Section 13 rent increase and the Tribunal?

admin    Uncategorized     agents

Hello, my tenants are on a periodic tenancy, only because they refuse to sign a new Tenancy Agreement.

Recently I served a section 13 to increase the rent up to the current market value, but the Tenant only offered fifty pounds

View Full Article: Section 13 rent increase and the Tribunal?

Majority of landlords have ‘no idea’ about EPC deadline and costs, survey reveals

admin    Uncategorized     agents

Most landlords are still in the dark about EPC changes, a new survey has found, raising fears that they could be blindsided when proposed new rules become law in 2025.

Only 57% of landlords with a single property and 77% of those with four or more properties in their portfolio aren’t aware of the need to get new properties up to an EPC grade C while just 38% fully understand what the new regulations will entail, according to Market Financial Solutions’ (MFS) poll of 459 investors.

Despite this lack of awareness, there is surprising support for the changes as 48% believe the government is right to take action to improve the energy efficiency of rental properties. However, a significant majority (64%) of landlords are unsure of how to make their properties more efficient and 65% want more support to help them adapt their homes

Those planning changes cite replacing lightbulbs with LED lighting (73%), loft or wall insulation (70%), new windows (68%), installing a smart meter (67%), and installing energy efficient kitchen appliances (64%).

Rents

MFS reports that just 15% of landlords have spoken to a broker or lender about securing finance to improve their property’s energy efficiency while 52% are considering increasing rents to pay for any renovations needed to comply with the new regulations.

This number falls to 42% among landlords aged 55 or over, which could point to older landlords having more capital.

CEO Paresh Raja (pictured) says that in the current climate, many landlords will not have the liquid capital needed to make energy efficiency changes to their properties.

“Flexible financial options – like bridging loans or BTL mortgages – could prove vital for landlords who are looking to keep up with a rapidly changing regulatory landscape,” he adds.

Read more about EPCs.

View Full Article: Majority of landlords have ‘no idea’ about EPC deadline and costs, survey reveals

Looming Section 8 eviction reforms will be ‘unwieldy and difficult’ says leading lawyer

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Property lawyers have flagged up potential problems with eviction reform measures within the Renters Reform Bill white paper.

An amendment to Section 8 notice evictions will expand the range of circumstances where landlords can seek possession when needing to sell or allow themselves or a close family member to move back into a property.

A new mandatory ground for repeated serious arrears will mean that possession orders will be granted irrespective of the balance of arrears at the hearing date where there have been at least two months’ arrears on any three occasions within a three-year period.

But Clyde & Co partner Keith Conway (main picture) fears the persistent arrears ground will be unwieldy and difficult for landlords to use and will be a high hurdle for them to clear.

Chunky

“It actually [covers] quite a chunky period and is very easy for a tenant to manipulate themselves into and out of that situation, so I suspect the ground will not arise that often, even though it is mandatory,” he tells Commercial Dispute Resolution magazine.

Conway says the bill lacks detail of what constitutes a ‘close family member’, giving rise to doubts about how effective this ground will be and how it could be challenged.

He believes when the legislation is introduced, more smaller landlords will exit the market in favour of those who have greater resources to cope with the changes and disputes to come.

Smaller operator

“The direction of travel is clearly against the smaller operator, and economies of scale are needed to put these systems into place,” he adds.

The bill has also signalled potential improvements to dispute resolution processes. Osborne Clarke associate director Sue Thompson believes that improving the court system – something the government has said it would tackle – is vital due to significant delays when relying on the court process.

“Reforming that area is crucial going forward to improve efficiency and provide enhanced access to other means of redress,” she says.

View Full Article: Looming Section 8 eviction reforms will be ‘unwieldy and difficult’ says leading lawyer

Shelter attacks large rise in Section 21 evictions

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Shelter has attacked Section 21 evictions as the leading cause of homelessness. 

Chief Executive, Polly Neate, has highlighted the 143% rise in ‘no fault evictions’ recently revealed by new government figures. Up from 792 households between Oct and Dec 2021 and 1,924 between Oct and Dec 2022.

