New Tenancy rules could trigger evictions or rent rises

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Shared Homes:

New tenancy rules issued on the 1^st of October mean that any shared home with five or more residents from more than one family come under the mandatory Houses in Multiple Occupation (HMO) licensing regulations.

Many landlords rent out shared homes and now that the three-storey rule has gone, even a bungalow could be caught in the mandatory HMO licensing system.

For some landlords this could mean having to spend thousands bringing their properties up to the correct HMO safety and room size standards, with fire doors, hardwired fire alarms etc.

Of course, any house housing five or more unrelated tenants was a HMO in the first place, but it was not necessarily licensable unless it had three storeys. Now, with these new rules local authorities will look to impose their own interpretation of the rules which are generally quite demanding.

This puts many landlords in a dilemma: do they evict some tenants to bring the occupancy level below five, which means their income will decrease, or do they apply for a licence, possibly involving a large investment, increasing their costs. Either way they will likely be looking to recover some of that loss of income or cost by way of a rent increase.

The new rules on minimum room sizes mean that in some cases alterations needed to the property could be substantial, or if the minimum room sizes cannot be met, some tenants may have to go.

It is thought that since October 1, around an extra 160,000 houses will be caught in the mandatory licensing trap, and landlords should already have applied for a license and taken the necessary steps to ensure compliance. The rule change means many more properties will be required to be inspected and certificated by local authorities.

Often people see living in an HMO as a cheaper option. They are happy to put up with poor conditions, and many of these shared houses are in very poor condition, either to save up for a deposit, or if they are in low paid work.

Now, with a government drive to improve conditions in HMOs, they are likely in future to be not so much a cheap option.

One tenant in Leeds told the BBC:

“Property prices are so high, so saving for a deposit is hard work, and rents for one-bed flats are extortionate. So the only way I can afford to build a deposit is to live in a HMO.

“It’s a sociable way to rent, but the quality of the properties can vary. I’ve had HMOs where gas leaks have been common, carpets haven’t been fitted and whole kitchen units have fallen off the wall.

“If rents do go up because of this new legislation I’ve got friends who’ll struggle to pay their rent because they just haven’t got the cash.”

It has been estimated by The Centre for Economics and Business Research that this new licensing process will cost landlords an average of £1,200 each, and in total, over £95m.

The new rules only apply to properties in England. They focus on safety issues in the property and also to improving the environment where HMOs are located. Neighbour problems are commonplace with HMOs, often having unsightly bins out front. Landlords will now be required to provide appropriate space for an adequate number of refuse bins.

See – HMO Licensing Requirements

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Do you need Unoccupied Property Insurance?

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If your own residential or landlord property then you need to be sure you are insured when the property is empty. You’ll find in most insurance policies that unoccupancy is not well catered for and could end up costing you thousands of pounds in a claim due to small print.

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Swiss Franc mortgage losses – Double tax whammy?

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I have a question regarding losses due to currency fluctuations and capital gains tax.

I bought several apartments in Poland during the period 2006 to 2008 using Swiss franc mortgages. As is well known to those involved in the Eastern European property market at the time

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Shelter misleading the public about its finances

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If you search on Shelter’s website for Annual Report you will be given a link with that name which takes you to a page called “How we spend your money�

This states, “For every £1 you donate 79p is spent directly on helping people through advice

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Claims that 33% of landlords ignore deposit schemes

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Rental Deposits:

Research carried out by comparison website, ComparetheMarket.com, reveals that up to one-third of landlords, affecting something like 1.5 million tenants, could be ignoring their legal obligations to protect tenancy deposits in an approved Deposit Protection Scheme (DPS).

The price comparison website with the legendary Meerkats says, “Over 1.5 million renters across the UK could be at risk of losing their deposits�, stating that one third (33%) of renters know that their landlord has not placed their money into a Government-backed deposit protection scheme. A further third (35%) of renters do not know the whereabouts of their down payment, the holding deposit.

Even more surprising is the claim that around 20% of landlords fail to issue any form of written tenancy agreement for their tenancies, leaving themselves and the tenant in a sticky position should there be a need to rely on the legal system. There would be no means of easily proving when the tenancy started, what the contractual rent amount is, and any Section 21 notice served would be invalid.

• One third (33%) of renters say that their landlords have not put their money into a deposit protection scheme.
• Almost one fifth (19%) of UK tenants do not have a contractual agreement with their landlord.
• Renters are significantly underinsured as over one third (36%) don’t have contents insurance.
• Younger demographics are worst affected as half (46%) of 18-34 year olds don’t have contents insurance.

It is still commonplace for landlords to arbitrarily deduct money from their tenant’s deposits when they leave, with the research indicating that this happens in around 18% of cases.

