Rent cap and evictions ban forcing landlords out say 83% of Scots agents

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Propertymark says Scotland’s emergency legislation is alienating landlords, discouraging investment, inhibiting supply, and causing rents to rise faster.

It reports that while most landlords can’t evict tenants following the Cost of Living Act extension, those with tenancies that are naturally coming to an end are now more likely to want to sell.

Propertymark’s research found that 83% of letting agents saw an increase in the number of landlords serving notice to sell because of the temporary measures, up from 69% in December.

Those that aren’t selling are securing their future financial position by raising rents in between tenancies, and when asked, 94% of agents said their landlords were now more inclined to do so, compared to 91% in December.

In January, the Scottish government announced a further six-month extension of the rules until the end of September meaning that if a landlord wants to increase a tenant’s rent mid-tenancy, this will be capped at 3%.

Enforcement of evictions continues to be paused except in a few specified circumstances. 

Exemptions

Of all the notices served, 67% do not meet the exemption criteria and are awaiting processing from October 2023, up from 44% in the last survey.

Timothy Douglas (pictured), Propertymark’s head of policy and campaigns, says rent control is causing problems for the sector in Scotland. “We know from our member agents that as a direct result of the Cost of Living legislation, rents and costs are now being more heavily scrutinised by landlords, with many putting up rents between tenancies to protect against any future cost implications.”

Adds Douglas: “The crux of the housing problem is that demand is far outstripping supply, but this legislation is counterproductive for tenants, pushing landlords out of the sector and leaving little choice for those looking for a rented home.”

View Full Article: Rent cap and evictions ban forcing landlords out say 83% of Scots agents

How to win deposit disputes

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It’s frustrating when the landlord-tenant relationship has to end with a dispute over damages in the property, the need for deep cleaning, or rent owing, but the deposit is there for these reasons. Unfortunately, tenants don’t always see it that way, and they are not always aware of the costs involved in: repairing damage, deep cleaning, replacing removed items or removing items left behind, replacing broken items, and collecting arrears of rent.

Most landlords are willing to write-off small amounts and put the loss down to experience (it’s is a tax claim expense) to avoid the hassle of taking a dispute through to a formal claim, but when there’s a substantial amount of money in involved, landlords should pursue a claim.

Fair wear a tear must be taken into account – see below – so any claim allowing for this will depend on the length of time the tenant has been in residence and the age of items claimed for among other factors.

Justifying your claim

Landlords often fail to win tenancy deposit disputes, not because the claim is unjustified, but purely because of the way they have gone about claiming, and usually because they have insufficient evidence to support their claim.

Some years ago a case involving a tenant with a pet cat leaving fleas left behind in the property is a good example of how a deposit claim can be won or lost on the way the claim is presented and the available evidence.

In this case involving a dispute of £180 for the pest controller’s fees, the dispute went to the deposit scheme’s arbitrator who awarded for the landlord.

Despite the tenant’s arguments to the contrary, and good evidence put forward the landlord claiming that the tenant left behind a flea infestation which had to be irradiated professionally, the landlord won the case.

Claims for pet related costs are likely to increase because (1) the government is encouraging landlords to take in more “well behaved” pets, and new legislation in the Renters Reform Bill going through Parliament, and (2) the tenant fees act now restricts the maximum deposit a landlord can take to 5 week’s rent, leaving landlords the only option for their protection, when pets are involved, to charge a higher rent.

According to a report in Property Eye at the time, in the cat case the landlord claimed the tenant should pay for the cost of treating the flea infestation at the property. But the tenant denied there was any evidence of fleas at the property when they left, and put forward convincing evidence that their cat was flea-treated by their vet and had never had fleas.

The landlord submitted the following evidence to the adjudicator:

• dated and signed check-in and check-out reports
• invoice in the amount claimed from a pest treatment contractor
• a statement of opinion from the contractor
• various emails between landlord and tenant
• a photograph of a flea-bitten ankle.

