Tuesday 27 November 2012

Which? report claims tenants are being hit by unfair charges

A new report from consumer group Which? claims that tenants are being hit by unfair charges. Their report states:

New research by Which? has found that rental tenants feel disempowered and dissatisfied with their letting agents. Which? found that lettings agents are ranked second from the bottom in their comparison of markets.

Tenants hit by unexpected charges from letting agents

Unfair fees are another area of consumer detriment that Which? uncovered. Less than a third of tenants said that agents provided information about fees before they asked, which hints at a lack of transparency in the industry.

Which? also found that of the 32 lettings agents we looked at, none provided fee information on their websites.
Which? found that 41% of tenants think that upfront fees on rentals are unfair. Holding deposits cost an average of £400 (or one week's rent), deposits cost £1,000 (one month's rent plus six weeks' rent) and deposit administration fees cost up to £29.

And that's without the credit reference check, which can cost almost £100, and the administration fee – which can be as much as £420. Some 64% of consumers reported having to pay administration fees, while three-quarters told us they had to pay deposits when taking out a rental contract. Almost half (47%) said they had to fork out for a holding deposit.
Bad practice in the lettings market

Complaints to the Property Ombudsman have increased by a quarter this year. Which? found evidence of aggressive sales tactics, poor customer service and – shockingly – misleading consumers through out-of-date advertising.
Tenants aren't the only ones affected. Landlords were also found to have lost money because agents fail to pass on rent or unfairly handle holding deposits, and we also found that some letting agents fail to put deposits into protection schemes – something that is required by law.

Which? wants action taken on letting agents
Two-thirds of all private tenancies involve an agent, so this isn't a small problem. If you're planning on renting a property, always make sure the agent is a member of a professional body. We found that 62% of tenants and nearly half of landlords (45%) didn’t conduct a check on their letting agent.

Which? is also working on changing this bad practice. We are calling for increased consumer protection in the rental sector by extending the legal protection for people buying and selling rental properties.
This would ensure that lettings agents are covered by the same legislation as estate agents, making them more tightly regulated and giving the Office of Fair Trading the power to ban agents who break the rules. It would also require them to sign up to an ombudsman scheme.

'Greater transparency' from letting agents
Which? also want to see more transparency from lettings agents. This means fees being included in upfront quotes, in adverts and on websites. We also want terms and conditions to be provided in full.

Which? executive director Richard Lloyd says: ‘People searching for a rented home through a lettings agent are too often hit by unexpected fees or an unacceptably bad service. With the private rented sector now the only option for millions of people, it is vital that more is done to protect both tenants and landlords.’

Click here to read the Which? report Renting roulette: the great lettings agent gamble

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Thursday 22 November 2012

End to illegal charges on tenants

The law covering what fees letting agents and landlords charge private tenants has been clarified.

The Scottish Parliament has voted to approve secondary legislation so that all tenant charges, other than rent and a refundable deposit, will not be permitted.

From November 30, the law will now also allow any charges in relation to the UK Government’s Green Deal that may be attached to a privately rented property.

The current legislation, the Rent (Scotland Act) 1984, has not been explicit enough about additional charges such as reference checks, credit checks and inventory fees.

The move follows a consultation launched earlier this year on how to deal with unfair and illegal premiums.

It is estimated that there are around 500 letting agent businesses in Scotland involved in around 150,000 private lettings per year

Minister for Housing and Welfare Margaret Burgess, said:

“The vast majority of Scotland’s letting agents and landlords operate in a professional and above-board manner, and play an important role in the Scottish private rented sector.

“I am pleased that the legality of pre-tenancy charges has been clarified.

“This Government was determined to end the illegal practice of charges such as holding deposits and reference checks.

“The law is now clear on this matter and will help remove a barrier that will make the private rented sector more accessible for a wide range of individuals and families.”

Graeme Brown, Director of Shelter Scotland, says:

“This is great news for everyone who has been ripped-off by unscrupulous letting agents. It will finally put an end to this unlawful practice and ensure that tenants are no longer exploited.

“Shelter Scotland has been campaigning all year for these fees to be outlawed. Our reclaimyourfees.com web site has proved so popular that already more than a quarter of a million pounds worth of claims against letting agents have been made using our free step-by-step toolkit.

“Moves like this can only strengthen Scotland’s private rented sector and help make it a fairer and more secure place to live for the 270,000 households that now call the sector home.”

Click here to view the original article End to illegal charges on tenants

NetRent Comment

Clearly the Scottish Government believes that there is no cost to setting up a tenancy. They obviously believe that it's free to do the paperwork including references, tenancy agreement, inventory, bank set up etc. which will come as a surprise to landlords, agents and tenants alike.