View Full Article: Shelter attacks large rise in Section 21 evictions

Student property EPC downgraded moving C rating further away?

admin    Uncategorized     agents

We recently had a new EPC done on our 5-bed student rental, which initially downgraded it from a D (65 points) on the previous EPC to an E (53 points) although nothing has changed.

After complaining, the assessor agreed that he hadn’t looked in the roof (he said it was inaccessible) and after I climbed in and sent photos

View Full Article: Student property EPC downgraded moving C rating further away?

Managing Agent has gone AWOL?

admin    Uncategorized     agents

I hope a Property118 member will know how this problem can be dealt with. Our managing agent of well over 20 years has failed to pay rents received and answer queries or solicitors’ requests for a year now.

I have asked the tenants to pay me directly but still inform the agents of any issues.

View Full Article: Managing Agent has gone AWOL?

INVESTIGATION: Why licensing is a selective attack on landlords

admin    Uncategorized     agents

Once upon a time, selective licensing only affected landlords of houses in multiple occupation (HMOs) and the rest were spared the red tape – and extra cost.

Until that is, Tony Blair’s government managed to persuade Parliament to enact the Housing Act 2004 which created an option for every council to impose a landlord licensing scheme.

View Full Article: INVESTIGATION: Why licensing is a selective attack on landlords

Are you bold enough to show me yours?

admin    Uncategorized     agents

We are all feeling the effects of Section 24 and there is definitely some comfort in sharing the warmth and knowing you are not alone. I am always interested to hear stories of how much things have changed for our clients over the last few years and more latterly this has obviously centred largely around the punitive taxation that landlords are suffering.

View Full Article: Are you bold enough to show me yours?

Guarantors in rental agreements – what are they and what should you look out for?

admin    Uncategorized     agents

Now more than ever, in a cost of living crisis, it makes sense to take extra precautions when letting a property. Taking a guarantor or rent guarantee insurance are great ways to protect yourself against rent arrears and other issues in a tenancy.

This is a comprehensive article outlining what both landlords and tenants should look out for when entering into a guarantor arrangement.

Why have a guarantor?

There are a number of reasons why a landlord may ask for a guarantor when renting a property to someone. Traditionally it’s done for students or young people with no credit history, but more and more landlords as asking for guarantors today as a matter of policy.

There are some very good reasons for doing so, sometimes it can be for:

• The tenant has a poor credit score due to debts, court orders or bankruptcy
• They are on low income or have just started a new job
• They have moved about a lot in the past few years or have lived abroad
• They are unable to provide a reference from a previous landlord
• Or simply to give landlords some peace of mind

The guarantor is an alternative to a rent guarantee insurance policy. It is a safeguard against the tenant defaulting on payments or refusing to pay for damages caused whilst in that property.

With commercial tenancies it is common practice to require a guarantor, especially if the tenant is a company where directors are required to act as sureties, and especially for a new business with few assets and no goodwill.

In either case it is essential for guarantors to be comprehensively credit checked and referenced just as you would do for any new tenant, you also do the same checks on your guarantors.

Guarantors take a risk

There is no doubt about it, being a guarantor is high risk. The worst case scenario for a guarantor is that they have to pay off someone else’s debts. Many guarantors don’t realise just how much risk they are taking on, but usually it’s parents and relatives who act as guarantors and they know the tenant concerned, therefore there’s a high degree of trust.

On the other side, most tenancies go smoothly, the guarantor is not called on and the tenant pays up on time and causes no problems at all.

Advice for guarantors

For a rent guarantor there are a few things to bear in mind. With claims against guarantors on the rise in these straightened times the prerequisites for standing surety are becoming more strict.

The guarantor will need to show their income is over a certain amount and quite often will have to be a home owner. They will be asked various questions with checks to back all of this up such as employer details, national insurance number, bank details and contact details.

A background check will be done on all of these things before they will be accepted as the guarantor. It is important to note that the process can be time consuming. A check on credit history and references may be required, depending on the landlord or agency carrying out the checks.

