Why should you, a responsible landlord, use an Agent? Plus a couple of updates for you, one industry and one legal.

Well it has been an interesting month for landlords hasn’t it? Or are you simply just not aware of what is going on?

I wouldn’t be at all surprised.  One of the biggest downsides of the property industry is that it is run by government. Now don’t get me wrong, I believe passionately that this industry should be properly regulated and professionally run. Just currently it is not!  We currently have (I am told by the Sunday Times), over one hundred and fifty acts of parliament and a further four hundred regulations!  Yet we don’t have to be regulated. I think that is rather silly, don’t you?

The trouble is that the legislation that is passed, is often very badly communicated to both the industry providers (Agents and Landlords) as well as the public in general, but more specifically tenants.  And quite often the consequences of their actions have generally not been properly thought through.

Just wait until you read my first update, that indeed is a classic case where, if you follow the governments advice, you could possibly fail in your attempt to get your tenant to leave, as bizarrely their form is not yet fully legal!  Why? Because the government has not got either the money, or the infostructure, to roll this information out and because our industry is unregulated that means it is normally chaos to find out what is happening. 

This is where your agent can be invaluable to you.  You pay agents for a reason; the good ones are there to help you. Indeed, we have saved our landlords literally millions of pounds over the years and that is why they come back to us. Time and time again!

If you have ever read my blogs before, you will be aware of just how complicated this industry is, the issues are quite simple.  Difficult legislation, poorly communicated.  Making it virtually impossible for a landlord to manage his property legally, which of course leaves him (or her), in a very financially unstable situation. Most of the fines, penalties and sanctions these days are unlimited (or often well over £5000 per offence mark) and they now most also carry a statute of limitations, giving the tenant (or claimant), six years to make a claim against you!

This is why a good agent is worth their weight in gold!  Always look for an accredited agent. That means they have access to the best training available, the best legal helplines and are most likely to keep you legal and profitable because they know their industry.

We have stringent new data laws that came in to force in May 2018 where you have to adhere to very strict protocols, not only with the data you have but also how you store and use it. 

To be fair, the government are working hard to regulate this industry and the main buzz word for the last two or three years has been “Landlords, are Businesses”.  However, what this actually means is that the government now regards being a landlord as having a business. Although that may raise your profile within the community. It also leaves you wide open to larger penalties. i.e.  If you fail to do a Legionella Risk assessment” on your property at the appropriate time and somebody was to unfortunately die of Legionella poisoning, by law you are liable to a £20,000 fine.  However, as you are now regarded as a business, the injured parties (partners, husbands, wife, parents etc.), now have the right to sue you for “Corporate Manslaughter” not just negligence.  So now you could be talking £millions!

My first update is a legislative one and I am going to pass this on to you, the way it was sent to us by our Industry legal helpline (TFP), including the links to help you, should you need to issue a Section 21.

It is really important if you are managing a property, that you read this update,  as the law (not for the first time) is proving to be very unhelpful and indeed mirrors my thoughts on how the government are managing the private rented sector.

Please note this information ONLY applies to section 21 notices for England.

You will have undoubtedly heard in the media about “the new section 21 notice”. We are emailing you to explain why TFP have not told you there is a new one to download as you subscribe to our documents.

On 8 August 2019 The Ministry of Housing Communities and Local Government (MHCLG) “made changes to the Form 6a”, However, as the form 6A is a notice prescribed in law, there is no new section 21 notice in law until a new statutory instrument is passed.

This means that the current Form 6A on the gov.uk website https://www.gov.uk/guidance/assured-tenancy-forms#form-6a is not a valid prescribed form and should not be used and you should continue to use the form 6A in your Forms regulations, or use the link below.

The TFP Form 6A uses the exact wording of the regulations and ignores the changes MHCLG have been making. This is because we can be sure the one in the law has to be accepted in the courts whereas you would be relying on the goodwill of the court to use any other version. This is an unnecessary risk and we are looking after you best interests by keeping to the version in the law. For this reason, we do not recommend using the version of the form on the link above.

The correct link to the legislation that prescribes the form is: The Assured Tenancies and Agricultural Occupancies (Forms) (England) (Amendment) Regulations 2019.

I think that says it all 😊!

The second update although of national interest, is primarily for landlords with properties in Newcastle.  The government have just sensationally blocked Stoke-on -Trent Council’s application, for a similar Licensing scheme to the current Newcastle council’s plan.  This means as it stands that it is unlikely that Newcastle can progress their scheme without government approval.

As you are no doubt aware, in November 2018 Newcastle City Council went into a “Public Consultation Period” with its landlords and the general public.  Where they wanted to apply both additional and supplementary licencing, to all rental properties, within the city.  This basically, means that every property (in certain designated areas) in Newcastle, would require a licence.  In my opinion a great idea but in reality, the facts appear quite different.

Currently all 5 bed H.M.O. properties are already licenced so these measures are in addition to the current situation.   It is worth noting, that an HMO (House of Multiple Occupation), is a property occupied (rented) to three or more unrelated people. 

From a proposed date next year, properties would be subject to additional licencing (That is three and four bed only, as five or more are already licenced), at a proposed price of £750 for a five-year licence.  The one and two beds in central Newcastle would be subject to Selective licensing at £650 for a 5-year period.  This would bring the council (at my last estimate), an additional revenue stream of £2,585,500 per year for five years with the total £12,927,500 being paid up front!  Yes £12Million!

Although the rationale behind this scheme given by the council was to raise the standard of Landlords and their rented properties.  This argument fell down when they said that they were implementing this initiative as they had received over one thousand complaints regarding bad landlords in the city. However under questioning from the floor, then admitted that they had not actually prosecuted one landlord!  You would not be alone in thinking that this was a money generating exercise and not a “standards” issue at all. Perhaps if the council had prosecuted those that deserved to be penalised, they may well have got the money they so obviously need without trying to penalise the good landlords?

