Friday, 29 November 2013

A strike too far: the case of Superstrike versus Rodrigues

When it became a legal requirement to protect tenants’ deposits in a government-approved deposit protection scheme, it was expected that the legal system would clearly establish how tenancy deposits should be handled and what procedures are required to ensure compliance. And indeed it did – or so it seemed. Since 2007 when TDP became mandatory in England and Wales, court cases have enforced against landlords who fail to protect the deposits or don’t issue the prescribed information.
What we didn’t expect was a high profile court case that re-interpreted the statute without acknowledging the spirit of the law concerning TDP. The case of Superstrike versus Rodrigues set a precedent that no one had expected; that when a fixed term tenancy ends and a statutory periodic tenancy is entered into, a new tenancy is created. As such the deposit may need to be re-protected and the prescribed information re-issued. This ruling could have a significant impact on many existing tenancies.
As a result and until any new legislation is put in place to clarify the law, landlords who have allowed tenancies to become statutory periodic since protecting the deposit (or not if the initial tenancy began prior to 6 April 2007) have the following options:
  • Negotiate a new tenancy and re-protect the deposit
  • Confirm the deposit is protected and re-issue the prescribed information
  • Refund the deposit
  • Take a risk and wait to see if the law changes
Incidentally, the NLA and its industry colleagues, the UK Association of Letting Agents, the Association of Residential Letting Agents, the British Property Foundation, the National Approved Letting Scheme, the Residential Landlords Association and the Royal Institute of Chartered Surveyors, are putting pressure on the Government to legislate in order to prevent further confusion and damage to the industry and landlord confidence.
So far, the Department for Communities and Local Government, the Government department responsible for TDP, has confirmed that is has accepted the need to legislate and clarify its original intentions in law, i.e. to specify in statute that when an AST becomes a statutory periodic tenancy a new tenancy is not created and there is no subsequent need to re-protect a deposit or re-serve the necessary prescribed information.
However, this isn’t likely to be a quick fix – indeed the judgment was made back in June of this year and new primary legislation will take some considerable time to bring into play. The Department must now impress upon the Leader of the House of Commons the necessity of working quickly to introduce this change. For this purpose the NLA, working with a coalition of industry bodies, has produced a package of evidence demonstrating the potential impact of not resolving the issue quickly.
Click here to read the original article: "A strike too far: the case of Superstrike versus Rodrigues"

Wednesday, 27 November 2013

Landlords Profit as Tenant Arrears Fall and Rents Hit New High

Tenant arrears have fallen to the lowest level since 2008 despite record high rents, providing further evidence of a buy-to-let boom.

The total amount of late rent across England and Wales fell to £245m in October, down from £273m at the same time last year, according to the latest Buy-to-Let Index from LSL Property Services.

As a proportion, this represents 7.1pc of all rent – one percentage point lower than last year.
The falls come despite the fact the average monthly rent across England and Wales rose to a new record high of £758 in October, up 1.9pc since October 2012.

Rents fell in five of the ten regions in England and Wales over the year however, including the East of England, the Humber, the North East, the North West and the West Midlands.

In further good news for landlords, lettings activity accelerated in October. The number of new tenancies agreed across England and Wales increased by 7.4pc compared to October 2012.

The buy-to-let market is currently in rude health as landlords benefit from record high rents, rising house prices and increasing yields.

LSL Property Services predicts if rental property prices continue to rise at the same pace as over the last three months, the average buy-to-let investor in England and Wales could expect to make a total annual return of 14.5pc over the next 12 months, equivalent to £24,921 per property.

David Newnes, director of LSL Property Services, said: “At a time when a seasonal slowdown would usually be expected rents are up again. The lettings market appears to be experiencing an extended Indian summer. Normally we can expect the rush of early autumn to fade into a late autumn hibernation. Even as the nights draw in, demand for homes to rent seems unabated, and still well ahead of a year ago.

“The first rung of the housing ladder is still a big step up. Despite a healthier circulation of mortgages, even a 5pc deposit is fast becoming a challenge for many would-be first-time buyers.”

Click here to read the original article: "Landlords Profit as Tenant Arrears Fall and Rents Hit New High"

Monday, 18 November 2013

Housing Bill to Tackle Wales' Rogue Landlords and Homelessness

Unscrupulous landlords and family homelessness will be targeted under new legislation over housing in Wales.

The Welsh government is publishing its first Housing Bill since it gained full law making powers in 2011.

In May 2012 ministers outlined plans to tackle homelessness, improve conditions in private rented homes and provide more housing.

Minister Carl Sargeant will launch the bill on a visit to a housing charity in Cardiff on Monday.

The Welsh government's White Paper - which sets out its intentions for the bill - included a proposal that would see private landlords having to sign a mandatory register before they could take on tenants.

It also described the private rented sector as having "extremes" of good and bad practice.

