Government to order letting agents to publish details on fees

Letting agents will be required to publish full details of the fees they charge, under plans announced by the government today.

Ministers have said that the move will ensure a fair deal for landlords and tenants, and will prevent a "small minority" of rogue agents from imposing unreasonable, hidden charges.

Currently, the Advertising Standards Authority only requires letting agents to list compulsory charges to the tenant upfront in the process.

Agents found to have imposed hidden charges face little more than being 'named and shamed' on the ASA’s website.

However, the government wants to make it a requirement that all letting agents publish a full tariff of their fees – both on their websites and prominently in their offices.

Anyone who does not comply with the new rules will face a fine.

The plans will be covered in an amendment to the Consumer Rights Bill.

Housing Minister Kris Hopkins said: “The vast majority of letting agents provide a good service to tenants and landlords. But we are determined to tackle the minority of rogue agents who offer a poor service. Ensuring full transparency and banning hidden fees is the best approach, giving consumers the information they want and supporting good letting agents.

“Short-term gimmicks like trying to ban any fee to tenants means higher rents by the back door. Excessive state regulation and waging war on the private rented sector would also destroy investment in new housing, push up prices and make it far harder for people to find a flat or house to rent.”

The move has been welcomed by the Residential Landlords Association. RLA policy director Richard Jones said: “The RLA has been calling for greater transparency of the kind announced today and we welcome the government’s decision to amend legislation accordingly.

“Labour’s plans would have only served to increase tenant rents as many landlords would in all likelihood have passed the extra costs of having to shoulder all charges levied by letting agents onto tenants.

“Today’s announcement will prove good for tenants and landlords alike and we look forward to working constructively to see its full and successful implementation.”

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Commons vote on letting agent fees

The letting agent fees row will hit the Commons this week after the Labour party forced a vote on the issue.

The opposition wants to see a ban on letting agents charging fees to tenants when they rent a property.

The proposal will be tabled as an amendment to the Consumer Rights Bill in the Commons tomorrow (Tuesday).

Party leader Ed Miliband told reporters during a campaign visit to Greater Manchester that Labour would be challenging Conservatives and Liberal Democrats to back the measure.But Paul Smith, CEO at estate agent haart, dismissed the vote as “nothing but an empty political PR stunt”.

“Tenants receive a very good service, mostly to protect them and their interests, both physical and financial and to ensure they have security of tenancy. That service comes at a real cost to agents and if we are unable to charge as an industry, there is a real danger agents will cut corners and reduce the quality of administration, which is exactly opposite what we believe is right; tenants deserve to be protected, but have to understand that comes at a small cost.

“Tenants’ fees include the cost of referencing – employment and previous landlord, ensuring that the prospective tenant is actually who they say they are and that they can afford to make rental payments and drafting the tenancy agreement. If the tenant doesn’t pay for this service upfront it will not simply disappear – instead it will become part of the monthly rent if the costs are transferred to the landlord. Will the Labour Party also seek to implement this ban on lettings for commercial lets too?”

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Labour to call Commons vote on letting agent fee ban

Labour are to call a vote in the Commons in an attempt to ban letting agents from charging fees to tenants.

Party leader Ed Miliband said people who buy a house are not charged fees by agents, but people who rent are.

He said Labour was "determined to stand up for generation rent" and deliver an "immediate financial benefit" to people who do rent.

The Association of Residential Letting Agents said it was "deeply concerned" by Labour's proposals.

Labour will table its proposal as an amendment to the Consumer Rights Bill in the Commons on Tuesday.

Under the party's plans estate agents would no longer be able to charge a letting fee for renting out properties in addition to requiring a deposit and the first month's rent upfront.

Mr Miliband said: "If the Conservatives and Liberal Democrats support us on Tuesday we can make this happen now. That could be implemented straight away."

During exchanges at Prime Minister's Questions on Wednesday, David Cameron indicated that he would be prepared to work with Labour on its other proposals for longer term tenancy agreements, although he rejected blanket rent controls.