There is a strong feeling of opinion within the landlords and industry peers, that this initiative is going to have to be thought through again in the light of the governments refusal to allow another similar licencing scheme. I have also heard of other challenges to other councils proposing similar arrangements, saying that the schemes are not actually legal. More information when we have it on that situation.  So potentially good news for Newcastle landlords and we will continue to update you as we receive more information.

If you would like to discuss your rental, or property sales needs, both buying and selling, please feel free to contact me at my Durham Office on 0191 212 6970. Perhaps we can advise and help you.

Landlords Relax. YOU ARE NO LONGER ALONE! Labour have now decided to tax all decent hard workers a lot more, not just you lot!

So, you think it’s just Landlords that are having a tough time?  Well think again!  If Labour get in at the next general election, all of us need to make sure we are all completely future proof, or we will have to kiss goodbye to our investment income for EVER and that very well could include our own homes!

Don’t take my word for it, here is a brief summary of what Labour have in store for you as a hard-working responsible individual, plus some of my thoughts and comments.  Finally, I have also added a link to the actual Labour document that really does spell this nightmare out for you, so you can see for yourself.

So, just before you start to read this can I just make one thing absolutely abundantly clear, in order to avoid any stereotypical responses on this article.

 I am not impressed in the least by ANY political party currently.  I think on the whole, they all are self-centred, egotistical, individuals, who are more interested in their own self-preservation rather than in the best interest of the people they represent.  I think that is self-evident to anyone that has listened to the news and any political programme, especially about Brexit in the last few years.

 However just like everything else in life there is a scale, normally rated Good to Bad), only in this particular case, I would suggest “Bad to Worse!”   So back in your box Corbynistas!  I am not a fan either of Conservatives, Lib Dems, Brexit or Green parties either.  Although perhaps a wry smile for the Raving Loony party simply because their name more honestly reflects the state of politics in the UK today!

If we have a general election, ALL HOME OWNERS may want to take note of Jeremy Corbyn’s plans to scrap council tax and replace it with a ‘progressive property tax’.

If Labour wins, Comrade Corbyn, would ensure that those with larger (i.e. family) homes and gardens would be faced with a staggered higher rate of taxation for each of the top four property bands by value.

So, now it’s no longer just landlords, they want to penalise. This policy is clearly directed at anyone who has the audacity to have worked hard and been reasonably successful. Especially those who have shared some of the fruits of their hard work with their families. Like a nice house, with a garden, to enhance the “quality of life” for your family. If you fit these criteria, you are now “Fair Game” to the Labour party.

In a slightly more confusing move, the report says that Stamp Duty Land Tax should be phased out for those buying homes to live in themselves, and capital gains tax for second homes and investment properties should be increased.

It also proposes that tenants will be exempt from council tax and that only property owners will pay, but unsurprisingly, they make no comment whatsoever, about how that would affect rents.

Well that just about takes the biscuit doesn’t it? These politicians, don’t even have the basic common sense to realise that the letting industry and that includes ALL landlords including Housing Associations, are in fact businesses.  Indeed, current legislation even states this fact by actually referring to Landlords in legislation as a business. However with regard to the landlord paying the council tax, I think you will find that this doesn’t apply to Council Housing.  Why? Because councils are part of government and therefore exempt. 

I believe the communist mantra is;”

Everyone is Equal, except some are More Equal than others?

Once you understand that.  You can understand that if a business has additional costs forced upon them, then the only way they can survive, is to increase its prices (THAT’S RENTS JEREMY)!  So, what the labour party is actually promoting, is hurting their own core voters, yes, the most vulnerable ones, increasing the chances of actually making them homeless. HOW VERY CARING OF YOU JEREMY!

Although JEREMY will tell you that they can’t increase prices because he is capping rents.  Although he hasn’t mentioned that if he caps rents, landlords can’t make a living from their investment so they will stop renting and sell up.  The result of that is  that there will be no rental properties other than council housing and they can’t survive without the private rented sector. There is of course Social housing but they are landlords too so they are going to be hit with Council Tax according to this report, So  I think you may well be looking at the end in Social Housing Associations as well.  GOOD ONE JEREMY, YOU ARE REALLY CAUSING HAVOC NOW!

So we can now see that an increase in rents could now increase the amount of homelessness in the UK and THIS IS WHY JEREMY.  Three main scenarios here. 

Firstly, because the less well-off people will no longer be able to afford the rents. OR. The housing market will crash because landlords cannot afford to maintain rents that have been capped!  OR Labour are going to have to dramatically increase the amount of Housing Benefit that is currently being offered to meet the changes they have caused.  Oh and by the way, as no one is paying tax because their businesses are not generating income, Labour won’t have any money to increase the benefits!

This is not just a nightmare for landlords either.   As we have discussed earlier ordinary homeowners could really struggle as well, just to keep up their mortgage payments whilst running at a loss, because Labour have increased their council tax to cover the stamp duty given away to other owner occupiers. This means they may well have to sell up and downsize.  So, prices will inevitably fall dramatically (A HOUSING PRICE CRASH JEREMY). 

It is also worth noting, that this scenario is probably the most likely outcome, as the vast number of homeowners have mortgages.  Sadly, pretty big mortgages, most with a very high “Loan to Value” (SO VERY LITTLE EQUITY JEREMY)!   This means that there will be a very high percentage of home owners in negative equity so they cannot downsize.  If they sold they COULD LOSE EVERYTHING JEREMY!

Now the effect of this Labour policy is gathering momentum there is something else to consider.  As Labour have now created an environment where “Everyone” now wants to live in a small; property (YOU KNOW JEREMY, THE ONES WE USED TO CALL STARTER HOMES? So all this demand, will dramatically increase the lower priced properties to spiral upwards in price. THOUGHT OF THAT ONE JEREMY!

Indeed, what Labour will have succeeded to do, is to have made the lower priced property from a starter home sector into a very competitive market indeed and the higher priced properties will become un-affordable. A bit like the “Holiday Home argument where richer incomers purchase local housing as second homes driving the prices well above what the locals can afford.  

