EXCLUSIVE: How evictions ban and rogue agency cost landlord duo £40,000… and counting

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A shocking story of illegal sub-letting in central London has highlighted the problems facing many landlords as a mixture of unchecked rogue letting agents and the unintended consequences of the evictions ban continue to cause havoc.

The case has cost the landlords involved over £40,000 in lost rent and costs so far with both facing many months due process before they can take possession of their properties.

What happened?

Late last year a leading lettings agency was approached by a TV production company based in Manchester which sought two apartments in London for staff who were working temporarily in the capital. The agency wishes to remain anonymous over staff safety worries.

Properties in Pimlico and Vauxhall (at St George’s Wharf, pictured) were secured and tenancies agreed but after several months the rent stopped being paid.

The agency discovered that both apartments were being sub-let without permission to new tenants via a Knightsbridge agency called Blackstone Properties.

Despite both email and face-to-face meetings at their offices, Blackstone has so far failed to return the keys to either of the flats to the agency. The rent continues unpaid for both apartments.

Fobbed off

A spokesperson from the company says that on visiting Blackstone they were fobbed off with excuses but believes they know the law is on their side and that evicting the tenants they have sub-let to will take months.

“We managed to talk to one of the tenants and once they realised what they had become caught up in, left the property but new tenants almost immediately,” they say.

Although the evictions ban does enable illegal sub-letting cases to be prioritised ahead of most other types of evictions, rogue operators are fully aware that it will take months to get a preliminary hearing date as the courts struggle to cope with huge volumes of cases.

And until the government implements the findings of the RoPA report, rogue letting agents are free to operate in the market unchecked or policed.

Ballooning

Paul Shamplina, whose company Landlord Action has been involved in the case, says: “Since Covid has struck we’ve have been extremely busy dealing with cases like this where rogue agents have failed to pay rent to landlords and been involved in illegal sub-letting,” says Paul Shamplina.

“This kind of problem has ballooned alongside increasing levels of dodgy rent-to-rent agreements, which employ similar tactics and – like this case – lead to landlords losing tens of thousands of pounds.

“Part of the problem here is the blanket approach the government has taken to evictions during the Covid pandemic – forcing agents and landlords to give six months’ notice of possession action means rogue agents have the upper hand at the moment – they know their fraudulent activities are difficult to stop or police.

“The Government needs to look at the Guaranteed Rent and Rent to Rent industries separately within the PRS and introduce tougher enforcement through Trading Standards; it’s so easy to take the rent, not pass it onto the landlord during which the landlord loses control of their property and remains liable for enforcement of overcrowding or breaches of HMO regulations, for example.”

LandlordZONE have asked both the TV production company involved, Rami News, and Blackstone Properties, for comment.

Read this guide to protecting yourself from sub-letting scams.
Paul Shamplina will soon be appearing in the next series of Nightmare Tenants, Slum Landlord during which he’ll be highlighting two more rogue agencies and their activities.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – EXCLUSIVE: How evictions ban and rogue agency cost landlord duo £40,000… and counting | LandlordZONE.

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In the frame: Agents must realise it’s now all about communication not location

admin    Uncategorized     agents

It’s been two weeks since the housing courts reopened and over six months since landlords were last able to go to court to get a possession order.

During this time many tenants have seen a dramatic change to their previously normal lives, some have lost jobs, been furloughed and found themselves navigating the minefield that is the benefits system for the first time.

It’s no secret that some landlords have experienced tenants who have either not been able to pay their rent or in a minority of cases those who just decided not to pay and used Covid as the perfect excuse.

For many self managing landlords, the recent increase in legislation and taxes coupled with the issues Covid has brought, has seen many return to or start using a letting agent to manage the property and the tenants. This gives landlords the peace of mind that with a professional in place they will ensure compliance and remove risk and stress.

Heads in sand

Sadly, the opposite seems to be the case, with some landlords reporting that letting agents are not managing their properties well and have failed to cope with the temporary legislation as well as burying their heads in the sand when it comes to tenants not paying rent.

Many agents don’t have a detailed rent arrears policy that includes all levels of communication, it seems that a minimal number of text and emails are the only methods swiftly followed by a notice seeking possession.

This can leave an already worried tenant, defensive, scared and very unwilling to engage, a basic level of personal communication can work miracles in this current climate.

Arrears

My experience has shown that there are many ways to communicate with people, but it seems managing agents fail to communicate from the start, leaving many landlords facing thousands of built up arrears and months and months of wading through the court process.

With all the technology available at our fingertips, why do the majority of letting agents still fail to communicate and still fail to manage properties to a good standard? Surely as the professionals in the industry letting agents should have the upper hand of both knowledge and skill when it comes to managing a landlords property.

