Salford to begin huge new £1,085-per-property HMO licensing scheme

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Salford has given the go-ahead to a new licensing scheme for smaller HMOs in response to a rise in safety problems and resident complaints.

The scheme – covering the entire city – takes effect on 19th July and costs landlords £1,085 to licence shared homes where three or four tenants live.

It will run alongside the current mandatory scheme, which covers larger five or more person HMOs, and its other selective licence areas. Landlords now have three months to register unless they already hold one of these other licences.

Private sector rented properties account for 23% of Salford’s private housing stock, up from 11% in 2008, and the council says HMO conversions in selective licensing areas have risen by up to 460% in some areas.

In the last year, 90% of those three and four bed HMOs inspected fell below the required standard.

Salford City Council’s Strategic director place, Peter Openshaw (pictured), says problems included fire safety hazards and damp or mould as well as inadequate heating.

He adds: “Most of the landlords or managing agents carried out improvements and removed the hazards when alerted to them without formal enforcement action but 21 landlords were issued with civil penalties for breaches of HMO management regulations. We will not hesitate to take firm action against those who leave tenants in unsafe or poor conditions.”

Payment concerns

Salford reports that 34% of landlords and managing agents who responded to its consultation agreed with the proposal, although the National Residential Landlords Association voiced fears that such a scheme would add an extra layer of financial strain on landlords and tenants, leading to potential unavoidable rent increases.

The council says it has taken these comments on board after beginning its consultation last October and has come up with payment options including monthly direct debits.

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Post Covid Staycation boom could be taxing

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Soaring demand for holiday lets as the UK plans for a ‘staycation summer’ is driving inquiries for tax advice from customers considering buying a second property, Handelsbanken Wealth Management (HWM) says.

But HWM advises would-be buyers to focus on rules that will allow them to qualify for tax breaks associated with furnished holiday lets (FHL) as distinct from traditional residential lettings.

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HMO latest: Landlord pays back £11k to tenants despite claiming it was daughter’s home

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A landlord who tried to evade licensing his HMO by claiming relatives were living in the property has been handed a significant rent repayment order.

Ali Mohamed was ordered to pay back £10,800 to two tenants living at his five-bedroom HMO at 16, Cornwall Gardens in Willesden, North London, who were paying £900 a month in rent.

He had claimed they were no more than lodgers or licensees before an inspection by Brent Council in August 2019 because the property was a family home occupied by his daughter and son-in-law. He thought this meant it was exempt from the need to have an HMO licence but applied and was granted one once he realised.

HMO

A First-Tier Property Tribunal ruled that as the tenants had assured shorthold tenancy (AST) agreements and he had protected their deposit using an approved scheme – and because six people were living in three separate households – the property was an HMO.

It said Mr Mohammed was a professional landlord with 30 years’ experience who knew the rules and regulations, but admitted he found it difficult to keep up to date with them. His three other properties in the Brent area were also unlicenced.

The Tribunal ruled: “Given the respondent’s acknowledged experience and expertise as a professional landlord of many years, the only reasonable inference to be drawn from his conduct is that he either had a blatant disregard for the legal requirement to obtain an HMO for this and his other properties or was reckless about that matter.”

Giles Peaker, housing solicitor at Anthony Gold, adds: “Alas for Mr Mohamed, the Tribunal quite rightly found that occupation by his daughter and son-in-law did not make him a residential landlord, nor was his daughter. The other occupants had ASTs and the property was indeed a licenceable HMO throughout the period.”

Read more about rent repayment orders.

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ANALYSIS: Commercial landlords rush to offload loss-making properties

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There are record amounts of commercial property coming onto the market as, in some cases, owners fight for survival following a battering from the Covid pandemic comes on top of a declining bricks and mortar retail market.

According a recent report by international property broker, Jones Lang LaSalle, there are companies across Europe, the Middle East and Africa that have sold £23 billion worth of commercial properties last year.

Companies owning these commercial property investments are raising cash to reduce balance sheet debt and are prudently preserving their capital, as well as rebalancing their portfolios.

All this is done in the light of the effects of the pandemic and the long-term structural changes affecting the commercial property market.

Around one-third of corporate property sales to-date has been in offices, sales which account for a figure that’s around 10 per cent above the volumes seen in the previous year.

Rents cut off

With lockdowns cutting-off rent revenue streams almost overnight, and persisting to today, retail and hospitality businesses have been particularly badly hit.

Many of the commercial property sales already achieved have been sale and leaseback deals allowing the affected companies to access cash whilst maintaining control over their premises and businesses, whether this be business retailers or owner landlords.

Well known retail chains have been assessing the profitability of their stores across their estates and they are closing down the less profitable ones. In the U.K., The John Lewis Partnership and Matalan are examples of how this trend is unfolding, while many others large and small are following in their wake.

Home working

The sudden switch to home working during the last year, and the general decline of the high street outside of the major cities, as home deliveries have rocketed, have changed the outlook entirely from 12 months ago.

These factors are forcing office-based and retail-based businesses to take a long hard look are their commercial property needs for the future.

For example, John Lewis now claims that 60 per cent to 70 percent of its sales by values are internet sales and home deliveries.

Alternatively, one area of commercial business that has thrived during the pandemic is out-of-town warehousing and distribution centres, boosted by the rocketing volumes of home deliveries.

This is resulting in a rotation of investment funds from the traditional high street store and city offices into commercial “sheds” in strategic distribution locations.