The tenant submitted:

• Various documents relating to their cat’s vet treatments
• receipts for the purchase of pet flea prevention treatments.

No mention of fleas was made on the check-in report, but the (dated) photograph of the landlord’s flea bitten ankle appeared to have been taken at least a week after the tenancy had ended.

This evidence the adjudicator thought was insufficient, but what swung it for the landlord was the pest controller’s statement that showed a flea infestation was present at the property, two weeks after the tenancy had ended, with no other occupation in between.

Further, the tenancy agreement set out the landlord’s agreement that the tenant could keep a cat at the property, stipulating clearly the tenant’s responsibility for any costs arising for damage or to eradicate any pests caused by or resulting from the presence of the animal in the property – the relevant clause in the agreement stated very specifically: “The tenant will be liable to compensate the landlord for any losses due to flea infestation by an animal of the tenant, his family or his visitors”.

Whether disputes like this one go to the deposit scheme’s dispute arbitration or a county court, the principles are very much the same and there are a couple of lessons to be drawn here:

1. Documentary and independent evidence is vital. This, including any photographs, must be dated and confirmed independently.
2. The tenancy agreement must set-out very clearly the obligations and responsibilities of the parties for these eventualities.

These measures noted in the contract are particularly important where pets are involved, but also for other potential damage such as condensation, rent arrears issues etc.

Landlords take deposits to give them financial security should tenants:

(1) cause damage in the property,

(2) leave the place needing extensive cleaning,

(3) take items, or leave possessions in the property which need expensive removal, or

(4) leave owing rent.

Landlords / agents should ensure that the letting agreement (contract) provides for all these reasons for retaining a deposit.

Landlords / agents should also be aware that damage deposits should not exceed 5 weeks’ rent.

Landlords and agents taking a deposit for an assured shorthold tenancy (AST) tenant must protect it in one of the approved schemes within 30 days of taking it. They are also obliged to serve on the tenant a set of statutory information regarding the scheme in question. This information and documentation (s213 notice) with instructions will be available to download from the relevant scheme’s website.

Landlords and agents are advised to get proof of service of this documentation as failure to comply with any of the deposit rules will invalidate any accelerated possession (s21) claim.

Deposit Disputes and that crucial evidence

Most tenancies end amicably and the landlord or agent will agree to either refund the full deposit or an agreement between them and the tenant will be reached, such that all or a part of the deposit is retained to cover the issues mentioned above.

However, it is sometimes not possible to reach agreement and therefore the deposit amount in dispute is put into an arbitration process, which is handled by the tenancy deposit scheme in question at no cost to the parties involved. In some cases, where complications arise, or the amounts exceeds the deposit to some degree, the dispute will be transferred to the county court, in which case fees and costs will be involved, and normally the losing side pays these.

Deposit amounts in dispute will be released from the scheme when the parties agree to this. Otherwise the scheme adjudicators will decide on the evidence presented to them who receives the money.

It is crucial therefore that landlords and agents, during the course of letting and managing a tenancy, build-up sufficient documentary evidence to enable them win a deposit dispute claim, should the need arise: a good inventory (preferably done by an independent inventory clerk) with check-in and check-out reports, including photos and tenants signature, is pretty much essential.

Further evidence would include estimates and invoices for repairs and renewals, cleaning and removal costs, rent schedules where there are arrears and statements from third parties / contractors as in the case above. It is not possible to claim for work that landlords do themselves (DIY).

Fair Wear and Tear

The contract between a landlord and a residential tenant has an implied term which means dilapidations to the property due to fair wear and tear are acceptable and cannot be claimed against the deposit.

What is fair wear and tear is a matter of subjective judgement to some extent but is informed by the experience of the landlord, agent or inventory clerk, and when in dispute will be decided by the scheme’s adjudicator.

These requirements contrast with commercial tenancies where the lease usually requires the tenant to put back the property into a tenantable state, which usually means complete repair, refurbishment and redecoration, and can even stretch to major structural repairs.