Housing knowledge

I have worked with a number of landlords who use consultants like myself to help with damage limitation and I have been shocked and saddened at the poor level of service landlords are receiving from their agents, but also the lack of any housing law knowledge whatsoever.

One landlord has been left with over £6,000 of rent arrears and unable to evict the tenant, due to the letting agent serving three separate invalid Section 21 notices, meaning the landlord must now start from scratch and serve a new notice.

My intervention in this situation, discovered the tenant was a freelance photographer, so all his work had dried up, he was not aware he could apply for Universal credit as he was self employed, so felt shamed and embarrassed.

I picked up the phone and invited the tenant into the office, got to know him, we then did the following:

• Helped him apply for UC and request direct payment to the landlord
• Contacted Local council and secured a ‘Financial Inclusion grant’ which paid £3000 off the arrears
• Contacted two independent funds which support freelance workers, between these two organisations, they paid the remaining £3000 to clear the arrears

Mother figure

Now, I do not expect a property manager to be a qualified debt adviser nor do I expect them to be a councillor or a mother figure to a tenant, but I do expect property managers to have high levels of communication skills and a good understanding of their tenants and the support available with an ability to sign post them to this support.

If the last decade of change within the PRS has taught us anything it is that Property management is now more complex than ever, this change means property manager now need to be a different breed with very different skills to what we would expect.

Knee jerk

Since the tenant fee ban came into force in 2019 there has been a knee-jerk reaction from letting agents to increase their fees to Landlord to help cover the loss that they were going to see from not being able to charge tenants.

But with the increase in fees sadly we did not see an increase in service.

Statistics released by The Property Ombudsman in their last annual report showed that communication and property management were the highest source of the complaints and this is only set to increase.

In addition, most reported illegal evictions are actually carried out by letting agents and not, as the media would have you believe, rogue landlords.

Bread and butter

It would seem that many agency owners do not put as much value in the role of a property manager as they do their negotiators, even though property management is the bread and butter of many agents who would undoubtedly fold without it.

Qualifications and training of property managers do not seem high on many directors to do lists, yet those same agencies pride themselves on shiny window sticker proclaiming they are a member of a number of voluntary industry bodies.

Agency owners need to understand what issues the industry now pose and what skill set a good property manager requires.

Take pride

Implement a structured and comprehensive ongoing training programme for property managers, start to take pride in the fundamental service that a Landlord relies on and this in turn will bring a high staff retention, better continuity for both landlords and tenants as well as an improved level of customer service.

But the crux of the issue here is, no matter how inexperienced or how monumental the mistake an agent makes, the law states the responsibility lies with the landlord, so when your property manager doesn’t serve your Gas certificate on the correct date or fails to register a deposit and you find you can’t evict your tenant, ultimately the buck stops with the landlord, it is the Landlord who gets the hefty fine it is the landlord who is stuck with thousands of pounds of court fees.

But until the industry starts to take this area of its own business more seriously and understands that as agents they have a client (the landlord) AND a customer (the tenant), we will continue to see complaints rise and more landlords fall foul of a glossy window sticker.

Julie Ford runs the Hemel & St Albans Property Network

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – In the frame: Agents must realise it’s now all about communication not location | LandlordZONE.

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BofE writes to CEOs to gauge readiness for zero or negative interest rates

admin    Uncategorized     agents

There is no indication it is likely, or that the Bank of England will reduce the Base Rate to zero or a negative figure. However, a letter has been sent by Sam Woods on behalf of the Bank of England to selected firms’

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Tenants who give notice but stay – Double rent?

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A lawyer recently told me that he thought there was a law whereby, if a tenant gives notice, but then does not move out at the end of their notice period, they can be charged double rent.

Has anyone heard of this please or know what my position is under the Covid-19 emergency rules?

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Landlords ask for help as confidence in rental market collapses

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Landlords are justified in their calls for a rent arrears loan scheme in England as research shows that confidence within the sector is plummeting, it has been claimed.

A survey of over 2,000 landlords by the NRLA has revealed that two thirds believe they face a tougher operating environment as the economic affects of Covid hits the private rental sector, with 18% saying this was likely to be severe.

Consequently, 56% said they were less confident about the future compared to three months ago, particularly when it came to achieving their goals.

And 30% now say they want to sell one or more of their properties compared to 16% who expect to expand their portfolios.

Rent arrears

Given the mounting financial pressure on both tenants and landlords alike, the NRLA has once again said Ministers should follow their Welsh and Scottish counterparts and introduce low-interest loans for the most vulnerable tenants, paid direct to their landlord, to help them repay significant rent arrears.