Mr Miliband said: "David Cameron seemed to be warming to Labour's policy on rents. Now he has a chance to actually vote for it."

Earlier this month the Labour leader, while unveiling his party's new slogan "Hardworking Britain better off", outlined further his party's plans to fight for a "fairer deal" for tenants who rent.

He said Labour wanted to see a cap on rent increases in the private sector as well as scrapping agent fees.

But Ian Potter, managing director of the Association of Residential Letting Agents, said Labour's plans could have an "adverse affect on tenants".

He said: "The challenge we have today is an unregulated market and a worrying lack of supply.

"Pledging to transfer fees to landlords or calling for outright bans will increase rents as landlords and agents seek to achieve returns. Fees are not arbitrary or unnecessary; they represent a business cost that Labour has failed to recognise.

"Political posturing on an issue that has such a great impact on people's lives is unfair."

The prime minister's official spokesman has declined to comment on Mr Miliband's recent comments.

Following Tuesday's vote, the Consumer Rights Bill will still need to go through a third reading in the Commons, after which it will be considered by the House of Lords before being enacted as law.

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Annual rent-increase cap is focus of Labour launch

A future Labour government would cap rent increases in the private sector and scrap letting fees to estate agents to give a "fairer deal" to tenants.

Ed Miliband pledged to end "excessive" rent rises when he launched his party's campaign for local council and European elections.

An "upper limit" on rises will be put in place based on average market rates.

The Labour leader also called for longer, securer tenancies and rental charges of up to £500 to be axed.

But the Conservatives said evidence from other countries suggested rent controls lead to "poorer quality accommodation, fewer homes being rented and ultimately higher rents".

Speaking in Redbridge in London, Mr Miliband said a "cost-of-living crisis" affecting millions of families would be at the centre of Labour's four-week campaign before the polls on 22 May.

A generation of people have been unable to get on the housing ladder due to spiralling prices and yet the needs of long-term tenants have too often been neglected, he argued.

"Generation rent is a generation that has been left ignored for too long - not under a Labour government," he said.

"Nine million people are living in rented homes today - over a million families. They need a fairer deal."

Too many tenants, Mr Miliband argued, were vulnerable to being asked to leave their properties at short notice under current rules - sometimes because a landlord wants to put the rent up.

Citing figures suggesting rents have risen by 13% on average since 2010, equivalent to £1,020 a year, Mr Miliband said tenants need greater protection and predictability regarding their monthly outgoings.

Under Labour's plans, landlords and tenants would agree initial rents based on "market value" and, thereafter, a review could only be conducted once a year.

While landlords would still be able to increase what they are charging following changes in market conditions, there would be an "upper ceiling" to prevent rent hikes out of step with the overall market.

The threshold would be based on an industry benchmark of average rent rises. The Royal Institute of Chartered Surveyors is currently considering what an appropriate figure would be, Labour says.

Estate agents would also no longer be able to charge a letting fee for renting out properties in addition to requiring a deposit and the first month's rent upfront.

Although fees vary widely at the moment, Labour said tenants were having to pay an average of £355 each time they moved into a new property.

Rules on tenancy agreements would also be changed to give more certainty to tenants wanting to remain in their properties for an extended period.

As now, a tenant would be able to terminate a tenancy after the first six months, with one month's notice.

But a landlord could only do so with two months' notice and if certain conditions were met, such as the tenant failing to meet their rental payments, engaging in anti-social behaviour or breaching their contract in other ways.

After the six-month probationary period, contracts would automatically run for a further 29 months.

During this period, landlords could only ask tenants to leave for a breach of contract, or if they wanted to sell the property or needed it for their own use, not as a way of raising the rent.

Students and business people on flexible contracts would still be able to request shorter tenancies while existing contracts for buy-to-let properties agreed before the changes took place would be honoured.

Under current rules, tenants already have the right to challenge "excessive" charges and to be protected from "unfair eviction and unfair rent".

Conservative Party chairman Grant Shapps said the Labour plan was a "short-term gimmick" and accused the opposition of "political tampering".