Only instead of second holiday homes it will be the families with larger houses and gardens that want the smaller houses so they pay less tax (or more realistically they cannot afford to pay the higher Labour taxes).THAT MEANS YOU HAVE JUST CRIPPLED THE HEART OF THE LABOUR MOVEMENT JEREMY!

These plans won’t bring any rays of sunshine to hard pressed landlords (or agents) either, who market what we would have once described as “Normal’ Family Homes”.

All of these ridiculous recommendations come from within Labour’s “Land for the Many” report, which aims to “Change the way our fundamental asset is used, owned and governed.”  I believe their way of turning the UK into a Communist style State!

The proposals within the report are for the Labour Party to consider, as part of its policy development process in advance of the next general election.

James Brokenshire, our current Housing Secretary, said, “These proposals are extraordinary and deeply damaging in equal measure. This tax bombshell for families would mean family homes with gardens paying far more and higher taxes on pensioners by abolishing the single person discount.”  So, it’s not just the BBC either. By the way, my monies on Corbyn promising to reverse that policy if you vote him in! He hasn’t got any money now remember it is just another cheap political lie!

This “Land for the Many” report, also believes major reform is needed in the PRS and actually states.  “We recommend major reforms of the Private Rented Sector” it goes on to say for example, “tenancies should be open-ended and landlords should lose their power to evict a tenant who have not broken the terms of the tenancy agreement for the first three years of the tenancy agreement and should have to provide grounds for eviction after that point.

They also said that there should be a cap on annual permissible rent increases, at no more than the rate of wage inflation or consumer price inflation (whichever is lower). We propose that Buy-to-let mortgages should be more firmly regulated and restricted.”

They really have no idea of what goes on in the real world have they?  Landlords only want nice people who will look after their rented properties and pay their rent on time.  Is that not too much to ask?  As long as they wish to keep their property, they want to maximise their investment.  Every time they change a tenant, they pay a fee (twice as much now thanks to the conservative party)! Why on earth would they want to serve a notice on a tenant that will cost them additional fees unless the tenant wasn’t paying his rent, wasn’t looking after the property, or because he was selling the property or needed it for another purpose (family etc). It doesn’t make sense!

Well I think we ought just to summarise here.  A government doesn’t actually have any money of their own. They have some of our money that they have harvested through taxation (Income Tax, VAT, Stamp Duty, Council tax etc.). If people are losing their homes because they have been driven to by government policy, or if landlords have to sell up because they cannot afford to let then there is no income tax to pay so THE GOVERNMENTS POT OF MONEY WILL REDUCE JEREMY, SUBSTANTIALLY!  So, they will have to borrow more money, increase the debt of the country and of course send us into bankruptcy!

That’s why in my opinion, NO ONE SHOULD VOTE LABOUR! It is such a great pity though, that the rest of the UK political landscape is not much better but definitely better than this!

Please Read the report for yourselves.  I have and someone actually commented to me, that “It is VILE COMMUNIST PROPAGANDA”! If only I could recall who.  Or indeed how many!

http://labour.org.uk/wp-content/uploads/2019/06/12081_19-Land-for-the-Many.pdf

If you require any advice on letting, require your property to be sold, let or professionally managed in the Newcastle, Tyne & Wear, Northumberland, Sunderland or Durham areas. Please contact me at my Durham Office, on 0191 212 6970, or e-mail me at; john@acornproperties.co.uk. Thank you for reading, I trust you found it of interest. J

April 2019 Property Updates

Rather than re-write an excellent article, I am treating you to one of our own company’s legal helpline updates. They write various articles on our companies behalf. They also provide us with a dedicated rental helpline and provide us with a regularly updated latest state of the art tenancy agreements, to give our landlords what we believe to be, the very best peace of mind available in our challenging market place today. It also does include the usual (virtually mandatory these days), disclaimer. Not for any other reason there are still sadly folk out there that expect everyone to look out for their interests and make no attempt to run their own businesses professionally and take on board their responsibility. They will instead, often try to blame anyone else (people or companies), who try to support them as a client or customer. Thankfully we have very few (if any) of those types of clients left (at least we hope we have got rid of them all so far ), but as we expand our business there is always that chance. The deal from our company is still the same for all landlords or investors in the North East, who want to deal honestly, fairly and within the law. If you would like to discuss your rental needs or require advice in purchasing investment properties, or discuss the market with a view to purchase. Please feel free to contact me at my Durham Office on 0191 212 6970. Enjoy the article. John

Just to illustrate how far our sphere of influence reaches, this week alone, we have been (and continue to do so), advising Ex Pat investors in Cyprus and Spain, to review, aid and add to their investment portfolios in the region.

PROPERTY MATTERS

0191 212 2020 Acorn Properties (Jesmond) Ltd Spring 2019

DRIVING OUT ROGUE LANDLORDS AND AGENTS

The slew of new legislation either in force or in the pipeline, appears to be geared to driving from the market both rogue landlords and rogue agents. This is aimed at driving up living standards and improving conditions for UK tenants.

Tenant Fees Act 2019

The Chancellor of the Exchequer announced the Government’s intention to ban fees to tenants in the Autumn Budget 2017. The law is now passed and await implementation, highly likely to be 1st June 2019.

Section 1 deals with prohibitions on landlords, section 2 introduces the ban for agents. The separation is deliberate as some of the rules are different e.g. the landlord may still serve a section 21 even if the agent takes a prohibited payment.

All fees and payments required by the landlord or agent are prohibited unless they are identified in Schedule 1. There are 10 permitted payments which mercifully includes rent, utilities and council tax. A 5 week deposit is the maximum chargeable, as well as a 1 week holding deposit which is subject to strict treatment rules found in Schedule 2.

Default payments are limited to the loss of keys or other security device and to interest on late payment of rent. A payment for damages is also a permitted payment subject to there being a breach of the agreement.

After the coming in to force of the Act it will be an offence to even put a prohibited payment in a tenancy agreement. Taking a prohibited payment will also be an offence, although there are transitional provisions for tenancies granted before the Act comes into force. Rules around the repayment of prohibited payments and enforcement are set out in various sections through the Act. The penalty for a first offence is up to £5,000. A second offence in section 12 is either a financial penalty up to £30,000 or a criminal conviction and an unlimited fine, which may lead to a banning order. The consequences of getting it wrong are serious.

