Rubbish idea? Islington latest council to fine landlords for tenants’ recycling mistakes

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A leading London council is set to approve a controversial new scheme that will fine HMO landlords when tenants put non-recyclable materials into communal bins.

If Islington Council gets the green light, landlords will have to fork out £47 each time that refuse collectors find “significant amounts of non-recyclable material” in the bin.

Currently, each time this happens, a separate refuse crew has to go back and empty the bins, with the council absorbing any extra costs.

Islington will first issue a section 46 notice to all landlords and managing agents of properties that use communal recycling bins, explaining which containers to use.

But if their bin is then found to be ‘contaminated’ they’ll have to pay the £47 charge.

If they refuse, the bin won’t be emptied and they’ll be invited to remove the rubbish themselves and the recycling bin will be emptied as normal on the next scheduled collection day. If this doesn’t happen, they’ll be served with a community protection notice.

The council says this plan will offset the additional cost of collection for which there is currently no budget and improve the quality of recycling collected.

Not the first

Islington is not the first council to take this type of action; among those who charge for the service are Cambridge City Council (£30), Wigan Council (£20), and Watford Council which charges up to £90.

In 2017, the government extended HMO licencing and as part of the measures promised to make landlords responsible for bins and the associated dumped rubbish, declaring: “Landlords will be held responsible for making sure the council’s rules on refuse and recycling are followed.”

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Can I increase the rent?

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It’s a sensitive time to be talking about increasing the rent, but the time will come when this question needs to be addressed

Most landlords have done their utmost to help their tenants through the pandemic crisis, when they can afford it, but as the crisis comes to an end, and it must inevitably do so in time, landlords will need to address this difficult question, if they are to keep their businesses viable.

It’s so easy to let this issue slip, to let the rent fall so far behind the true market value that any increase back to the correct level becomes so painful that tenants start looking around for a move.

Responsible landlords want to keep their tenants as long as possible, but this should not be at any cost; it makes sense to instigate a series of small increases to keep rents in-line with the market, than risk a confrontation over a big increase – tenants rarely appreciate the benefit they got from living on a below market rent for an extended period, when the big increase eventually comes.

It we are to believe the economic pundits, there’s a good chance that inflation will take off as we pull out of the crisis and the country gets back to full activity. So operating costs will begin to rise and as any accountant will tell you, income should be kept in-line with costs whenever possible.

How much can a landlord increase rent by?

Under an Assured Shorthold Tenancy there’s no legal constrain, it’s a matter of agreement between the parties but using the market as a guide is the obvious answer.

Ask too much and the tenant will start to look around, so it’s a good idea to start that look around first, yourself. Trying to ascertain comparable rents within the locality and pitch the rent slightly below that level is a good strategy which has stood the test of time. Shop around the agents and letting ads, you can even make a few explorative enquiries as a prospective tenant yourself, to gauge the market values locally.

With house prices at record levels, it’s unlikely that demand for renting will decline any time soon, so you can rest assured that tenants will need to rent regardless, but that’s no excuse for exploitative behaviour.

Ask a fair rent for the type of premises you are letting and you are likely to hang on to your tenants for longer. Remember, void periods and reletting costs – not to mention the risk involved with new unknown tenants – will bring down your average returns dramatically. It makes no sense to maximise rents at the expense of constant turnover.

Most Assured Shorthold Tenancies (ASTs), as the term implies, are quite short, so the issue of a rent increase with an existing tenant does not arise. It then becomes a less contentious process to set a new rent with a new tenancy.

However, some shorthold tenancies last for many years, and Covid may well increase tenancy lengths. There is no legal time limit when the tenancy becomes periodic, or the number of renewals that can be signed, so rent increases do become an issue when a new rent needs to be agreed in a long-term – landlords or their agents then need to become involved in processing a rent increase.

With all ASTs rents can only be increased after the initial fixed term has ended, unless:

1. A rent increase or formulae for increase has been agreed beforehand and stated in the agreement

2. The tenancy agreement contains a rent review clause.

3. The landlord and tenant come to a mutually agreed rent increase.

Most standard AST agreements have a rent increase clause setting out the procedure for rent increases, which by definition is then agreed at the start of the tenancy.

If the tenancy agreement is silent on the matter and the tenant objects to an increase, then, if the landlord still wishes to pursue the matter, he or she has recourse to a procedure laid down in the Housing Act 1988.

This procedure was originally intended for use with tenants on an Assured Tenancy (AT) but it can also be used for ASTs.

Assured Tenancies (ATs) give tenants security of tenure, meaning landlords cannot use the s21 eviction process and must therefore have a means of increasing the rent for tenancies, most of which last for a very long time. Section 13(2) of the Housing Act 1988 makes this possible, after the initial fixed term has ended, by serving on the tenant a Section 13 Notice.

Safeguards

There are appeals safeguards for tenants in the process. The rent tribunal complaints procedure will review the cost of renting similar properties in the area and what the landlord could charge if a new tenant was renting the property. It’s important for landlords to try to negotiate and stay on good terms if you want a long-term arrangement with your tenant and try to avoid this.