In typical style Shelter, a charity, also believes that every other business should also be a charity and lays the blame for all the ills of the letting industry firmly at the door of letting agents who are exploiting tenants. Their claim that this makes renting in Scotland 'fairer and more secure' is dubious to say the least.

Having succeded in Scotland their next target will be Wales where the Welsh Assembly has already indictated that it too wants to end tenancy set up charges. England won't be far behind.

The reality is that it does cost to set up a tenancy and those costs will have to be passed in in the form of increased rents. So we'll have moved from a system where charges are transparent to a system where charges are hidden. And the benefit to everyone? None.

Tuesday 20 November 2012

Forget saving for a pension, buy-to-let landlords reckon rental income will see them through retirement

More than 80 per cent of private landlords in Britain intend to use their property portfolios to see them through retirement instead of a pension.

Figures from an independent Landlords’ Survey by BDRC Continental found that four out of five plan to sell off properties or live off rental income to fund their later years.

At a time when annuity rates are falling and pension drawdown changes are slashing retirement income, landlords are putting their faith in property over pensions and intend to live off rental income in their later years.

Another 20 per cent said they would sell off some of the properties they own, with five per cent saying they would sell all of the properties in their portfolio.

The HomeLet Rental Index released this week revealed that the average rent across Britain has increased in the last three years, from £679 per month in October 2009 to £790 per month now.
But those with property in London in particular are making much more, with the average rent coming in at a massive £1,240 per month, rising six per cent in the last year alone.

But with house prices still high - even after having fallen 20 per cent since their 2007 peak - large deposit demands represent a significant barrier to investment.
After the property slump hit, buy-to-let's source of potential income is attracting investors eying long-term rental returns rather than the capital growth from rising house prices chased in the boom years.

However, while people people may think they can bank on their property and not their pensions when they give up the day-job, they should remember the buying, maintenance and running costs that come with owning and letting a property.
As most buy-to-let mortgages are set up interest-only, they should also remember that their debt will not be cleared and that base rate will eventually rise from its record 0.5 per cent low.

Mark Long, director at BDRC Continental, said: ‘Landlords consistently tell us that they see their property portfolio as forming a critical part of their pension provision for the future.
‘On average, landlords intend to remain active in the rental sector for another 15 years or so, and see a combination of capital gains and rental income as underpinning their pension strategy.’

The research comes after the Council of Mortgages Lenders said that one in eight mortgages are now buy-to-let loans – the highest level since records began.
The loans now account for 1.44 million of the 11.3 million mortgages in the country, compared to there being just 275,500 a decade ago.

Click here to read the original article Forget saving for a pension, buy-to-let landlords reckon rental income will see them through retirement

 

Tuesday 13 November 2012

UK landlords lose out on £2.1bn a year

Are you losing out? Many landlords are, reveals new research, which shows that tenant arrears, empty homes and unexpected maintenance bills are costing private landlords in the UK £2.1 billion a year.

Landlords pay an average of £1,500 a year out of their buy-to-let pockets, Northwood found. The Guaranteed Rent provider's survey showed that 84 per cent receive less money than they thought from their monthly rental income due to unexpected costs.

Indeed, vacant properties are the biggest financial problem facing landlords, with half of them saying that they do not receive income for up to three months a year. Northwood's study also highlighted that over half of tenants are late with their rental payments, leading 91 per cent of landlords to be concerned about arrears over the next two years.

Managing Director of Northwood, Nick Cooper, comments, "Landlords have recently been under fire with accusations that tenants are victims to greedy landlords, but this research highlights that landlords too face a number of difficulties. The amount of money being paid out for unexpected costs each year is staggering, and with tenant arrears and vacant properties a very real concern, landlords can be hit hard."

But while Northwood's study shows that landlords are losing out, other reports show that landlords are very comfortable with their income. 61 per cent plan to live off their rental income alone when they retire, according to the National Landlords Association.

No wonder, as rents continue to hit new records in the UK. According to LSL Property Services, rates are now at a high of £741 per month. And if Savills' new forecast comes true, those numbers will climb even higher: average rents in the UK will rise by 2.5 per cent in 2013, predicts the firm, ultimately increasing by 18.2 per cent by 2017.

Those really looking to lose out, then, are the under-35s, with the amount of rent paid by the age group predicted to soar by 53 per cent from £24 billion to £37 period over the next five years.

"Every pound monthly rents go up, there's another pound renters cannot save for a deposit for their first home," comments LSL director David Newnes. "This is lengthening their stay in rented accommodation and increasing competition in the private sector."

Greater London landlords will be the biggest beneficiary, says Savills, with rentysomethings just outside the capital set to pay 3 per cent more in rent next year - ahead of the national average - and 26.4 per cent more by the end of 2017, far outstripping that of even prime central London.