Where a landlord is guilty of taking a prohibited payment, the section 17 prohibits the landlord from serving a section 21 notice till the prohibited payment is refunded.

The Act applies to assured shorthold tenancy agreements and licences but not long leases and contractual tenancies.

Homes (Fitness for Human Habitation) Act 2018 (the Act)

The vast majority of landlords are keen to ensure that their tenants are looked after and that the property is well maintained. When it goes wrong, however, the tenant has a limited and protracted route to get disrepair remedied. This new Act which came into force on 20th March 2019 updates the Landlord and Tenant Act 1985 (LT85) and gives the tenant the right to take a landlord to court directly for disrepair where they may seek specific performance i.e. to get the work carried out, and compensation. As action will be taken through the courts and compensation is available we can expect to see ‘no win, no fee’ lawyers chasing a share of any compensation awarded.

There is an implied covenant within each tenancy agreement, to which the Act applies, that the property is fit for human habitation at the start and throughout the tenancy. There is a further implied covenant by the tenant that the landlord, or someone authorised in writing by the landlord, may inspect the property to inspect its condition and state of repair. This covenant is subject to the tenant being given 24 hours’ written notice with the visit at a reasonable time of day.

Landlords will become responsible for disrepair upon notification although in the case of common areas, for instance in an HMO, the landlord will be responsible immediately the disrepair occurs.

The property will be considered to be in disrepair and if not reasonably suitable for occupation if it is defective in any of the matters within section 10 of LT85 including the 29 hazards from the Housing Act 2004.

The Act will apply to all new tenancies granted after 20 March including statutory periodic tenancies arising. A transition period of 12 months applies to existing statutory periodic tenancies unless a new tenancy arises.

Some exemptions are listed in section 9A(2) of LT85, however, the importance of maintaining a regular and documented inspection routine and responding promptly cannot be overstated.

N.B. This newsletter article, is produced and distributed on a limited basis. Whilst the information researched and provided is believed to be correct, neither the sender nor anyone involved in the production of it, accepts responsibility for its accuracy.   © TFP

When are we going to stop penalising the good guys and let the bad guys pay for a change?

James Brokenshire, The Secretary of State for Housing, has made a
shock announcement recently, significantly widening the redress scheme membership including landlords, student housing providers, new
homes developers and park home operators.

All private landlords in the UK are to be forced to join a redress scheme, the government has revealed, scooping up over an estimated 1.5 million
landlords into regulation. The announcement is part of a wide-ranging
package of regulatory measures revealed by Secretary of State for
Housing James Brokenshire, following last year’s consultation on the
subject.

Mr. Brokenshire plans to “bring forward legislation that will require all private landlords, including providers of purpose-built student housing and park home site operators, to belong to a redress scheme,” he says. “This would ensure that all tenants have access to redress services in any given situation and that all complaints can be addressed.”Other measures alongside this, include requiring all freeholders to join a redress scheme
regardless of whether they use a managing agent or not. Also, all new
homes developers will have to join a scheme too, and the minister also
plans to create a specific new homes ombudsman.

Lastly, Mr. Brokenshire is to set up both a one-stop shop for housing
complaints, regardless of tenure to be called the Housing Complaints
Resolution Service, and a single code of practice to cover all the housing sectors. At long last, the government are listening to the common-sense brigade within the industry, who are tired of trying to regulate the
market simply by adding rules and regulations, often not communicated
so the industry is unaware of their obligations. The first thing before
anything else both logically and ethically, is the requirement to register
every landlord.  It is pointless having a register of rogue landlords, if you don’t know (and can’t find) a definitive list of landlords in the first place, how do you know which ones are rogues other than as when they are
reported? What we need is an accelerated process and I have just the
idea to make it work.

My suggestion would be to have a free registration with the minimal of a redress scheme (perhaps a one-off fee of £50). Then for landlords that do not register, an automatic fine of £5,000 for non-compliance. If a “Crime Stoppers” style department was set up where the public could
anomalously report landlords for not being registered and receive a
reward of say £1000 for every successful claim.  The remaining £4000
would more than cover the administrative cost of the department plus
any court expenses that required payment,prior to any prosecution. 

However, it is well worth remembering, that any landlord who has failed to register their details, is they are more than likely going to come under
the “Rogue Landlord” banner anyway, so all of their properties should
be inspected right away. This exercise will no doubt bring in considerably
more money in further non-compliance fines. The lovely part of this
initiative, is that from a government point of view it is a “Self-Funding”
exercise and even better it is the bad landlords NOT the good landlords that are providing the income stream (money), to run this operation.

It is not about time we started exercising some common sense here. This is an ideal opportunity to get the property market back on its feet at last. Especially at a time when we as a nation appear to be let down time and
time again, by politicians, who appear to be driven buy their own
agendas, rather than the will of the people who voted them in, in the first place? Well it’s an interesting thought, don’t you think? If you would like to discuss your letting needs, you can call me at my Durham Office on;
0191 212 6970 and I would be happy to do so.  

Just who can you trust these days?

I am often quoted as saying “‘we are Landlords 1st choice 2nd time round”- that’s because landlords unfortunately, are quite often swayed initially by low fees, local market presence, flashy offices, magazine ads etc.  but these aren’t all necessarily signs of a quality service and when things go wrong, their requirements change to reviews, awards and associations and that’s when we are hard to beat. NB. Although we do have lovely offices 😊!