"The only way to raise people's living standards is to grow the economy, cut people's taxes and create more jobs. We have a long-term economic plan to do that, Ed Miliband doesn't."

Housing charity Shelter welcomed any move towards more "modern, stable rental contracts" but the Institute of Economic Affairs said rent controls would distort the market and create "perverse incentives" for landlords in areas where market rents rise quickly.

On Europe, Mr Miliband claimed that Labour's priority will be to change the way the European Union works rather than seeking to leave.

Labour has promised an in-out referendum on the UK's membership of the EU if further powers are transferred from London to Brussels, but admits this is "unlikely" during the next Parliament.

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Register demanded to net rogue landlords

A report by a landlord representative body fails to defend deregulation of private renting and only reinforces the case for a national landlords register, a campaign group has said.

The Residential Landlords Association's report - 'The impact of regulation on the private rented sector' - claims that current regulations are failing to achieve their aims.

However, though Generation Rent (GR) agrees that existing regulations are not working, the campaign group has said that a national register of landlords would help to improve conditions for tenants.

The RLA's report, written by Professor Michael Ball of Henley Business School, makes several points that GR has taken issues with, including:

• “Registration schemes can never be comprehensive because they face the fundamental information problem of not knowing what properties are rented out by whom.”

GR claims that saying there is lack of data in the industry, and that it is difficult to enforce against the worst offenders only proves the need for a comprehensive landlord register.

• "Operating costs “range up to 30-40% of gross rents”

GR says the regulatory ‘burden’ is illusory – all businesses have running costs, and being a private landlord is a highly profitable one.

• “The sensible way to evaluate any proposal aimed at regulating the PRS is to undertake a cost-benefit analysis (CBA), comparing the costs, direct and indirect, with the value of the benefits expected to be achieved.”

According to GR, Professor Ball’s own cost-benefit analysis claims that tenancy deposit schemes cost £276m but the only benefit is the £7m in deposits that are recovered by tenants as a result of the scheme.

Alex Hilton, GR director, said: “RLA wants you to pity poor, over-regulated landlords but the reality is that it’s harder to open a commercial kennel than to let a house to humans. The evidence is that private renting is one of the most profitable businesses that you can run and it’s about time there was a fair balance between the rights of renters and landlords.”

Click here to read the original article: "Register demanded to net rogue landlords"

Fire brigade worried about London's 'hidden homes'

Thousands of people in London are living in hidden homes - often in disturbing conditions - because they cannot afford to live elsewhere.

The BBC has found people paying to live in shop storerooms, above car repair garages, on industrial estates and in former warehouses.

This shadow housing market is causing London Fire Brigade "grave concerns".

In the past nine months, firefighters have attended 36 fires in such places and two people have died.

Carlo moved to London from Spain four years ago in search of a better life for his two teenage daughters.

Now all three share a cramped room above a car repair shop on an industrial estate in north-west London.

They are 20 residents sharing eight rooms and a kitchen, while mechanics work on customers' vehicles below.

"I looked for a two-bedroom flat, but it's too expensive - the rent, the deposit. Now I live just in this room, little room, and I pay £433 every month - with no furniture," said Carlo.

His daughters, now aged 18 and 21, sleep in bunk beds in the same room. The only other furniture is a small fridge, and there is mould on the walls.

Tim Bolt, planning enforcement manager for Brent Council, told BBC Radio Four's Face The Facts programme that homes hidden away on industrial estates and within commercial property were an increasing problem.

For the past few years he and his team have been attempting to crack down on so-called "beds in sheds" and have issued more than 100 enforcement notices following investigations, which often begin with tip-offs from neighbours.

He says his job is getting harder: "One of the problems we've had in investigating this type of accommodation is that a lot of it has been hidden away.

"Unlike if it's in a predominately residential area, in industrial areas people are not interested in reporting it."

Mr Bolt says: "The people living in these places - factories and industrial units - are often vulnerable and quite a few them don't speak English or speak very broken English. They have difficulty finding work and they are often reliant on their landlords for work."

But it is not just migrant workers who find themselves having to endure what can be squalid living conditions.

