carried out by an experienced chartered surveyor.

Avoiding arguments is the first place is the best policy and by carefully managing tenancy relations a lot can be achieved by landlords.

For example, having heating on constantly at a lower heat is said to be better and more energy efficient overall that having it switching from high to off which is what many tenants often do when they are out at work all day; a bit of friendly advice here might help.

Damp and Condensation Specialists – LandlordZONE Directory

Rising Damp – how to deal with it

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Equity Release/Life Time Mortgages

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Question: Why is Equity release such an attractive option for Homeowners?

Answer: Because it can be the solution to many quandaries

Equity Release is a means of retaining your home, whilst obtaining a lump sum or a steady stream of income and boosting retirement income.

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HMRC change landlord tax manuals without notice or legislation change

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The following article is credited to Ross Martin, a firm which provides “practical tax resources for accountants and advisers” and has been copied verbatim from their website.

HMRC appears to have changed its long held views on the availability of tax relief on interest charged on new borrowings by property business owners who remortgage their property to withdraw capital from their business.

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