Guarantors would be well advised to get some advice before signing anything and make sure they check the following:

• Who they are responsible for in the tenancy?
• How much are you liable for?
• How long they are expected to act for?
• How soon they will be notified if there are problems?
• What course of action will the landlord take if there are breaches of the contract ?

There’s no standard contract

There is no standard form (contract) or statutory agreement for guarantors so the exact wording will be strictly enforced by the courts if it should it come to that.

In commercial tenancies it may transpire that the guarantor be forced to sue the tenant for damages and take over their tenancy in order to be able to cancel it.

With a commercial lease the guarantor obligations can stretch out for years.

Advice for landlords

Enforcing a guarantee agreement is not straightforward and depends on following strict legal procedures. This article is general guidance only and should not be relied upon when making or not making decisions: always seek professional advice when setting up a guarantor arrangement.

The guarantor is the landlord’s insurance policy against tenant default. The guarantor pays the landlord the rent if the tenant defaults, it pays the landlord all losses, expenses or damages where the tenant fails to carry out his of her full obligations under the lease.

With residential tenancies it now quite is common for the landlord or agent to ask for a guarantor, particularly when a tenant has a low credit score. There are many reasons why a tenant may have a low credit score when credit checks are carried out. These include:

• Never having borrowed money or used credit cards
• No fixed address and/or not listed on the electoral role
• Lived at current address less than 6 months
• Lived abroad and returned to home country
• Worked for less than 6 months
• Student or job with low earnings
• History of debts, late payments or Count Court Judgements (CCJs)

With commercial tenancies it is very common for a guarantor to be required. Similar reasons apply here as with residential lettings, but commercial lettings, as has been said, usually includes asking directors of companies to act as guarantors where the tenant is a limited company, this being particularly important with new businesses.

One alternative to having a guarantor with a commercial tenancy is to have the person who is willing to act as guarantor become a joint tenant on the lease. It is very likely that with a company, especially if it is newly formed, with few assets, the lease will be in the directors’ names as tenants, not in the company name.

The guarantor would usually need to be a home owner with steady long-term employment if he or she is to satisfy the requirements of a good guarantor.

Parents of young people or students are often asked to guarantee their son’s or daughter’s rent and other tenancy obligations. This, hopefully, is less risky for the parent, as they know that their relative can be trusted?

However, parents need to be cautious here because joint residential tenancies for students or groups usually carry joint and several liability – this means that the parent is, in effect, guaranteeing all the other residents as well, not just their child! It has become more common of late for parents to limit (in the guarantor agreement) their obligations to those of their relative alone.

A guarantor will be required to do these things:

• Complete a Guarantor’s Application form
• Sign a Guarantor’s Agreement

The guarantor’s application form is similar to the tenancy application. Credit searches and references will be checked and all of the following:

• The individual’s identity
• The property to be let
• Guarantor’s personal details
• Residency information, including home ownership at the Land Registry
• Legal history and any CCJ’s
• Employment history
• Accountants, solicitors, character referee
• Bank and trade references for businesses
• Declaration allowing credit search & signature

The second part is the guarantor’s agreement with the landlord. This states:

• The date of the agreement
• The term to which it applies, when and how the obligation ends
• The signatures and names of the parties to the agreement
• The property
• The names of the tenant/s

Points to watch:

The wording of the Guarantor Agreement is crucial. This is a legal contract and will be strictly enforced by the courts according to how it is worded – there is no standard form or statutory Guarantor Agreement.

Is the agreement confined to the original lease term, or will the obligation continue into subsequent terms or a periodic tenancy? Both parties need to be clear on this.

If the agreement states that the guarantor is a primary obligator the guarantor will be obliged to carry on paying until the end of the term certain, or when the tenant leaves if the tenancy has become a periodic one.

On the other hand, should the agreement state that the guarantor indemnifies the landlord against losses due to the tenant’s default or failure to observe the agreement terms, then the landlord is obliged to minimise her losses.