For almost a year Erin, 24, lived on a houseboat on the Thames - paying £250 a month for a makeshift cabin aboard an old converted grain barge.

She came to London looking for work in the television industry, but the friend who offered a couch to sleep on moved.

"The boat is about 60ft [18m] long and basically has a house built on to it made out of scrap wood and metal. Some of the ceilings are even made out of old doors," she says.

It is one of three boats, moored together, which house up to 32 people.

Mains electricity is provided for just a few hours a day, thanks to a generator.

There is a camping shower, but hot water comes from boiling a kettle.

"At first I thought I'd take it on the chin - but then when it started raining a lot more and the weather got worse, the conditions got really unbearable. The walls leaked water, the carpet on the floor was wet for five months. It was so cold that you couldn't fall asleep and you could see your breath in your room," says Erin.

She says she suffered anxiety and depression as a result of her experience and, after months of saving, has now moved to a small flat-share.

Her former landlord says he has been working to improve conditions on the boats and was pleased the barges could offer people "shelter and get them on their feet out when they could afford little else".

In Hackney Wick, in the shadow of the Olympic Stadium, dozens of former factories and warehouses now house what is said to be the biggest creative community in Europe.

The residents are attracted by large spaces at relatively low rents.

Isobel, 27, lives in one former factory, which she shares with 11 others. Breeze-block walls divide the building into living spaces.

"It does feel like a warehouse but that's part of the attraction. You can take the space and do with it what you like - we've even built new rooms," she says.

Isobel says she has permission to live where she does, but Face The Facts has spoken to others who lived in buildings deemed to be for industrial use only but where landlords were creating other hidden homes.

"The building was so badly maintained because there was always that excuse, 'Oh you're not supposed to be living there,'" says Alex.

He says: "There were a lot of rats in the building. One day these rats just started dying in the walls and in the pipes because of the poison, and there was this horrible smell in our bathroom. And then eventually there was this trail of blood that came down the wall and it was it was really really grim. We went to the caretaker and he was just like, 'What do you want me to do about it?'"

The owner of the building told the BBC he would evict anyone he found living there and the LFB are now happy with the fire-safety precautions taken.

Housing Minister Kris Hopkins said the government had made £6m available to local authorities to "root out the cowboys" and 950 illegal and overcrowded commercial properties had been uncovered as a result.

But Rita Dexter, deputy commissioner of the LFB, does not believe the problem will go away in the near future.

She says: "Fundamentally there are many many people looking for places to live in London and it doesn't seem to me that that will diminish in the short term. We are very concerned about what is next in terms of what people will design as places for people to live.

"Ingenuity is one word for it. In our organisation we call it risk."

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Campaigners demand closure of ‘unscrupulous landlord' loophole

A campaign group has demanded that the government closes a loophole that allows “unscrupulous landlords to run off” with their tenants’ security deposits.

The call from Generation Rent follows the case of Daniel Burton, a rent-to-rent landlord who was expelled from a tenancy deposit protection scheme.

The scheme allowed the landlord to keep his tenants’ deposits, which meant that they were not protected when he was expelled from the scheme and subsequently went bust, owing 160 tenants around £140,000.

A Channel 4 News investigation revealed that Burton’s business, Unida Place, sub-let rooms to renters and went into liquidation in August 2013, leaving many of its tenants out of pocket.

Burton promised to pay the money back in November, but some tenants are still waiting to be reimbursed, according to the report.

Generation Rent says that the case raises serious doubts about the effectiveness of government-backed tenancy deposit schemes.

While one of the three different schemes provides the option to hold the tenant’s money in a neutral account, the two other schemes, including MyDeposits, run by the National Landlords Association (NLA), allows landlords to keep the money, in return for insurance payments.

If the landlord fails to comply with the scheme, such as in Burton’s case, the insurance becomes void and the deposit is not protected.

Generation Rent wants the government to review the deposit protection system to ensure that tenants’ money is not put at risk should their landlord fail to comply with the rules.

And it is also calling on the NLA to pay back any money that has not been adequately protected. 