It was finally acknowledged in the Sunday Times “Landlord Quiz” in the home section on February 4th this year, that there are now 150 laws and 400 regulations in the rental property sector, so if you want to manage your own properties, Good luck to you, but I would strongly suggest, you at least liaise with a properly regulated agent for the letting of your property.  Remember, good agents are more likely to keep you in the loop of what is happening and what is required by a landlord in this highly competitive and regulated market place.  With huge fines (and prison sentences),  on offer for Non-Compliance, it is often simply a commercial decision to use a specialist to save you money.  I was horrified to hear that if someone dies of Legionella  whilst in your rental property and it is identified that the infection was caused by your water system and you haven’t done the Legionella Risk Assessment (Legal requirement from May 2013. Under the 1974 Health and safety Act.  Amendment L8 “Legionella Risk Assessment), that you can be fined by the government up to £20,000!  Now I too agree that the likelihood is small (although 380 people apparently died of Legionella disease in 2013 in the UK).  However, when I rang our legal helpline, I was not expecting the reply I got.  “£20,000, that would be very lucky.”  “Pardon?” I said.  “Well think about it logically” They said “The act specifically mentions landlords as “Businesses” therefore if some one was to die in your property and you had not taken any precautions specifically required by law.   That is “Corporate Manslaughter” and you could be sued for £Millions!”  If we are managing your property, we do the Risk Assessment for you (and do not charge extra for this).  If you are managing your own property(s) and we are marketing it for you. On the acceptance of a let we send you a “Confirmation of Let “outlining your responsibilities and in addition we supply a “Legionella” Risk Assessment form and a guide of how to fill it in.  We want our clients to be able to sleep at night in the knowledge that their agent is looking after their best interests.

So the first thing to mention is; that whoever you are dealing with,  to either let your property and/or manage it, you need to be confident that they have your best interests at heart.  Why?  Well at least this bity is very simple and most landlords forget all about it!

Because it is your name that goes on the tenancy agreement not that of your agents and if anything is found to be either; not quite right, non-compliant, or downright illegal, it is the landlord who is going to be prosecuted NOT THE AGENT!  Only if they manage your property their address will be on the agreement, but only as a “Care of Address), It is still your name and therefore, it is you that are responsible in law! 

Of course, if it was serious you would have redress, but if your agent is not accredited, i.e. they are just an ordinary Ltd company (which only limits the liabilities of the directors of that company), so not independently regulated with the correct insurance cover, indemnity, public liability, client money protection etc.  Then what is to stop them from simply going out of business and leaving you high and dry?  We have seen this happen so many times.

We are not the only decent letting agent in Newcastle, Durham or for that fact, the North East, there are good agents who are able to help you. They will be part of a regulated body (NALS, ARLA), they carry Client Money Protection insurance, as well as the other policies and they will know what they are doing.  However, at the last count there were nearly 200 agents in Newcastle alone and most of those do not present such credentials.  Yes, they may even be a little cheaper to use, but not always. Although in the long run, having read this short article.  I will leave that decision entirely up to you.

Well that is one law taken care of, only 149 more to go and of course another 400 regulations! Good Luck at least you now know the facts to make your decision.

If you require any further information or just want to chat about your letting needs, please feel free to call me at my Durham Office on 0191 212 6970 and I will be happy to discuss.

Clarification of Grey areas in current Rental Property Legislation

I have had some very interesting and fruitful conversations with Newcastle City Council recently.  Following some discussions regarding recent legislation we had discovered some potential “GREY AREAS” that needed clarifying, as they could have severe repercussions for non-compliance.

Our main concern was regarding the recent Carbon Monoxide (CO2) regulations which states that, a Carbon Monoxide detector must be present in any property that has solid fuel heating.

Where we identified a “grey area” was that (in particular), there are many thousands of “Tyneside” flats in the Newcastle area that have open fireplaces. These fire-places are 99% aesthetic as the properties all have gas central heating and our tenancy agreements clearly state that tenants or guests are not allowed to use the fireplace without the written permission of the landlord.  However, in principle these fire-places could still be used as they have not been blocked off.  We suggested that in addition the landlords could put a notice in the property in addition for want of a better expression, to provide “Belt and Braces” approach.

The council thought that was a good idea, however they also confirmed that;

“If the fireplace was not capped off (So potentially despite notices tenants could still start a fire), that the council would expect a carbon monoxide detector to be present, as that is the legal requirement.”

So please be aware that if you have such a fireplace that it needs either to be blocked off or you do need a Carbon monoxide detector fitted otherwise you could be fined for non-compliance.  Please note that is based on the fact that no one has actually used the fireplace. If you have an incident resulting from the fact that there was no detector there then the fines we were informed, would be considerably greater!  So please act now and be pro-active to avoid any potential incidents and / or, financial penalties.

The second query we had was regarding an article on HMO’s on the council website

“HMO Licensing guide for Landlords August 2018”

On page 19 12.3.2 it says;

“Demand references from persons who wish to occupy the house before entering into a tenancy. The reference must be kept for the duration of the licence” i.e. Not just the let.

We are still waiting for final clarification on this, but we are led to believe based on our conversations that this is a legal requirement for HMO’s so please be aware that this is the case. The consensus currently is that the referencing refers more to the character and previous conduct of the tenants and we are just waiting to see if there is a financial element to this as well as it could be argued that if the tenants do not have the ability to pay, that they could be suffering stress as a result.  We will keep you in the picture.  If you would like to discuss this matter or require any help in renting your property(s) then please call me at our head office (Mondays and Fridays) in Jesmond on 0191 212 2020 or at our Durham Office (Tuesdays Wednesdays and Thursdays) on 0191 212 6970

 

Newcastle Council look set to licence all residential letting properties in the city

On Monday 5th November we received a letter from Newcastle City Council (linked here) and the following day I was supplied with the link below, which gives a much more in-depth outline of the council’s objectives, which we have not studied in great detail to date.  However, due to the timing and potential consequences of this proposed legislation, we thought it prudent to make our landlords aware of this situation at the earliest possible opportunity.

Link to Newcastle City council Website providing much more information;    https://newcastleplproposal.commonplace.is/schemes/proposals/document-library/details

 We are, therefore, informing all of the landlords on our database, to make them aware of the council’s current plans.  Please note, that these proposed changes are in addition to the recent changes in licenced HMO properties in Newcastle that came into force on Oct 1st 2018, which was the removal of number of floors and the introduction of minimum room sizes with minimum height restrictions.  