For example, she may be expected to use possession proceedings to remove the tenant or re-let as soon as possible if the tenant leaves within the tenancy term certain leaving the guarantor to pay his remaining rent. However, the guarantee agreement may state that the landlord is not obliged to minimise his losses, in which case the landlord could sue, and the guarantor would have to keep on paying.

In extreme cases the guarantor may be forced to sue the tenant for damages and apply to take over his tenancy, thus making it possible for her to terminate the tenancy agreement.

Particular care needs to be taken by guarantors of commercial leases where obligations can be for many years. Here, guarantors could find themselves guaranteeing the lease of a failed business, or where the tenant has varied the lease terms to the detriment of the guarantor.

Guarantors can therefore find themselves completely taking over the obligations of the original tenant, taking on more onerous terms or continuing to underwrite the lease for subsequent tenants.

Varying a commercial property lease and its effect on a guarantor: landlords and tenants should seek the agreement of any guarantors to any proposed changes to the terms of the lease, even minor changes which could increase the guarantor’s liability.

Keep informed

It is very important that landlords communicate to guarantors any and all changes in the tenancy, lapses in rent payments as soon as they occur, all missed rent payments or damage issues which arise and which may result in a claim.

In commercial tenancies holding former tenants and their guarantors liable means that in a commercial lease, where previous tenants or their guarantors are still held liable to a landlord for default by the current tenant, landlords should at all times keep everyone in the picture, notifying them before the current tenant accumulates excessive liabilities.

Assignors who have ongoing liabilities under a commercial tenancy guarantee should be kept in touch and the landlord should provide all the necessary information.

Guarantors and Assignors should take professional advice on what methods are open to them to minimise their losses created by tenant defaults.

Landlords should be aware that a separate guarantor agreement needs to be signed as a deed and witnessed, as there’s no consideration involved in this type of contract, otherwise the guarantor should be made a party to the tenancy agreement (contract) – seek legal advice on this as it is being constructed, because if you get it wrong the agreement with the guarantor is not enforceable.

If you have any questions about any of the issues here, post your question to the LandlordZONE® Forums – these are the busiest Rental Property Forums in the UK – you will have an answer in no time at all.

View Full Article: Guarantors in rental agreements – what are they and what should you look out for?

EXCLUSIVE: Landlord battles ‘horrendous’ mortgage mistakes by Barclays

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Nottingham benefits landlord Mick Roberts is fuming after being left with bad credit due to computer errors on his Barclays’ mortgage payments.

After years of struggling with call centres and going through complaints procedures, he took his protest to a Barclays branch and threatened to superglue himself to the counter until it sorted out his problems.

Roberts (pictured) blames the bank’s faulty Trinity System which he says doesn’t recognise over-payments. It has sometimes lost them, paid the capital but no interest, or paid the interest and no capital, he tells LandlordZONE.

“With one mortgage, I’ve had a balance in January of £50,000 and have overpaid every month but ended up with a balance of £52,000 a year later.”

Other payments don’t even get registered, most recently last December. As a result, Barclays had erroneously put a bad credit note against his file which meant Roberts was refused good low-rate fixed mortgages in 2021.

He’s even had bailiffs trying to repossess goods for alleged defaults. “These mortgages will now cost me £25,000 more on a product transfer as no other lender will take me,” he says.

After his protest, Barclays removed the bad credit note from his file.

Standards

A spokesman tells LandlordZONE: “We accept that on this occasion the service our customer received fell below our usual high standards.

“Appropriate steps have been taken to ensure the information held by the credit reference agencies is now accurate for our customer. As soon as we are alerted to any discrepancy we will work swiftly to review and resolve the situation.”

However, Roberts says the whole experience has made him ill and he’s not convinced that the problems won’t happen again.

It was no comfort when he complained to the Financial Conduct Authority which helpfully referred him to the Samaritans.

“It’s been horrendous,” he says. “But I can’t believe that with 10,000 similar accounts, other people haven’t been similarly affected. Landlords with Barclays BTL mortgages should carefully scrutinise their statements.”

View Full Article: EXCLUSIVE: Landlord battles ‘horrendous’ mortgage mistakes by Barclays