Generation Rent additionally wants a national register of landlords to ensure that all tenants can check if their landlord is bona fide and legitimately letting the property.

Alex Hilton, director of Generation Rent, said: “More than two thirds of renters have no choice but to rent privately, which means they are easy prey for unscrupulous landlords and letting agents who enjoy Wild West levels of regulation. What regulation there is – to protect tenants’ deposits – now appears to be flawed. The nine million people living in the private rented sector deserve a market that works for them, instead of exploiting them.”

Click here to read the original article: "Campaigners demand closure of ‘unscrupulous landlord' loophole"

Convictions up for landlords failing to report rental revenue

HMRC is trawling through the buy-to-let sector, and already has seven convictions as a result of criminal investigations into landlords who have not declared rental incomes from let properties, says Mhairi Lees, tax supervisor at Alexander Sloan.

The UK residential property letting market is rich and varied these days, with a huge range of people, from professional landlords to individual second home owners, deriving an often very satisfactory income from it.

The most recent government estimates are that there are up to 1.5m residential landlords. Many will have substantial portfolios and run their properties as a mainstream business. Others may have inherited a property, bought one for student offspring or entered into a personal relationship which meant one partner’s property was surplus to requirements and could be rented out.

Whatever the reason, all these rental properties have one thing in common - they earn money for the owners and are liable to tax.

The strong and unwavering spotlight of HMRC is being turned at the moment on landlords big and small who, by accident or design, have failed to fully declare all their rental income.

The Let Property Campaign, which is running currently, is the latest in a series of anti-tax avoidance measures being taken by HMRC designed to help people to bring their tax affairs up to date, keep them that way and stop them getting it wrong in the first place.

Since 2007, HMRC campaigns - on themes such as property sales, direct selling and undeclared overseas income- have collected more than £552m in tax from people who became compliant and more than £224m from a large number of follow-up activities.

There are a number of criminal investigations underway and seven people have been convicted already, with custodial sentences handed out of up to two years. Those convicted have between them had to pay more than £550,000.

Marian Wilson, head of HMRC Campaigns, said: ‘All rent from letting out a residential property or holiday home has to be declared for Income Tax purposes. Telling us is simple and straightforward.

‘We appreciate some people will have made honest mistakes, and some may not be fully aware that the rent from a property is taxable, and that is why it always makes sense to talk to us so we can help. It is always cheaper to come forward voluntarily and pay the tax you owe, rather than wait for HMRC to come calling.

‘Telling HMRC about your tax liabilities is simple and straightforward, and help, advice and support are available. The message for all landlords owing tax is simple – it is better to come to us before we come to you.’

Keeping affairs in order

The Let Property Campaign, which was announced last summer, started officially in December 2013 and it has at least 18 months to run.

When HMRC runs a campaign of this nature, landlords would be well advised to take it very seriously and make sure their affairs are in order.

The campaign is in the early stages, but it is gearing up steadily and there is little doubt that the investigative officers of HMRC will already have a substantial database of people with whom they would like to have a chat. HMRC will have obtained information from a variety of sources including letting agents, adverts (online and in the press) and also the Land Registry.

If landlords feel that they may owe tax - whether through a misunderstanding of the rules or for any other reason - now is the time act. It is important to remember that even if after deducting all your property expenses you are making a loss you still need to declare the activity to the HMRC. This will also allow you to secure these losses to be offset against any future profits.

The opportunity to come forward voluntarily is time-limited, but those who do so will obtain the best possible terms for any possible payments.

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When TDS unfairly find for the tenants at adjudication

The following article is from the Landlord-Law Blog.

Here is a question to the blog clinic from Patty (not her real name) who is a landlord:

After a deposit was lodged with the TDS, and the correct paperwork served, the exiting tenants put in a claim.

The deposit was £620.

The case went to adjudication, and it was ruled that all of deposit should be returned to tenants.

This happened even though the landlord had submitted evidence that all of the deposit had been used to clear up bills left by the tenant. There was also a cleaning bill, from a professional company who had to clean the property from top to bottom, after the tenants left it in a dreadful state.