Although there are good landlords, it said some tenants were put in difficult situations by unscrupulous operators, with many enduring "poor conditions, insecurity and, sometimes, threats of eviction".

"The latter, combined with the lack of other options, means that many people, often vulnerable people, put up with the questionable practices of some landlords and lettings and management agents," the white paper said.

"In some cases, it also includes questionable charges and costs."

Other measures in the White Paper included a pledge to tackle the "blight" of empty properties by giving local authorities the power to increase council tax on properties empty for longer than a year.

Since the White Paper was published there has been a change of minister for housing with Carl Sargeant taking over from Huw Lewis, who is currently education minister.

Launching the White Paper in May 2012, Mr Lewis had said: "This is about much more than putting a roof over someone's head.

"Housing issues affect people's health and wellbeing and their ability to find and keep a job.

"For children, it is the foundation for the rest of their lives. In short, housing is fundamental to delivering many of our goals as a progressive government."

The bill is also expected to set a goal of ending family homelessness in Wales by the end of the decade.

Click here to read the original article: "Housing Bill to Tackle Wales' Rogue Landlords and Homelessness"

Tuesday, 12 November 2013

Councils Need Powers to Tackle Private Landlords Ignoring Problem Tenants

LGA press release 11 November 2013

Lords are being urged to hand councils the power to force private landlords to crackdown on anti-social behaviour caused by their tenants.

The Local Government Association (LGA), which represents more than 370 councils in England and Wales, has successfully lobbied for the Government to amend the Draft Anti-Social Behaviour, Crime and Policing Bill to allow local authorities to seek injunctions to evict private tenants.

Council leaders are now calling on Lords to go one step further when the Bill returns to the House tomorrow (12 November) and follow Scotland's lead by handing them the power to compel private landlords to take action over problem tenants.

The Anti-Social Behaviour Bill (Scotland) Act 2004 forces private landlords north of the border to be registered with their local council and can see them banned from collecting rent if they fail to take their responsibility to manage their tenants seriously.

Cllr Mehboob Khan, Chair of the LGA's Safer and Stronger Communities Board, said:

"Councils know people look to them to tackle the anti-social behaviour which can make a law-abiding resident's life hell or blight an entire neighbourhood. The Government's recent decision to allow councils to take action against private tenants as well as those in social housing will go a long way to helping them protect communities.

"The problem of anti-social behaviour by private tenants is considerable. While the majority of private landlords are responsible and considerate, there are plenty who care little about the behaviour of their tenants as long as they pay their rent each week.

"Hitting those who ignore warnings by stopping them from collecting rent would certainly be one way for councils to make them sit up and take notice of the damaging effect that anti-social can inflict on neighbours and the community as a whole."

Monday, 11 November 2013

Immigration Bill a 'Bonanza' for Dodgy Landlords

The government's new immigration bill will lead to a "bonanza" for unscrupulous landlords and the widespread discrimination against foreign tenants, MPs have warned.
The new regulation, requiring landlords to check the immigration status of all tenants, will cause many to simply turn migrants away rather than risk losing them further down the line, according to a new report by the Commons' Home Affairs Committee.
"There is a possibility that landlords will discriminate against all immigrants regardless of their status rather than take the risk of housing a person without right to remain," MPs say.
They point out that there are over 404 legitimate European identity documents alone, making it almost impossible for landlords to be confident of their tenants' immigration status.
They also warn the regulation will drive many vulnerable migrants into the "twilight worlds of beds-in-sheds" and suggest that some landlords will turn the situation to their own advantage.
"There is also a possibility that unscrupulous landlords will hold tenants who are suspected of being an illegal immigrant to ransom," they claim.
MPs criticised the government's controversial pilot of "go home vans" which they describe as "menacing" and welcome the decision to scrap the scheme.
They also "remain to be convinced" of the Home Office's policy of sending text messages to migrants suspected of overstaying their leave.
The scheme caused controversy earlier this year after it was revealed that many people had received the messages in error.
MPs also raised concerns over the number of complaints still received about the use of force by guards in immigration detention centres.
"It is completely unacceptable that, even after the death of Jimmy Mubenga, the Home office continues to receive dozens of complaints each year about potential breathing difficulties caused by the use of physical force in immigration detention centres and on removal flights."
The committee highlighted findings that just six per cent of reports of illegal immigrants had resulted in an investigation and only one per cent had resulted in illegal immigrants being removed.
They say more needs to be done to give the public confidence that their reports will be taken seriously.
"There are still over 430,000 cases languishing in the backlogs, enough to fill Wembley Stadium almost five times over," Committee chair Keith Vaz said.
He claimed the committee's findings higlighted major failings at the UK Border Agency and the Home Office.
"This has been a chaotic summer for immigration policy."