Currently, until such time as the Section 21 process is abolished, and taking into account the current extended notice periods, landlords of AST’s with the fixed-term ending have an alternative method of increasing the rent: rather than going through the rather protracted process using s13(2), they can simply offer a new fixed-term tenancy at an increased rent, failing which the tenant gets notice that the landlord will be applying for a possession order.

It may seem harsh to resort to these tactics, but it’s a commercial reality – if your lettings business is to survive long-term, rents must be kept in-line with market rents and running costs.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Can I increase the rent? | LandlordZONE.

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Continued imbalance of supply and demand is a concern

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Propertymark’s latest Housing Market Report has indicated that a record 32% of properties sold for more than the original asking price. This smashes the previous record back in May 2014 of 19%.

Propertymark Chief Policy Advisor, Mark Hayward

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Right to see payslips if tenant in arrears?

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An elderly family member has rented a property to a council tenant for 20 years plus. My relative hasn’t managed it well and is owed £8,000 in missed rent payments. As my relative is ‘slightly’ at fault (in my view)

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Peers savage government’s ‘too timid’ Leasehold Reform Bill

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The government’s Leasehold Reform Bill making its way through parliament was heavily criticised during its second reading in the Lords yesterday by peers unhappy about its weaknesses and unintended consequences, one describing it as ‘lipstick on a pig’.

The bill is designed principally to abolish escalating ground rents and the huge costs that they can create for leaseholders, so much so that a market for long-term residential leasehold investors has sprung up, such are the profits involved.

But the legislation, which will usher in the most significant changes to property tenure in 800 years, will only apply to new leaseholds once it becomes law, which is not expected until 2023, government minister Lord Greenhalgh (pictured) confirmed.

Baroness Pinnock highlighted how this would create a two-tier property market for leaseholder.

“The failure of the bill to deal with past abuses of ground rent and service charges will leave existing leaseholders in a worst position because it will create a housing market when new-builds with zero ground rent will be far more attractive than those with spiralling ground-rents,” she said.

“Who in their right mind is going to purchase a property with those extortionate additional costs?”.

Also, many peers tackled the government for being too timid in its reforms, which will enable the leasehold system to continue albeit reformed.

Others, including Lord Stummel, said its measures should be implemented now and not in 2023.

Many speakers said it was time to abolish leasehold entirely, arguing that freeholders and managing agents would always cook up new ways to get around the restrictions.

“Buildings should be run for the benefit of those living in them and not the freeholder,” said Baroness Andrew (pitured).

Former chancellor Lord Hammond (pictured, below) also picked up on a key problem with the bill – that its definition of ‘rent’ was too vague and would impact the wider market.

He pointed out that the definition of rent will prevent properties being rented out on medium-term or long-term leases including, most crucially, the build-to-rent developers and investors who often lease their properties to management companies.

Watch the debate in full.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Peers savage government’s ‘too timid’ Leasehold Reform Bill | LandlordZONE.

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New global guidance for Land Measurement

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New guidance on the measurement of land for development projects such as new housing and commercial development have been published by the Royal Institution of Chartered Surveyors 25 May 2021, which defines common measurements used across the built environment and associated metrics such as density.

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The number of homeowners taking in lodgers triples over 10 years

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Research into the value of the tax relief claimed using the Rent a Room scheme shows huge take-up.

Since 2009, the total value of relief declared as a result of the government’s Rent-a-Room Scheme has increased by 187%, according to the latest available MHCLG data.

Launched by the Conservatives in 1992 the ”Rent a Room” scheme was intended to encourage people to utilise their otherwise unused spare rooms and provide much needed accommodation for workers and students, encouraging mobility of employment and education.

The original tax-free earnings allowance for lodger-earnings was £4250, increased to £7,500 in the 2016/17 tax year, and this amount is still the current allowance. The earnings must be declared to HMRC but there is no tax payable for annual earnings below the allowance.

Analysis of the data by property management service provider, Houst, has revealed the record amount of £140,500,000 was declared over the 2018/19 period, up from £48,800,000 in 2008/09.

The data demonstrates a considerable rise in the number of homeowners taking in lodgers over the last ten years, and those figures do not take into account anyone taking in lodgers and not declaring this to HMRC.

The increasing number of Rent-a-Room declarations to HMRC indicates that more people are recognising the benefits of earning extra income from taking in a lodger – as a live-in landlord, you are allowed up to two ‘non-family’ lodgers before your property can be classed as a HMO, with all the additional regulations that implies.  

Covid push

Houst speculates that this trend is likely to have intensified dramatically since the onset of the Coronavirus pandemic, the period of time for which MHCLG data is currently unavailable.

Taking in lodgers received a dramatic boost in numbers during the economic crash and great recession of 2008 and has since continued with the popularity of letting out spare rooms with the advent of Airbnb type renters. Utilising spare rooms as a simple means using new technology to provide an additional income stream has now become a major industry in itself.