All monies spent were supported by invoices.

There was an electricity bill of over £200, cleaning bill of £100, sceptic tank emptying of around £50, and the list goes on.Should a landlord now have to pay the daily living costs left unpaid by tenants. Surely this is what a deposit is for – to prevent the Landlord being left out of pocket ?

I understand from the TDS, that the decision of the adjudicator cannot be reversed – so where does this leave the Landlord ?

A complaint has gone in to the TDS, in line with their own prescribed procedure. I await their findings.

They continue to send requests for the £620 to be paid to them for return to the tenants and they now threaten legal action on the Landlord if the money is not sent.

As the landlord – I am now not only out of pocket, but face legal action by the TDS, – I would rather let this one get taken to court than have to unfairly pay the bills left tenants.

Are then any cases like this – where unfair adjudication has ben addressed by the courts ? Or indeed cases where evidence supplied has been totally ignored ?

You don’t say why TDS found for the tenants.

Adjudication is a legal process and has to follow certain rules.  The underlying rule is that the deposit is the tenant’s money and so the landlord has to prove ‘on the balance of probability’ that he is legally entitled to make a deduction before the adjudicator will rule in his favour.

There are always two elements to a claim:

• Liability and
• Quantum

Liability

This is about whether the tenant is liable for the item claimed by the landlord.

A common reason why tenants are not found liable for claims is because the tenancy agreement does not include a clause authorising the landlord to make deductions from the deposits.

Or the clause in the tenancy agreement may not authorise the particular item the landlord is claiming for.

Quantum

This is about whether the actual sum charged by the landlord is reasonable.

So if a carpet was soiled, an adjudicator may consider that a claim for replacing the whole carpet is unreasonable if it could have been cleaned.

Or, if replacement is allowable, the cost may be considered too high (for example if a tatty old carpet is replaced by a high quality persian rug).

Or there may be an element of ‘betterment’ if an old carpet is replaced by a new one, and awards are often reduced to take account of the expected usable life of the old carpet.

Procedure

Finally there is the question of whether you followed the proper procedure in submitting your evidence.

For example if it was submitted too late it will not be taken into account.

Also – you say you have invoices. Presumably copies of these were actually submitted to the adjudicator?

Conclusion

Although the decisions made by adjudicators often seem unfair, there is almost always a legal reason why they came to the decision that they did.

This is why it is important that landlords take care when submitting their evidence.

If the adjudicator has found for the tenant and you fail to put them in funds to refund the money to the tenant, they are legally entitled to recoup this money from you.  So you are unlikely to be able to defend their claim successfully.

Click here to read the original article: "When TDS unfairly find for the tenants at adjudication"

Another council to introduce mandatory licencing for all landlords

Cabinet members have passed proposals to bring in a licensing scheme for private landlords.

Enfield Borough Council’s cabinet voted last night to pass the scheme, which introduces a compulsory licence that will cost £500 over five years.

The council has brought this in to stop rogue landlords and ensure property owners adopt health and safety measures.

Landlord Graham Roberts, who spoke at the meeting last night, believes the idea of tackling anti-social behaviour by targeting landlords doesn’t add up.

He said: “No report can suggest that private rented households cause anti-social behaviour. One correlation in data does not automatically mean it is just down to that one thing.

“What the council needs to understand is that we are not against the idea of tackling antisocial behaviour, but they should at least invite experienced landlords to help combat this issue. Whether they will or not remains to be seen.

"The scheme feels like it is stigmatising landlords, it is not about the fee."

Mr Roberts made it clear that any representation last night did not come from group Stop Enfield, which has been rallying support against the scheme.

Councillor Ahmet Oykener, cabinet member for housing, said: “The council wishes to support the development of good quality private rented sector in Enfield, and support private landlords to achieve this by setting clear standards.”

Cllr Oykener also claimed that if landlords signed up early they get a reduction of 50 per cent by signing up before April 2015.

The plan will go before the overview and scrutiny panel on April 30.

Click here to read the original article: "Cabinet passes landlord register scheme"