Friday, 8 November 2013

Landlord Fears Rent Arrears Rise Under Universal Credit

A private sector landlord with more than 700 homes says benefit changes could put his business at risk.
Carmarthenshire-based Kevin Green fears tenants will fall behind on their rent when a new system of paying benefits is introduced.
He says he may have to stop letting to people on welfare.
The UK government says it is restoring fairness to the welfare system, and that it is working on protecting landlords and tenants.
Most of the 762 properties Mr Green lets are in or near Llanelli. Around 60% of his tenants receive benefits, he says.
Last month the UK government began phasing in one of its big welfare reforms - Universal Credit. The roll-out is due to finish in October 2017.
Next spring Shotton, Flintshire, will become the first part of Wales where it is introduced.
Six working-age benefits - including housing benefit - will be merged into one monthly payment into the claimant's bank account.
A trial of the system in Torfaen among social housing tenants found arrears rose from around £20,000 to almost £140,000 in seven months.
Private sector tenants already have their housing benefit paid to them, rather than it going directly to the landlord.
But millionaire Mr Green, who experienced homelessness in 1984, said he feared some would struggle with their household finances and fail to keep up with the rent when benefits are merged.
"What we're finding is if rent payment is put in the tenants' hands they are not being taught in school or further education to run a home and they just can't budget," he said.
"And it's going to lead to huge arrears. It could lead to us going bust at the end of the day and not providing homes for less fortunate people as well."
He added: "If we pull out the market that's hundreds of houses that we rent out in this area that's pulled out.
"We're the UK's largest private sector landlord. We pull those out of the social welfare market and that's houses that people haven't got to live on housing benefit."
A Department for Work and Pensions spokesperson said: "Our reforms restore fairness to a system that was allowed to spiral out of control.
"We are working now to ensure that the right protection and exemptions are in place for both tenants and landlords ahead of Universal Credit.
"Direct payments are an important part of Universal Credit to make it easier for people to move into work, but we've been clear from the outset that we will take steps to protect vulnerable people."

Wednesday, 6 November 2013

RLA Welcomes Voluntary Water Scheme

The Residential Landlords Association (RLA) has welcomed the Government’s decision to proceed with measures for landlords to provide information about tenants to water companies to prevent them from not paying their bills.

In a letter to water companies, Environment Secretary, Owen Paterson MP has outlined the Government’s plans to establish a new voluntary database for landlords to provide information about their tenants to water companies.

Households currently pay an extra £15 on their water bills to cover the cost of those who do not pay. Ministers believe that much of the problem rests with tenants who fail to settle their bills when they move to a new property.

The measure is designed to get rid of this charge by making sure tenants cannot escape paying their charges.

The proposal is in contrast to that being suggested by the Welsh Government which wants to make landlords legally responsible for providing such information or face having to pay the debt left by their tenants.

A survey of RLA members in Wales found that all of those who responded opposed making such a measure a legal requirement for landlords. 63% however already provided information on a voluntary basis whilst almost 80% said they would support a voluntary scheme such as that being suggested by the UK Government.

Commenting on the Environment Secretary’s statement, Richard Jones, the RLA’s Policy Director said: “Landlords recognise the cost of living pressures that tenants face. That’s why official figures show that rents have increased by less than the rate of inflation over the past 8 years.

“Making landlords legally liable for the debt incurred on water bills where they did not pass on their tenants details to water companies would serve only to add to the creaking weight of regulations already affecting the sector and lead to increased rents to reflect the greater risks involved.

“Whilst it is vital that the technology to implement the scheme is properly tested and thought through first, the RLA welcomes the Government’s decision to opt for a lighter touch, voluntary solution that the majority of landlords already abide by.”

Click here to read the original article: "RLA Welcomes Voluntary Water Scheme"

Tuesday, 5 November 2013

Landlords Using Property to Fund Retirement

Landlords are increasingly relying on the rental income generated from their properties to fund their retirement.

According to a survey from BM Solutions / BDRC Continental, a third of landlords now view their buy-to-let property portfolios as a means to prepare their finances for retirement, with a significant 75% agreeing that their property is their pension.

More landlords are also turning to the rental market to supplement their monthly income, with 43% reporting they are doing this – up by three percent from quarter two's survey.

The research revealed that confidence in the buy-to-let sector is now at the highest it's been in six years and almost back at pre-credit crunch levels.

In particular, landlords are optimistic that they will continue to reap the rewards of higher rental yields as the economy continues to recover. This was despite the average rental yield dropping slightly in quarter three of this year, from 6.1% to 6%.

The strongest performing region was the North East where landlords were achieving average yields of 6.7%, while demand for rental property remains greatest in the East of England and London.

Commenting on the findings, Lee Tillcock, editor of Business Moneyfacts, said: "Given the continuing buoyancy in the property rental market it is clearly a sensible option for those individuals looking for monthly returns on their investments.

"The improving picture of house price rises will only serve to increase this attraction for the near future as capital growth becomes another factor in more long-term investment plans."

Click here to read the original article: "Landlords Using Property to Fund Retirement"