We are informed that the October 2018 amendments alone will increase the number of licences required nationally by approximately 160,000, based on Newcastle’s Fee of £843 for a new HMO licence (currently), that is a national revenue stream of £134,880,000. 

If in addition, they are going to licence all HMOs which are not currently licensed in Newcastle; this means any property that rents to 3 or more unrelated people.  This is as well as the selective licensing already in place.  Using the council’s own figures from the documents provided in the link above, the Selective Licence cost; £650 x 9100 properties and additional Licence cost of £750 x 9350, giving a total revenue stream of £12,927,500.  I think you will agree this is a substantial income over a five-year period, amounting to £2,585,500.p.a. 

As this is in addition to both the existing and newly created licensed HMO stock, I for one, would like to know how that money is going to be spent.  The document stresses that this money is ring-fenced and can only be used for running this scheme but I would have thought that this sum of money would be well in excess of what would be required just for this purpose.  Therefore, perhaps a more affordable licence should at least be a consideration?  Where I fully appreciate there are overhead costs and expenses that would need to be recovered even if you paid an inspector £50,000 per annum, the additional revenue alone would pay for 50 new inspectors in Newcastle in year one and their continued salary every year after that! 

Whereas I have always supported raising the standard of private rented property and welcome any attempts to do so, I think it only right that we should look and question the motives for such action.  Especially at a time when landlords are being hit from all angles by the government (removal of tax breaks, tenant fee ban, etc.).  On the other side of the fence, it is no secret that councils are being equally underfunded by government and instead are being given ideas and the opportunity to introduce legislation to increase revenues by stealth at the expense of certain market sectors.  Landlords, in my opinion, are clearly being treated as soft, easy targets by the government. 

We hope to be attending these meetings – the three dates are in the attached letter – and would urge any interested parties to do so also, to ensure that your voice is heard and you are aware of both the motives and rationale for such proposed changes.  Again, I stress this is not necessarily bad news, as anything that improves the standard of the private rented sector is good, especially for decent landlords; it can only reduce the number of bad landlords in the city making your properties even more desirable. 

We are happy to discuss this matter further with you, so please feel free to call me on 0191 212 6970on this matter( but to date please note you are in possession of all the information we are), or  if you require any help with letting your property(s).

 

October 2018 Industry updates

Residential Lettings, legislation and Industry updates October 2018. 

Over the last few years landlords (and Agents), have been bombarded with legislation. Gas safety, HMO regulations, HMO licensing, Smoke alarms, CO2 detectors, Legionella Risk Assessments etc. etc. and come with heavy fines so know your responsibilities, otherwise it could be VERY costly!

Well the additional legislation continues and the only good news I could find I am afraid, was the intention to regulate the industry once and for all, so the good landlords will definitely benefit as they will no longer be put in the same category as bad ones. In April, the government started the process by introducing a register of “Rogue Landlords” and they have pledged to regulate the market and have EVERY Landlord and/or Agent properly registered and accredited over the next couple of years.

However, I was at a conference in April of this year when the register was announced.  Interestingly enough, at the end of the presentation during question time, one delegate asked the speaker (a renowned property solicitor) the question “when will we have a register for Rouge Tenants?” only to be told to by the speaker (with a wry smile), that, that would be highly unlikely, as there would not be any votes in that!   Sadly, I think you could be forgiven for thinking that response, as a stark reminder of the poor way we are governed as a nation presently.

Apart from the loss of tax breaks, the introduction of Banning Orders for Landlords and Agents who fail to comply with the law and the announcement of the tenant Fee Ban in April 2019 there have been several other additional laws introduced (or about to be introduced) that we strongly recommend you need to keep a sharp eye on.

The first is the change in HMO licensing laws which mean that the “licensing” regulations are changing, from five or more, unrelated people over three floors, to five or more unrelated people regardless of the number of floors.   Industry watchdogs and specialists anticipate, that this should increase the number of HMO licences by 160,0000 nationally. At the same time, we are informed that they are also introducing new minimum room sizes into licenced HMOs only, at this point.

The minimum room size we are told for one person is 6.51 Sq. M, however (and this is really important), they have in addition, also stipulated that the minimum height for this calculation, is 1.5M which means landlords with rooms in roofs (attic rooms), may want to check, to ensure they are legal. If you already have a licence, then it will only come into force when you are renewing your licence. For more information, the RLA have provided an excellent article on minimum room sizes  (https://www.rla.org.uk/landlord/guides/room-sizes-for-houses-in-multiple-occupation.shtml )

The starting (entry) point for an HMO remains the same, as it has since 2007 at “Three or more unrelated people in a rented property” If you have an HMO then you are automatically governed by the HMO legislation (HHSRS etc.) so nothing has changed there.

Also, there is the proposed change to widen the scope of electrical testing.  I am sure you are all aware that this legislation has already been in force  since 2007,  in ALL HMO’s (NB. That is for properties with 3 or more unrelated people, not just licenced HMOs’), and very soon it is anticipated that it will become law for all rental properties. Electrical certification in non-HMOs are currently discretionary (although many will disagree.*i.e.There is currently no statutory requirement to have annual safety checks on electrical equipment as there is with gas, but the housing act does state clearly that the electricity supply in a rented property must be safe and in reality the only way you know if it is safe is if you have it tested!   We always advise to do this and all of our managed properties have 5 year fixed wiring certificates and annual visual checks to demonstrate that our clients are responsible landlords and we are a professional agency.  So I would advise all landlords to follow this model as  good practice.  If you do have an issue with the electrics in your property and there is damage, or injury then you most definitely will be held accountable.  Although but we have been advised they will most likely keep the regulations the same as the current HMO regulations, we anticipate therefore we will see “Five-year fixed wiring checks” with annual interim checks, at some point in October 2018.  It is worth pointing out that this change (in principle), is already written into the 2016 Housing Planning Act, so all the paperwork is prepared, voted on and agreed by parliament.  So it just needs a rubber stamping  by the minister responsible.   NB. latest update 19/10/2018:  Due to the additional time taken with Brexit, the minister and his committee, are still deciding on the regulations of “How”(the nuts and bolts) they will manage this law. The latest estimate is in the next few months.  i.e.  The minister responsible can simply enact this at his or her discretion now it already has parliamentary approval by vote.