The NRLA’s says 78 per cent of landlords would support such a scheme and one of the UK’s leading housing campaigners Lord Best has said the cost would be negligible to the government.

Ben Beadle, Chief Executive of the NRLA says: “Providing the financial support needed to help tenants pay off rent arrears built since lockdown started would cost the government less than the Eat Out to Help Out scheme.

“As we head into more local lockdowns, it is even more important that tenants don’t have to worry about meeting their rent bill.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Landlords ask for help as confidence in rental market collapses | LandlordZONE.

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Shops needs a ‘normal Christmas’ to get through Covid warns report

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Shops and restaurants are hurting from a high street slump across almost every city and large town in the country – and there are fears the festive season could be the last straw for some.

According to the latest data from the Centre for Cities, the economic recovery stalled in September, when consumer spending in city and town centres fell by an average of 9%.

It’s hit some towns particularly hard; while Bournemouth had the biggest increase in visitors this summer, last month the amount of money spent there fell by 46%.

The south coast town and many other tourist spots including Blackpool, Brighton, York and Edinburgh, saw large drops in the numbers of visitors in September, raising concerns that their initial recovery from Covid-19 may have been short lived. 

Centre for Cities’ High Streets Recovery Tracker recorded overall footfall in the centres of cities and large towns up by just 1% last month – 17% lower than the increase seen in July and August.

Land Commercial MD Adam Diamant says the retail sector has been helped by the Government’s recent changes to the use classes system which means buildings can now become restaurants, retail or offices without applying for planning permission.

“Shops can be used for a much wider variety of uses, changing from a betting shop to a restaurant or doctor’s surgery, and retail has been quite busy for us,” he tells LandlordZONE.

One highlight from the survey is the fact that there’s little indication that the 10pm curfew on pubs and restaurants has had an effect on footfall, which overall hasn’t fallen as a result of the measures. 

However, Diamant worries about the impact of the next few months on the sector.

He says: “If we can’t have a ‘normal’ Christmas in terms of hospitality and retail – with no office parties for example – that will be the real killer to a lot of businesses. I think it will hit people a lot harder than the loss of the summer.”

Visit the Centre for Cities website.

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Chancellor’s job support package is not enough to protect struggling tenants, say landlords

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Landlords have rejected the Chancellor’s extended Job Support scheme which is intended to help businesses affected by current and future local and national lockdowns preserve jobs.

Sunak said today that the government will pay two thirds of employees’ salaries and offer cash grants to businesses told to close during the pandemic this winter, of up to £3,000.

But the proposals have been criticised by the National Residential Landlords Association, which reckons these local ‘furlough payments’ will not be enough to help renters who are already behind in their rent due to Covid.

“The impact of local lockdowns makes it even more important that the Chancellor acts without further delay to bring in a package that will help tenants and landlords to sustain tenancies,” says its Chief Executive Ben Beadle (left).

“Landlords cannot be expected to subsidise tenants who are struggling to meet arrears indefinitely.

“The Government should develop tenant hardship loans such as those in Scotland and Wales to support renters in England who have built arrears since lockdown began in March but are not in receipt of benefits. 

“There also needs to be extra support for those who rely on benefits to meet their housing costs.”

The scheme will start on November 1st and last for six months.

“I have always said that we will do whatever is necessary to protect jobs and livelihoods as the situation evolves,” says Rishi Sunak.

“The expansion of the Job Support Scheme will provide a safety net for businesses across the UK who are required to temporarily close their doors, giving them the right support at the right time.”

Read the HM Treasury announcement in full.
Read more about how Covid is hitting poorer tenants hardest.

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Will life-long renting for the many be the outcome of Covid?

admin    Uncategorized     agents

With interest rates at all-time lows (bordering on negative rates), house prices are being pushed to record levels to the detriment of first-time buyers. They need a mortgage to cover on average 7.8 times their annual earnings, that figure compares to around 3.5 in the early 1990s.

But could all this be good for the rental market?

Research shows that would-be first-time buyers are finding it increasingly difficult to secure a home, and the economic effects of the Covid pandemic are making it even worse. Recent figures show that around 22% of aspiring first time buyers in the UK are still living with parents, and a good proportion of those believe they will have to do so for five years or more to save enough for a house deposit.

If it’s any consolation for those seeking ownership, the situation in the United States is probably worse. High demand, low supply and low mortgage rates have also driven up home prices to historic highs during this summer.