Fair wear and tear has been defined by the House of Lords as resulting from:
“Reasonable use of the premises by the Tenant and the ordinary operation of natural forces”

This statement is not all that helpful when it comes to the task of deciding what is fair wear and tear and what goes beyond that?

Reaching a decision means making allowance for:

– The original age, quality and condition of any item at the start of the tenancy
– The average useful lifespan to value ratio (depreciation) of the item
– The reasonable expected life time usage of such an item
– The number and type of occupants in the property
– The length of the tenants’ occupancy

It follows therefore from established legal practice that a landlord cannot charge its tenants the full cost of having any part of a property, or any fixture or fitting, returned to its original condition, or even the condition it was in at the start of the tenancy.

When it is not possible to make repairs, any compensation when a new for old replacement is made will therefore involve an allowance for age, quality and fair wear and tear – a contribution from the landlord.

Further, a duty is placed on landlords and agents to adopt the most reasonable, practical and appropriate cost-effective approach to achieving a remedy, usually meaning repairs rather than new for old.

Appropriate remedies might include:

Only replacing items where it is so severely and extensively damaged it is now beyond economic repair or, it has become unusable. Here, the most economic repair would be expected.

Small stains on carpets for example may be put down to fair wear and tear, whereas more extensive marks and staining or burns would not.

However, depending on their position it may be possible to cover them with strategically placed rugs and mats and the adjudicator may insist on that.

Otherwise where a replacement carpet is deemed acceptable, any compensation by the tenant would need to take into account: (1) its appropriateness for use in a rental (e.g. colour), (2) quality, its age and expected lifespan. Therefore in these cases the tenant would be asked for a contribution to the cost, new verses old.

Repairs or Cleaning

What is clean to one person is sometimes downright filthy to another.

Cleaning is the most common cause of a deposit disputes between a tenant and a landlord, with nearly a quarter of all dispute cases being attributed to issues of cleanliness.

Therefore any adjudicator’s decision will depend on the evidence submitted, how reasonable is the amount being claimed, and is the claim supported by a contractor’s statement.

Questions the adjudicator may ask:

– Who says it needs cleaning? Is this opinion independent and impartial, e.g. an inventory clerk or agent?
– Did the tenant agree to condition and cleanliness at the start of the tenancy and was it made aware of potential costs of not complying – e.g., a specific clause in the agreement?
– Was the property professionally or DIY domestically cleaned at the start of the tenancy?
– What evidence have you got that shows deterioration, start to end?

Photo & Video Evidence

Photo and video inventories (ideally produced independently) are useful for recording the condition of the property at the start and end of the tenancy and when done properly will provide a clear record of the property prior to its occupation.

You need to make sure all photographs and video evidence is clearly dated and signed and agreed by both parties. This is much easier to achieve when an independent inventory clerk completes the task.

Always make sure the tenant is given a copy at Check-in/Check-out stage, and get a signature to say they agree and understand all the implications after viewing and discussing.

The end result of adjudication will always hinge on the quality of the paper-based documentation presented, so good quality photo evidence, signed by both parties will add considerably to the weight of a landlord’s case.

Preparing a Claim

Preparation for a deposit dispute claim starts pre-tenancy. If you have not planned your management process: agreement wording, quality inventories, check-ins and check-outs, communicating to tenants your expectations, interim inspections etc., then your chances of successfully claiming against a deposit are pretty low indeed.

Putting together a good claim is time consuming and evidence heavy – the adjudicator can make a decision only on the evidence presented in document form. Furthermore, there is no appeal once the adjudicator makes a decision. You cannot challenge an adjudication decision unless it is via a court of law. The more evidence you can produce and the more transparent you are with the whole process the better your chance of success.

As a landlord or agent you need to weigh the costs of putting forward a good claim against the amount of money involved. If the one outweighs the other it is sometimes better to return the deposit to the tenants and “bite the bullet” as to the costs involved.

This can sometimes be an act of good will and will prevent any chance of retaliatory action by the tenant – it would not be the first time a landlord had a brick through the window of its rental property because the tenant felt hard done by, losing its deposit.