*There are of course many more legal updates and reminders, we are just highlighting some of them for you. *

The EPC laws were updated in April 2018 and only EPCs Currently E and above are allowed to be marketed for rent, so NO F or G’s can be marketed for let without an exemption certificate.

Minimum Energy Efficiency Standards (MEES), introduced April 2018 also ensure no let may go ahead either if they do not meet the new EPC standards and again, please note, the rules are changing again in 2020.

Also “Banning Orders” are now effective for both Landlords and agents, who do not comply with such UK legislation such as “not complying with improvement notices, Breaches of HMO licencing, harassment or unlawful eviction, Gas / electrical safety, Failure to do Right to Rent etc. etc. For more information simply go to the link below which also gives you more information on Rogue Landlord database, non-compliance penalties (fines) and rent repayments:

https%3A%2F%2Fwww.gov.uk%2Fgovernment%2Fpublications%2Fbanning-orders-for-landlords-and-property-agents-under-the-housing-and-planning-act-2016&usg=AOvVaw1seuZ5eRUY9LBwf7tXDdGQ

Perhaps most worrying, is the change in the way government funding has changed. Now central government allows the councils to keep ALL of the money they make from prosecutions regarding housing Non-Compliance, so there is now, a real incentive for councils to prosecute now, as they keep all the fines! In essence, it is “a potential income stream, for cash strapped councils”. Please feel free to check out our website and you may also want to look at our property blog which highlights and discusses. many of these issues, or discuss your property needs and options, with John on 0191 212 2020.

Housing News Update August 2018

I friend alerted me to the fact that one of the tabloid newspapers has issued a warning that the buy to let sector may be under attack yet again with the government now considering even more stamp duty on homes purchased to be let out.

James Forsyth, who is the political editor of the Conservative-supporting Spectator magazine, wrote in a guest column in The Sun over the weekend, that this autumn’s Budget may see the introduction of yet more Stamp Duty Land Tax (SDLT), on buy to let purchases.

In April 2016 a three per cent stamp duty surcharge was introduced on additional homes – that is, both buy to lets and holiday homes.

The Sun is not normally a natural source of housing news, but I understand that it has been used rather cleverly by the government in the past to “fly kites” and raise issues to gauge public opinion before the measures are introduced formally – or, in some cases, abandoned.

In addition, I also understand that Mr. Forsyth is known to have influential sources close to government.

his comments include on this particular issue:

  • The Treasury is looking for ways to raise money ahead of the Budget this autumn.
  • I understand one option being considered is a further increase in the stamp duty rate for buy to let properties.
  • This would, so the thinking goes, raise money for the Exchequer and help keep house prices down.

But let’s be honest here, this is not about solving the problem, it is just another cynical attempt to hide the inadequacies of our current parliament.  If the Government was serious about helping more people on to the property ladder, as opposed to just raising yet more money from Stamp Duty, then what’s needed is changes to the planning laws to get far more homes built where people want to live and most importantly the first-time buyers’ market and the affordable housing need to be addressed as a priority not as an afterthought.  “You cannot build a strong house on a weak foundation” It’s that basic and that simple!

 

In November of last year, the telegraph announced that the Government had exceeded its target of 200,000 new homes for only the first time since records started in 1992 (and then by only 6530). However, they also identified that only 19% were affordable housing and that is where the real problem lies.

One of the main problems in my opinion, is the Charity Shelter who have been lobbying and advising the government on housing. Although they appear to mean well, so far, they have persuaded the Scottish Parliament to ban tenant fees in Scotland and according to Shelter rents have increased by 2%.  If you read my December 2016 Blog you will see the figures I have been quoted from articles using the Office of National statistics and the Scottish equivalent, rents have risen by 15.3% (just look at the difference in rental prices  in the article that prove this point irrefutably And yet they continue to advice the current government who are hell bent on causing the same pain for tenants in England next April. In my opinion for cheap political votes until they realise they have been conned.

They are quoted as saying  The housing crisis isn’t about houses – it’s about people. It’s the family struggling to meet next month’s mortgage payment. The young family renting a rundown flat, wondering if they’ll ever be able to afford a home of their own. The children living in temporary accommodation, forced to change schools every time they move.  The lack of affordable, decent homes is affecting families across the whole country.”  I agree in principle however experience has taught me to look at the potential consequences of your actions, which Shelter has clearly not done or learned from. 

Yet they have lobbied the English Government to ban tenant fees next April, which has been proved to increase rents and alienate landlords and tenants.  I am all for getting rid of bad landlords, they don’t deserve to make any money from renting indeed if they are as bad as people say they should have their stock confiscated and given to social housing (what a great way that would be to increase affordable housing.  However, Shelter has failed to acknowledge that the vast majority of landlords are decent responsible people and these are the ones that they are actually affecting.  So, as a direct result of their advice they are in fact forcing the prices of houses up as a consequence!  Hardly a model to show compassion or meet the needs of your customers is it?  I would suggest the direct opposite.

The guardian in January of this year wrote an article suggesting Builders were deliberately building slowly to keep the housing prices high.  Only this week we had on the news and in the Local Government Chronicle (LGC) that new housing on greenbelt land was up 50% on the previous year (2-4%), however the amount of affordable housing was again extremely low. Another source also quoted said

“Up to 460,000 homes are in the works on land released from the green belt – but the percentage of affordable homes is continuing to fall.

The protected rural areas remain under severe pressure, according to a new report from the Campaign to Protect Rural England (CPRE), despite government pledges to protect it.

Moving green belt boundaries during local plan reviews makes it easier for local authorities to release land for housing – despite the move only being intended to occur under exceptional circumstances.”

