BLOG: Ignoring deposit protection law can ruin some landlords – so seek advice

admin    Uncategorized     agents

As landlords, we all know there is a wealth of legislation that we need to wrap our heads around to maintain compliance throughout the lifespan of a tenancy. Gas safety, energy efficiency, electrical safety, legionella risk assessments, insurances, prohibited payments, How to Rent, Right to Rent – the list goes on.

One thing many landlords underestimate is the importance of deposit legislation and more crucially, the severity of the penalty for non-compliance. Rarely is there a case where the punishment fits the crime. The ‘crime’ is usually failing to protect the deposit in a government-backed scheme within 30 days. So, if you secure on day 31, you’re in breach.

Prescribed information

Equally, if you fail to supply the prescribed information, you’re in breach. If you fail to re-secure a deposit, you’re in breach. If you take too much money, you’re in breach. If it’s so easy to be in breach, is it worth taking a deposit at all? For the informed landlord, the legislation is far from complex, so one could argue that compliance is easy. For many landlords, ignorance is bliss and – let’s be honest – tenants are usually oblivious to this legislation and the ‘crime’ has no detrimental impact on them.

Due to increasing mortgage rates and the rise in the cost of living we are seeing more possession claims being served, as landlords struggle to balance their own finances. Landlords who relied on the rental income to cover their own expenses are being forced to exit the market as they find their financial commitments spiralling beyond their control.

Financial compensation

With the serving of a notice, comes the kickback from the tenant. They too have commitments and rising costs and with fewer properties available on the rental market they seek advice and support to help them remain in their current property. Unfortunately for the landlord, deposits at this point become scrutinised and are an easy way for the tenant to open negotiations with the landlord and discuss financial compensation to enable the tenant to move on.

The harsh reality is that if you fall foul of deposit legislation your tenant can make a counterclaim for up to three times the deposit for every breach. In simple terms that means three times the deposit for every tenancy renewal and for some high-end tenancies these figures can be astronomical.

Landlord call

In December, I took a call at Landlord Action from a landlady who had a counterclaim from her tenant for £48,000. This was purely down to a breach of deposit legislation and she was devastated. She had been ignorant about the deposit rules and relied on the income from the property to help cover her own increased mortgage costs and living expenses. She desperately needed to sell the property due to redundancy during Covid and was being threatened with foreclosure on her mortgage account. She had maxed out her credit cards and taken loans which she could no longer fulfil. She told me she’d called two numbers that day: The Samaritans and Landlord Action.

Sadly, this is not the first time I’ve taken a call like this. I also know it won’t be the last, with 2023 lining up to be a testing year for everyone. The advice is simple. Educate yourself and do it right. From the beginning. Hire a reputable letting agent to help you if you’re not confident, use a deposit replacement scheme offered by companies such as MyDeposits or alternatively don’t take a deposit at all. But whatever you do, please do it right.

Victoria Valentine is a client co-coordinator at Landlord Action

View Full Article: BLOG: Ignoring deposit protection law can ruin some landlords – so seek advice

Why not pay Housing Benefit directly to Landlords?

admin    Uncategorized     agents

Housing Benefit is paid to tenants to cover their housing costs (sorry for stating the obvious). There would be numerous benefits to landlords, tenants, Gov.uk and local authorities if it were paid directly. So why is this not already official policy or on @RishiSunak’s To Do list?

View Full Article: Why not pay Housing Benefit directly to Landlords?

Government’s energy efficiency plans are ‘dead in the water’

admin    Uncategorized     agents

The private rented sector has no hope of meeting the deadline to improve EPC ratings following the government’s failure to respond to a consultation which closed two years ago, according to the NRLA.

It is calling for a definitive timetable for publication of a response to the consultation and any following legislation. The NRLA also believes the amount landlords are expected to contribute should be linked to average market rents in any given area. This would mean it would taper from £5,000 to £10,000, taking into account different rental values (and by implication, property values) across the country. It suggests developing a new tax allowance for landlords who are undertaking works towards reaching Net Zero.

Proposed target

Back in January 2021, the government proposed a target that all new tenancies in the private rented sector should be in a property with an energy performance rating of at least a ‘C’ by 2025 – extended to cover all tenancies in the sector by 2028. The government also proposed that all landlords should be expected to pay up to £10,000 to make the necessary improvements to meet the proposed targets.

NRLA chief executive Ben Beadle says the government’s delay means its plans are dead in the water while the lack of clarity is playing a major part in holding back investment.

Unlimited sums

“The plans as they currently stand, rely on a misguided assumption that landlords have unlimited sums of money,” he adds. “They fail to accept the realities of different property and rental values across the country, and that the private rented sector contains some of the most difficult to retrofit homes.

“Ministers need a smarter approach with a proper financial package if we want to ensure improvements to the rental housing stock.”

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Homecare maintenance contracts – alternatives to British Gas?

admin    Uncategorized     agents

Hello, I’ve had BG boiler plumbing and drains homecare contract cover for some 20 years now for a modest portfolio of London properties and the service has been good – things like appointments or 24 hour service so you can book plumbers in the middle of the night (the only spare time I get).

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Will student tenants leave the utility bill?

admin    Uncategorized     agents

Hello, my question is, I have a buy to let property, and have noticed my tenants’ gas and electric bill is outstanding at £2,600.

They are overseas students so when they disappear will I, the landlord, be responsible for paying it?

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House sale profits exceed £100k for the first time

admin    Uncategorized     agents

Despite a slowing market and a recent drop in prices, it has been revealed that house sellers are racking up more than £100k in profit for the first time.

The figures from Hamptons show that for 94% of sellers who sold up last year

View Full Article: House sale profits exceed £100k for the first time