To help you prepare your claim properly here are two very useful guides: – Recommended Books

Understanding Fair Wear and Tear – a MyDeposits guide

How To Win Deposit Disputes by Tom Derrett

If you have further questions about any of the issues raised here, post 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: How to win deposit disputes

House price growth slows down – and renters look to buy

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Economic headwinds are seeing home sellers cautiously pricing their properties to sell with April’s prices increasing less than expected, Rightmove says.

And record high rents mean that tenants who can afford a deposit and a mortgage are increasingly looking at buying.

View Full Article: House price growth slows down – and renters look to buy

Free service starts promising to save landlords energy costs during voids

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A void energy solution and switching service for ‘end of tenancy’ promises to trim pounds from landlords’ bills.

Empty rental properties incur a range of standing charges that average between 10p and 80p per day for electricity and from 5p to 60p per day for gas, averaging out to £77 annually for electricity and £82 for gas, according to Muuvo.

To address this, the utility technology platform ensures the unit price and standing charge are correct and don’t exceed the current government price cap when a tenant vacates.

It says installing smart meters also prompts agents to add meter readings to all new and vacating tenancies (fully managed), avoiding excessive payments using an estimate based on past energy consumption.

Tenancy process

The platform can switch over to a preferred supplier as part of the end of tenancy process, meaning that it happens well before any new tenant’s check-in.

Energy switches used to take four or five weeks to complete and often clashed with new tenants setting up their own energy accounts – now it can be handled in just a few days.

As part of its void energy solution, Muuvo is the main point of contact with the void energy partner to assess and sense-check bills before they are sent to letting agents. It can then check that the name on the invoice, correspondence address, meter readings and dates are all correct.

The platform is free to use and provides access to all existing supplier data to provide comparisons and speedy upfront provision of relevant information to help set up new tenancies.

Read more news about voids.

View Full Article: Free service starts promising to save landlords energy costs during voids

Scottish legislation is driving landlords out

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Legislation by the Scottish government is pushing landlords out of the sector, a leading industry body claims.

According to research by Propertymark, 93% of landlords in Scotland have expressed a desire to withdraw property from the PRS because of temporary legislation introduced by the Scottish government.

View Full Article: Scottish legislation is driving landlords out

Block managers under fire over ‘large commissions’ paid to them by insurance firms

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Companies selling multi-occupancy insurance will have to act in leaseholders’ best interests under new proposals from the Financial Conduct Authority (FCA).

It is demanding new rights and protections to improve the transparency of the multi-occupancy leasehold buildings insurance market.

Under the plans, leaseholders would be defined as customers of buildings insurance and firms would not be allowed to recommend a policy based on commission or remuneration levels.

 Insurers and brokers would also need to provide more information about insurance policies to leaseholders, including detail of any commission paid.

An FCA review found average per policy insurance broker commission rose by 46% between 2019 and 2022.

There were also “significant shortcomings” by some brokers in applying fair value rules to their remuneration practices – and the impact on those paying the costs of multi-occupancy buildings insurance.

It reports that leasehold buildings insurance premiums have risen significantly since the Grenfell tragedy, with leaseholders facing much higher costs.

Large commissions

Sheldon Mills, FCA executive director of consumers and competition, says: “Our review revealed large commissions paid by some brokers to freeholders and third parties, like managing agents, with little evidence of any value added to justify these payments.

“We are taking action against these practices, and we won’t hesitate to take further action if brokers don’t comply with our rules.”

Andrew Bulmer, chief executive of The Property Institute, welcomes the focus on tighter regulation, fairness and transparency.

He tells LandlordZONE: “We remain firm in our position that leaseholder distress caused by an increase in insurance premiums, a lack of transparency and information, and suspicions for the potential unmanaged conflicts of interest, highlighted by the FCA, must be resolved to bring transparency and fairness to millions of leaseholders.”

Read more about multi-occupancy insurance.