Tom Jones, Co-Founder and Chief Commercial Officer of Houst, says: “Thanks to the digital solutions of the last decade, homeowners are now able to fill their properties quickly and efficiently, whether that be a spare room or a second home, and generate a secure and regular source of income. Given the enormous economic uncertainty, people are increasingly viewing personal assets as a vehicle to drive up their incomes by turning their homes into money-making properties.

“The reality of the pandemic is that it has forced many to reconsider their living arrangements and look directly at how we occupy our homes and how exactly they could be used to stave off economic concerns. The pandemic has transformed how millions see and use their homes, leading many to reconsider its potential as a stable driver of income.”

Warning

Anyone considering renting out a room in their home should be aware that permissions may be necessary: from their landlord if they are a leaseholder, from a mortgage provider and from their insurer.

There could also be considerations for the impact this may have on council tax liability, and any benefits the lodger landlord is claiming.

In addition, the property must be safe, free from and hazards that could cause injury. Also, the landlord must be letting out his or her own residence and share facilities such as bathroom and kitchen with the lodger. The property must meet certain general letting requirements including annual gas checks and five yearlyelectrical system checks, and all the furniture must meet the general letting safety standards.

Finally, lodgers come under the Right-to-Rent regulations, where the landlord must check the immigration status of their lodgers. It goes without saying that the income from the lodger arrangement must be declared on the next available tax return.  

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – The number of homeowners taking in lodgers triples over 10 years | LandlordZONE.

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Leading lender says landlords must be given more time to complete EPC upgrades

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A major mortgage lender has backed calls for landlords to be given more time to upgrade properties to the new EPC minimum standard.

Richard Rowntree, MD of mortgages at Paragon Bank, says the proposal that all new tenancies must have an energy rating of at least C by 2025, and all tenancies by 2028, puts too much pressure on landlords, particularly following coronavirus, and could threaten already strained stock levels. 

Last November, The Lettings Industry Council (TLIC) wrote to the Ministry of Housing, Communities and Local Government, urging a more staggered approach to improving energy standards in the private rented sector than those put forward by the Department for Business, Energy and Industrial Strategy (BEIS).

Says Rowntree: “Under TLIC’s proposals, all tenancies would have an EPC rating of C by 2030 – only two years later than the BEIS proposals – and improvements would be phased. This a sensible approach that recognises the need to improve the carbon footprint of the sector, whilst acknowledging the damage that inflexible proposals could cause.”

TLIC chair Theresa Wallace (pictured) tells LandlordZONE that she hasn’t had a response to its proposal but says: “I an email BEIS recently to ask what their next steps were following their consultation of this.

They responded to say that they will publish a government response in due course, which would set out more details on next steps.” She adds: “I have also asked BEIS to look into electric heating which apparently doesn’t score so well on EPCs yet it’s meant to be more energy efficient.”

Rowntree adds that landlords will need finance and innovative solutions to cope with the changes. “We have made a start in this area with the launch of our 80% LTV rates for properties with an EPC rating of A to C, encouraging landlords to invest in more energy efficient stock.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Leading lender says landlords must be given more time to complete EPC upgrades | LandlordZONE.

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Landlord loses appeal over £10k fine for HMO run via ‘sham tenancy’

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A rogue landlord who created a sham tenancy agreement to dodge HMO rules has been fined £10,000.

Tanvir Hussain had appealed the original fine from Islington Council but this has been thrown out by a First Tier Tribunal which ruled that he had named only four of the six tenants on the tenancy agreement to circumvent HMO regulatory provisions.

The house in Stroud Green Road, London, had been let under a 12-month assured shorthold agreement in 2015 to Mr Millen, Miss Johnston, Miss Harvey and Miss Morris.

The freehold was owned by Hussain’s brother, Jangeer Hussain, and managed at the time by Liberty Estate Agents.

During an Islington Council inspection in 2019, it found there were six occupiers and discovered breaches including blocked escape routes, poorly maintained fire alarm and no notices displayed for escape routes.

Unlawfully

Hussain told them that except for Mr Millen and (possibly) Miss Curd who lived with him as a single household, the other occupants of the property were there unlawfully.

He admitted he operated a “light touch” in relation to his duties as the landlord – despite operating a commercial business from the ground floor premises. He said that except for receiving the rent from Liberty, he did not visit or inspect the property.

The tenants said the tenancy had originally been granted to six people and that there were five bedrooms.

They said Liberty had insisted that only four tenants were named on the agreement and it advised them that there was no limit on the number of people who could live there. The Tribunal agreed that Liberty was acting on Hussain’s authority, aimed at circumventing HMO rules.

It reduced the original £14,999 fine because seven of the eight breaches were resolved.

Read the tribunal decision in full.

Read more about HMOs.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Landlord loses appeal over £10k fine for HMO run via ‘sham tenancy’ | LandlordZONE.

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Sheriff Rides in to Tackle Transfer Times of Orders for Possession

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As Sheriffs, we are continuing to monitor transfer times of Orders for Possession from the County Court to the High Court for landlords, and other claimants who want a faster and more effective transfer system.  So, we will be sharing our research with the Property 118 community

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