Other findings conclude that:

• One third (30%) of landlords are slow to respond when a problem needs fixing.
• 12% of the tenants surveyed claim that they have to make repeated efforts before receiving a response.
• 9% of tenants said that it can take between a fortnight and a month for an issue at their property to be resolved. However, says the report, in some of these cases the landlord is not always at fault.
• Barriers to access could account for many of these problems, as over one in ten (14%) of tenants go through a letting agency in order to contact their landlord.

The research shows, however, that the faults are not all one way. Tenants also often neglect their duties, including not allowing access or making poor arrangements for this, and not insuring their own possessions.

More than 36% of tenants do not have any form of contents insurance. Young people in particular are the least likely to take out any form of insurance, with almost half 18-34 year-olds failing to take out a tenant’s contents insurance policy.

There are more strict legal requirements needed when letting a property if landlords are to avoid trouble – see the New Section 21 Rules

See our letting checklists here- https://www.landlordzone.co.uk/documents

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Only 16 English councils know how many properties are covered by new HMO regulations

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Only a handful of English councils have said they know now many properties in their area are covered by new regulations governing safety and overcrowding, leaving potentially tens of thousands of flats and bedsits to continue operating illegally, new research has revealed

The Government has estimated that new rules governing dangerous and overcrowded properties

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Liability for Council Tax – tenant left before contract end?

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Who is liable for Council Tax if the tenant leaves before the contract ends?

I’m looking for help and advice here from those in the know. I seem to remember a similar thread in the past somewhere on this forum.

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How we are helping a BTL property developer to let an entire new build development on the day of completion

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We are in discussion with a developer who pre-sold his entire new build project to BTL investors off plan 18 months ago. Part of the deal he was offering included a guaranteed a fixed rental return on investment to purchasers for three years from completion.

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Straw Poll to combat further government attacks – Please help

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There is now the possibility of the Government extending its fiscal attack on the PRS, Click Here, by scrapping lettings relief of up to £40,000 and reducing the PPR period from 18 months to 6 months. The supposed quid pro quo being landlord exemptions from paying 50% of their CGT that would otherwise be payable

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Universal Credit tenants in £1,700 arrears

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Rent Arrears:

It’s a sad story that comes up again and again, but thankfully not too often. Dysfunctional tenants have to be evicted because they are not only in serious rent arrears, they left the property in a terrible mess. The landlord is faced with the distasteful job of cleaning up after them, writing off the debt, and spending thousands on a complete refurbishment.

As more and more landlords in the private rented sector have found themselves housing low income or in some cases, “no income� tenants and families, supported largely with social housing benefits, these sorts of incidents do arise.

They leave the landlord shattered and with little recourse to a remedy. Pursuing such tenants for arrears is a pretty fruitless and an expensive exercise – there are no resources there to pay off the debt, let alone the cost of repairing the damage caused to the property.

As the Grimsby Telegraph reports, the disgusting mess left by these Grimsby tenants claiming Universal Credit, and in £1,700 rent arrears, left a landlord’s house needing complete refurbishment before it could be lived in again

It seems the tenants had not been passing on to the landlord rent being paid in housing benefit under the Universal Credit scheme. On entering the property the landlord was faced with the distasteful task of bagging and removing more than 50 bags of household waste from the home, which had been housing a family with two young children.

The landlord told the newspaper that his kitchen had been “ruined”, completely covered in dirt and grime, with bags of rubbish and waste left scattered everywhere, and many of the cupboard doors broken off their hinges.

Doors throughout the house had been broken, carpets damaged beyond repair, electrical sockets knocked out of the walls and left hanging loose with exposed wires, and the bathroom wrecked as well. Even some of the ceilings were said to be covered in dirt and grime.

The landlord’s property managing agent, Anne, had said that it had “completely put them off renting to tenants who are on housing benefits�, stating that they had had numerous problems with tenants on the benefit, but none had left their houses in such a bad state as this one.

However, despite the bad experience, the landlord and agent had decided to let again, after having completely refurbished within one week, to a family from Nottingham Council who contacted them about housing a family in urgent need of re-housing.

Anne told Grimsby Telegraph:

“After we found the house in such an awful condition, we were steadfast against ever renting to people on housing benefits or renting through the local authority.

“But then Nottingham Council contacted us, and after they offered to provide us with three months’ rent in advance, this enabled us to make the necessary repairs.”

Anne had complained about poor communication between the authorities and landlords when tenants on benefits get into arrears:

“Many times when a tenant goes onto the benefit system, there is no communication with us as landlords, and for the first few months we often get no rent paid.

“To try and fix this we have sent documents to tenants and the Department of Work and Pensions, providing them with the correct forms so that rent is paid directly to us, but we have just hit brick wall after brick wall while doing this.

“There are times that I have been hung up on by the DWP just for simply trying to chase up where one of our tenants’ rent is coming from.

“It is putting landlords off renting to people on benefits altogether, as we cannot afford to go without rents being paid,” she said.

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