View Full Article: Block managers under fire over ‘large commissions’ paid to them by insurance firms

BREAKING: Government considers harsher penalties for ‘sex for rent’ landlords

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A new law to crack down on predatory landlords who exploit vulnerable people for sex in return for free or discounted rent is being considered, Home Secretary Suella Braverman (main picture) has announced.

Her department is seeking the views of victims, the police and charities as part of a call for evidence launching today to better understand the scale and nature of the ‘sex for rent’ exchange in the UK.

‘Sex for rent’ arrangements are already illegal under the Sexual Offences Act, and landlords can already be prosecuted for attempting to engage the practice.

The consultation will look at whether these laws go far enough, or if new measures are needed to tackle the issue and better protect vulnerable people from harm.

The practice has been in and out of the headlines in recent years, including the high profile case of Christopher Cox who, in May 2022, was found guilty of the crime and jailed for 12 months.

Exploited

“It’s wholly unacceptable that vulnerable people, and particularly young women, are being exploited in ‘sex for rent’ arrangements,” says Braverman.

“This is an abuse of power which puts people in desperate situations and has no place in our country.

“The launch of this public call for evidence brings us closer to ending this deeply harmful trend and better protecting victims.

“And it is another example of how this government will not stop in our efforts to bring more sexual and domestic abusers to justice.

According to research by polling firm YouGov, carried out on behalf of the housing charity Shelter, nearly 1 in 50 women in England have been propositioned for ‘sex for rent’ in the last five years.

Read the consultation in full.

View Full Article: BREAKING: Government considers harsher penalties for ‘sex for rent’ landlords

EXCLUSIVE: Jersey landlord leader slams rent controls and ‘open’ tenancies plan

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Jersey has launched a consultation into sweeping reforms including rent controls and open-ended tenancies, prompting fears that they could force more private landlords to quit the sector.

The island’s government aims to increase protections for both tenants and landlords under the new residential tenancy law which promises more security of tenure and protection against revenge evictions, increased minimum notice periods for tenancies and a limit on the amount and frequency of rent increases during tenancies.

A new housing tribunal would also be set up to consider a wide range of residential tenancy issues.

Rent controls would require all tenancies to specify terms for rent increases, introduce limits to the amount and frequency of rent increases and specify a minimum notice period of eight weeks.

The States is also considering adopting a more nuanced approach such as averaging annual RPI changes to specifically help during times of high inflation.

Jersey Landlords Association has been fighting creeping regulation for the last few years. 

“The impact of rent controls and open-ended tenancies will be that landlords will be less likely to invest in their properties, which will result in less tenant choice,” chairman Guy Morris (pictured) tells LandlordZONE.

“We believe that the majority of Jersey landlords have already done their best not to increase rents by anywhere near the Retail Price Index.”

He says that any while this piece of legislation would be hard to stomach, introducing it with landlord licensing and changes requiring landlords to ensure buildings are more carbon-neutral all at once could tip people over the edge.

“I think that if all these proposals go ahead, there will be more people leaving the sector, particularly accidental landlords,” adds Morris, “and that only makes the current supply problem even more challenging, especially as our planning committee has knocked back a series of new housing developments recently and our government is set to introduce a new tax on profits generated by the sale of re-zoned land for development.”

The eight-week public consultation ends on 9th June.

View Full Article: EXCLUSIVE: Jersey landlord leader slams rent controls and ‘open’ tenancies plan

Landlords see a massive increase in fraudulent tenancy applications

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There’s never been a tougher time for the private rented sector (PRS) with demand soaring and stock dwindling tenants are struggling with finding a place to live.

This leaves tenants battling it out for properties but some face extreme vetting procedures to access homes to rent.

View Full Article: Landlords see a massive increase in fraudulent tenancy applications

How can I get my rent arrears?

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Hello, I have obtained an eviction order giving my tenants 14 days to leave. I do not expect them to do so, so will need the bailiffs. They are £8,100 in rent arrears.

How can I get my money?

View Full Article: How can I get my rent arrears?