"Recent population trends suggest that demand will continue to increase in coming years," says Yolande Barnes, director of Savills world research. "Current levels of occupier demand make the private rented sector the only truly fully functioning market in the UK residential sector. Yields and income in London remain strong by world city standards and make the capital an attractive buy in a global context."

Click here to read the original article UK landlords lose out on £2.1bn a year

Click here to find out how to guarantee your rent: Rent on Time

Friday 9 November 2012

Court imposes maximum penalty for 'minor' omission of prescribed information

This week a residential landlord who failed to produce the prescribed information to the tenant under the Tenancy Deposit Scheme has received the maximum penalty from The Court of Appeal.

Although the landlord produced "most" of the materials and the omission was described as "minor" the case, which was initially dismissed by a judge, The Court of Appeals overturned the decision and awarded the full penalty to the tenant.

After the case, lawyers pointed out that the omission could have been rectified by simply giving the tenant a copy of the Tenancy Deposit Scheme's leaflet. It should also be noted that this is something the tenant was able to get for themselves.

The Housing (Tenancy Deposits) (Prescribed Information) Order 2007 states that landlords (or the agents representing them) are obliged to produce a list of "prescribed information" to all tenants. This "prescribed information" sets out exactly how the scheme works and its implications.

In this instance, the case of Ayannuga v Swindells, the landlord omitted seemingly minor pieces of information that had been listed in the prescribed information, regardless of the fact the information was already in the public domain.

The landlord argued in the initial hearing that he had provided most of the information with only minor deficiencies related to the technical details of the scheme and that these details were easily accessible to the tenant by contacting the provider of the scheme. The judge found in favour of the landlord and the claim was dismissed with the landlord being able to keep the deposit.

However, this was followed by a hearing at the Court of Appeal in which the previous decision was overturned. In addition, it was ruled that the tenant be awarded the maximum compensation of three times the deposit.

Luke Maunder, a property specialist with law firm Barlow Robbins, said: "This case has important implications for residential landlords and residential agents.

"It is not uncommon for minor pieces of information to be omitted from the prescribed information, particularly as the Act allows it to be produced separately from the Tenancy Agreement, and some required items instinctively seem less important as the tenant can find it easily elsewhere.

"In the case of Ayannuga v Swindells, the landlord failed to provide details of the procedures to be followed in certain events. Details of the Tenancy Deposit Scheme had been provided, but the omission of the additional information - potentially as simple as including a leaflet provided by the Scheme - has cost him thousands.

"The maximum fine is three times the deposit, but the landlord also forfeits the original deposit, so in reality it is four times. As a deposit is usually at least a month's rent, a small error can be very costly."

The important lesson to be learned from this is that guidelines and rules within the property industry must be adhered to with absolute precision. More and more stories are emerging of landlords and agents alike being reprimanded for details, which may seem arbitrary but have far-reaching consequences.

Luke Maunder concludes: "All residential landlords and letting agents need to take note of the important decision in Ayannuga v Swindells and make sure that they provide all the necessary prescribed information, ideally well within the 30 days allowed."

Click here to view the original article Court imposes maximum penalty for'minor' omission of prescribed information.

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Friday 2 November 2012

Indoor laundry drying 'poses a health risk'

Drying laundry in the home poses a health risk to those prone to asthma, hay fever and other allergies, according to new research.

A study carried out by the Mackintosh School of Architecture found that many homes had too much moisture indoors.

Up to a third of this moisture was attributed to drying laundry.

The researchers have called on housebuilders to build dedicated drying areas into new housing to address the health concerns.

A study of 100 homes by the Mackintosh Environmental Architecture Research Unit in Glasgow found 87% dried their washing indoors in colder weather.

Researcher Rosalie Menon said people were not aware how much moisture this added to the air.

She said: "Going into people's homes, we found they were drying washing in their living rooms, in their bedrooms.

"Some were literally decorating the house with it, but from just one load of washing two litres of water will be emitted."

A total of 75% of households, which were of mixed styles, had moisture levels which could lead to dust mite growth.

There was also a strong association between drying laundry and mould spores.

A particular mould spore known to cause lung infections in people with weakened immune systems was found in 25% of the homes sampled.

The research, funded by the Engineering and Physical Sciences Research Council, was the first to track the implications of drying laundry passively inside the home.

All of the types of housing surveyed had a lack of suitable spaces for drying clothes.

The researchers want to see dedicated drying areas incorporated into new housing.

Ms Menon said: "These spaces should be independently heated and ventilated. It's very much going back to the airing cupboards we saw in more historical types of housing."

Click here to view the original article Indoor laundry drying 'poses a health risk'