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LATEST: Rogue letting agencies kicked out of sector after failing to pay landlords compensation

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Landlords are being warned about three lettings agencies which have been expelled from the industry after failing to pay awards for poor service and, in one case, ‘recklessly’ referencing a tenant.

The three agents who between them owe landlords nearly £5,000 in compensation are Saville Park Ltd in Slough, Sun Properties in Leicester and Property Dragon in Porth, Wales.

All three had been directed to pay awards to landlords who had complained about poor service and, after these issues were not sorted out informally, referred to The Property Ombudsman (TPO).

Two of them are understood to be trading under alternative names but with the same directors or ownership.

But, as is the case for all the ombudsman schemes, the three lettings agencies are now banned from operating within the industry legally because they no longer have access to redress.

TPO says it understands that The Property Dragon Limited has already ceased trading and has been dissolved and removed from Companies House, but could be trading as Property Solutions Wales Porth.

The Property Dragon failed to pay a landlord £1,180 compensation after the firm’s management of a property failed to reach minimum standards set out in TPO’s Code of Practice.

Tenant complaints

Saville Park Ltd in Slough has been expelled after tenants complained about repairs and maintenance of their rental property, the provision of documentation, the end of tenancy procedures, provision of the landlord’s details and complaints handling.

But the more shocking of the three cases is Sun Properties in Leicester which was required to pay £3,220 in compensation after a landlord complained that the firm had carried out ‘reckless’ references on a tenant and used a deposit to clear rent arrears.

The ombudsman found that the agency had failed to carry out even basic checks on the tenant, had only obtained a single landlord reference and not checked a guarantor. The tenant stopped paying the rent soon after taking up the tenancy and caused damage to the property totalling £500.

Sun Properties’ has a website but appears not to be trading and instead, TPO warns, appears to have ‘phoenixed’ as Sunrise Properties Leicester.

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Rogue management board and cladding grant funding?

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Can anyone provide some guidance regarding The Private Sector ACM Cladding Remediation Fund? We are a residents group with apartments in an 8-floor building.

We are extremely dissatisfied with the way the current management board (one individual in particular) have been running our affairs

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EICR has thrown a complete spanner in the works?

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Can anyone help? We have 10 properties all currently let and very few issues – life good right?

Along comes the EICR legislation and throws a complete spanner in the works. We have used the same Electrician for a number of years and trusted him completely

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MHCLG Right to Rent Checker

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The Ministry of Housing, Communities and Local Government has published a Right to Rent guide for landlords with a basic checklist designed to confirm if a tenant has the right to rent and stay, backed up with a guide for the documents required to provide evidence.

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BREAKING: All students to return to campus from 17th May onwards, government confirms

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The Department of Education has also made an extra £15 million available to students who are struggling to pay their rent due to the pandemic.

This will cover both international and postgraduate students along with their domestic undergraduate counterparts.

The announcement is ‘Step 3’ in the government’s relaxation of Covid restrictions roadmap in England, assuming the steps preceding it roll out without infections, hospitalisations and deaths rising again.

Arts and ‘practical’ students have already been allowed to return sinc early March with an estimated 49 per cent of students already eligible to return to in-person teaching, subject to decisions by their institutions, while the remainder have continued to attend online lectures and seminars.

Covid testing

But the remaining students who return will have to jump through several Covid hoops in order to return to campus.

Returning students will have to take three supervised Covid tests, each three to five days apart regardless of whether they have symptoms or not. And they will have to take Covid Lateral Flow Tests twice weekly all the way through the summer term.

All tests will be free, and all students and staff who test positive from an LFD test will need to self-isolate for ten days, unless they receive a negative polymerase chain reaction or PCR test within two days.

Find out more about Covid student accommodation tenancies.

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EXCLUSIVE: ‘This is how PRS needs to be reformed to work better’

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Private rented sector expert Paul Shamplina has set out some key ideas to reform the market for privately rented homes so that it works better for both landlords and tenants.

Shamplina, who is consulted by civil servants when new regulations are being framed, says the key areas that need reform include the broken Universal Credit rent payment system, evictions and the dual problems of rogue tenants and landlords.

He says the government needs to think long and hard before banning Section 21 notice evictions.

“If S21s are banned then it is going to make landlords much more exposed to the kind of serial rogue tenants who play the system, and this will dramatically change referencing,” he told popular industry podcast Property Jam.

“Landlords are going to scrutinise tenants much closely before they get the keys and I think the voluntary schemes that link people’s credit scores to their rental payment track record need to be put on a more official footing.”

Tenant rogue databases

Shamplina has already told ministry of housing officials that the UK needs a national rogue tenant database – as exists in Australia – and that a ‘three strikes’ system should be introduced for landlords to exclude the worst offenders.

He told the podcast presenters this would be more effective than the current national rogue landlords database, which so far has only a handful of people listed after three years in operation, and is only available to local councils, not the public.

Also, the Landlord Action founder says the government’s decision to allow tenants on Universal Credit to be paid their rent direct has caused significant problems for thousands of landlords because it is difficult, and sometimes impossible, to persuade the DWP to pay a landlord the rent directly when a tenant is struggling to manage their finances.

“I always say that there are more rogue tenants than there will ever be rogue landlords, but at the moment the regulatory and political campaigning doesn’t reflect this reality,” he says.

Listen to the Property Jam podcast for free.

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