One investor landlord who invests in multiple family housing, Grant Cardone, is quoted in a recent Yahoo Finance article entitled The US will ‘become a renter nation’, as saying:

“Home-ownership is still dead in this country (United States) because the only people that are buying homes right now are people that have equity, great credit and a job… We’re going to become a renter nation in this country… Renting will become the economic choice and the desirable choice again…”

In the United States, currently for every $1,000 price increase, some 150,000 potential buyers are priced out of a home purchase, keeping them in the rental market.

One glimmer of hope for UK hopefuls is the Prime Minister’s statement recently that he wants to repeat the Thatcher home buying revolution, to turn “generation rent into generation buy”. Would new state-backed 95% mortgages help to get struggling homebuyers on to the housing ladder?

Despite the Prime Minister’s enthusiasm for such a scheme, he failed to mention in his speech to the Conservation Party conference how this would actually be achieved. Before the Covid crisis large mortgages with a five per cent deposit were available to those with sufficient savings, but since Covid hit, most of the major lenders, including the likes of Santander and HSBC, have simply pulled out, with virtually all of these deals cancelled until further notice. Even the few 90 per cent loan-to-value deals still available require stringent financial health checks.

Those getting a foot on the first rug of the housing ladder have moved way up in the age brackets, with home ownership even among those aged 35-44 having plunged, according to the Office of National Statistics (ONS) – its a fact that now adults in their mid-30s to mid-40s are three times more likely to rent than 20 years ago

Before the pandemic rising house prices and sluggish wage growth had left many middle-aged people priced out, but now with Covid it’s looking even more likely that people will have to rent for much longer, some with no choice but to become life long renters.

In American as here, renters have higher rates of unemployment, less savings for a down payment and consequently lower credit scores than they did before the pandemic. Renters are now more likely to fall behind on rent payments and more likely than owners to lose their jobs during the pandemic, taking them even further away from ownership.

There is little doubt that renters of today will suffer more hardship that those – mainly the baby boomer germination of over 65s, who were lucky to find it relatively easy to achieve ownership early on.

According to some research by The Royal London insurance company, homeowners without a mortgage can expect to maintain their living standards on a pension pot of about £260,000, while someone who rents privately would need almost double this, or about £445,000.

So for the one-third or people renting now who find this an attractive proposition, especially as the Covid crisis has had the effect of reducing rent levels, the prospects for them in older age are not as attractive. However, there are some advantages for older people renting, such reduced maintenance responsibilities and costs at a time when people could find it harder to maintain their home.

Finally, in America, to emphasise the difficulty for renters, says Cardone: “Homeownership is being driven by the upper class … You need a job that is secure, they’re [the banks] going to look at how you actually went through March, April, May and June with your job. If that was even slightly suspect, you’re not gonna get a home loan… You need a better credit score than you needed before Covid, and you need to secure a job.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Will life-long renting for the many be the outcome of Covid? | LandlordZONE.

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How disgraced footballer cleaned up in the end-of-tenancy game as he tackled pitch ban

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A footballer who was banned by the FA for making bets turned to the property sector for an income while away from the beautiful game.

Last September, former Bromley player George Porter admitted making hundreds of bets while playing for Leyton Orient, Burnley, Welling and Bromley over an eight-year period.

But rather than going off the rails or feeling sorry for himself, Porter set up his own cleaning company doing end-of-tenancy cleaning while he waited to get back on the pitch.

He told Kent Online: “I didn’t have an income but something good came out of that because I’ve set up my own business, so I’m tying that in with football and it’s brilliant.

Cleaning up

It’s a commercial cleaning company, so I work for estate agents and we do end-of-tenancy cleaning, stuff like that. I’m on the books of two estate agents and it’s going well.”

Porter placed a total stake of £5,147 across the 473 bets from December 2011 to May 2019, scooping £2,754 but making a net loss of £2,392. Players, staff and officials at all levels of football are banned from betting by the FA.

He’s now happy to be back playing for Maidstone United, adding: “I’ve come out the other side. I’m over it now and it’s made me even more hungry.”

Porters covers the London/South East London area, specialising in start and end of tenancy cleaning, carpet and upholstery cleaning, after builders cleaning, furniture assembly/removal and office cleaning.

Get advice on end-of-tenancy cleaning checklists.

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NRLA wants English Government to follow Wales and Scotland for PRS help

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The NRLA’s submission to the government is calling for a package of financial support for landlords and tenants to assist with Covid-19 related rent arrears ahead of the publication of its Comprehensive Spending Review.

Unlike the recent announcement by the Welsh government introducing a tenant loan scheme paid directly to landlords or agents there has been no financial support offered in England for rent arrears other than a ban on tenant eviction.

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