My advice to the government is simple;

Stop tinkering. Deal with builders the same way as you deal with landlords and deal with them firmly but fairly.  Introduce higher quotas of affordable housing and build them into planning permissions to ensure they are adhered to and restrict the time limits on the permissions (i.e. if a schedule is agreed and submitted, the permission is in line with the schedule and cannot be changed without a further permission. Regulate landlords fairly and stop promoting products and services for a few years then beating the hell out of them for the next ten until the market is ruined (Diesel cars, buy to let landlords, retail shopping etc.etc.etc.). Have a long-term cross-party plan that is workable, fair and achieves your aims. You can do it with energy, why not with housing as a whole?

If you have any questions regarding the letting or management of your properties, or wish to know more about the current legal requirements I can normally be contacted at our Durham office on 0192 212 6970 and will be happy to discuss your letting requirements with you. 

It’s Wake Up and Smell the Coffee time for Landlords and Agents. It is really simple: Comply, or Die!

 

Three years ago, I was informed, that there were 55 Acts of Parliament and a further 70 regulations governing the UK housing rental market. Now bizarrely no one is able to quote me the facts, as laws are being rolled out at such a pace.

As a fully accredited agent we work exceptionally hard to keep up with legislation as protecting our landlords is a major priority for us.  Over the past twelve months a lot has been happening in the background in our market place, that in the most has gone relatively unnoticed, or has been miss quoted and aimed at agents when in reality the main targets are actually landlords.

Why have these important points been missed? Well frankly there are (or people thought there were), “Bigger Fish to Fry”.

i.e. The new EPC regulations (M.E.E.S.), Right to rent checks and of course the upcoming “Tenant Fee Ban.” In addition, let’s not forget the imminent introduction of electrical certification for Non-HMO properties. Again sadly, the majority of Landlords (and a lot of agents too), still have not realised that electrical certification is mandatory for all HMO properties (3 bed +) not just the licenced (5 bed+) HMO’s since 2007!  That is a little worrying don’t you think?

So, what are we talking about then? What is so important and what will be the impact on Landlords (and agents) actually be?

Well the biggest impact you are about to face, is a very clever law that was passed in October 2017 that to-date, I note the North East Councils appear to have not yet capitalised on, but I believe that is all about to change.  The real underlying problem with councils is that they are grossly underfunded (or poorly managed), you choose as this is not the discussion point here, it is simply the underlying fact that needs to be realised and understood.

 Up until 2017 any fines imposed by councils went to a central government pot to fund central needs (Moats for MP’s houses etc. ?).  The biggest bug bear for councils was (and still is), that they have a huge workload and not enough resource to fund such activity.

As of last October, any fines levied by councils, now go to the local authority who imposed the fines.  This has clearly been designed as a self-funding initiative, providing councils with the incentive to clean up the private housing rental market and pay for the personnel (resources), to achieve this.  Now that is only a personal opinion, however I heard last week that one council in London has now employed a number of new housing inspectors to cope with the increasing number of new prosecutions for bad practice.  Anecdotal evidence I know, but it does make you think doesn’t it! 

I was fortunate the other week to see a letter sent to a landlord from one of our local authorities (copied to the tenant, who approached us for advice) that read;

“Please note that it is a criminal offence to fail to comply with your HMO licence conditions and the above regulations. A person who commits an offence is liable on summary conviction to an unlimited fine. Breaches of licence conditions or the regulations may also be dealt with by way of a civil penalty. Any such action may also give rise to the revocation of your HMO licence.”

In addition to that fine, the government in April of this year introduced another law, allowing them to issue “Banning orders” based on non-compliance, to both rogue landlords (and agents). 

In more detail;

On 6 April 2018, the Government introduced banning orders on rogue landlords and letting agents, barring those who commit certain housing offences from working in the lettings industry whilst placing their details in a database of rogue landlords.  I did enquire why there was not going to be a database for rogue tenants only to be told by an eminent housing specialist that the reason was very simple, “There are no votes in that” so it is unlikely a political party would spend time (or money) on such activity”! 

The Housing and Planning Act 2016 (Banning Order Offences) Regulations 2018 will result in landlords and agents who are convicted of a banning order offence being prohibited from working in the lettings market. Whether it be as a landlord, a letting agent or working as part of a property management team. 

The new database of criminal landlords and lettings agents has been created under the regulations and went live on 6 April 2018. 

Some of the most common banning order offences are: 

  • Illegally evicting or harassing a residential occupier in contravention of the Protection from Eviction Act 1977
  • using violence to secure entry under the Criminal Law Act 1977
  • providing false or misleading information
  • failing to comply with an improvement notice
  • failure to comply with a prohibition order
  • offences in relation to licensing of Houses in Multiple Occupation
  • offences in relation to selective licensing under Part 3 of the Housing Act 2004 (section 95)
  • offences related to drugs
  • contravention of an overcrowding notice
  • fire safety and gas safety offences
  • harassment and stalking. 

The effect of this order could be disastrous.  As a landlord would effectively lose their business!  A landlord or agent would be forbidden from renting or managing rented property although the order may permit them to do such work whilst they are closing the business down. 

A banning order is for a minimum of 12 months but there is a possibility that it could be for longer, right up to a ban for life. Banned landlords will also be forbidden from transferring their property to a business where they have an interest or a close colleague has an interest. 

The provision of housing is critical and an essential service provided to the consumer. With more and more legislation coming into force within the lettings industry, from right to rent checks to taxation changes, it is becoming increasingly more complex for landlords to manage their own property. 

A recent study conducted by the National Landlords Association (NLA) found there was a 7% increase in the number of landlords using a letting agent from the end of 2016 to June 2017(just six months)! Annually the proportion of landlords who self-manage their properties has reduced by almost 10%. 

Bleak news I know, but just pause for thought for one moment. You don’t keep your money under the bed, do you?  Your will was discussed and overseen by a specialist. Wasn’t it?  You didn’t get a pair of pliers from your toolbox to fix your sore tooth, did you?  Precisely!  A rental property is a valuable asset and should be looked after by specialists who are there to protect your investment for you.  We have been advising, renting and managing for over twenty years now. If you would like to discuss your rental or management needs, just call me at my Durham office on 0191 212 6970 for a chat or no obligation consultation.