About planetRent

New advice on Right to Rent

After months of uncertainty for landlords, the Home Office has now released updated guidance on Right to Rent, to help anyone letting property in England ensure they are compliant with the law.

The new guidance provides advice for landlords with tenants from Australia, Canada, Hong Kong, Japan, Singapore, South Korea and the United States (B5JSSK nationals), who are in the UK for up to six months.

Since May B5JSSK nationals have been able to use electronic gates at UK airports, so they don’t have their passports stamped on arrival. This has caused difficulties for landlords because their passports didn’t visually prove their right to be in the UK.

Now, the latest Home Office advice confirms that landlords can use the following as acceptable evidence of entry to the UK:

  • An original or copy (hardcopy or an electronic copy) of a boarding pass or electronic boarding pass for air, rail or sea travel to the UK, establishing the date of arrival in the UK in the last six months
  • An original or copy of an airline, rail or boat ticket or e-ticket establishing the date of arrival in the UK in the last six months
  • Any type of booking confirmation (original or copy) for air, rail or sea travel to the UK establishing the date of arrival in the UK in the last six months
  • Any other documentary evidence which establishes the date of arrival in the UK in the last six months.

The requirement is waived for holiday lettings of less than three months.

If a potential tenant is unable to present any of the above evidence, a landlord can use the Landlord Checking Service to confirm Right to Rent eligibility. It’s important that landlords keep evidence of Right to Rent checks on file throughout the tenancy, and for 12 months after the tenancy ends, after which time data should be securely disposed of.

For more information and to read the new guidance in full, click here.

Rents up as landlords leave the market – but agents remain positive

Demand is up and so are rents

Two new reports out this week look at the lettings industry. Both are revealing.  The Association of Residential Letting Agents (ARLA) and digital referencing company Goodlord put the current state of the lettings industry under the spotlight, now that agents have started to adjust to the changes brought in by the Tenant Fees Act.

According to ARLA, rents rose to their highest-ever level in June, with demand also on the increase. Year-on-year, the number of tenants facing rent increases is up from 31% in June 2017, and 35% in June 2018. At the same time, the number of properties under management fell. ARLA chief executive David Cox expects this to be a continuing trend.

 “In addition to the repercussions of the Tenant Fees Act, the proposed abolition of Section 21 coupled with the Mayor of London’s recent call for rent controls, will only cause the sector to shrink further. In turn, this will increase pressure on the sector because it will discourage new landlords from investing in the market, causing rents to rise for tenants as less rental accommodation is available.” He said.

Ever since the Government proposed the ban, ARLA has warned that tenants would continue to pay the same amount, but the cost would be passed onto tenants through increased rents, rather than via upfront costs.

Goodlord also surveyed letting agents around the country to take the pulse of the industry during the summer months. They reveal that agents are largely optimistic despite the issues raised by the ARLA survey. The agents surveyed admit they expect to lose revenue following the fees ban in June but they are taking a positive stance, with almost half (47%) of those polled planning to expand their managed portfolio in response.

But perhaps the most interesting feature of this survey is that while letting agents continue to deal with the familiar pain points of the rental business from carrying out referencing to sourcing tenants, more than 80% of them are increasingly looking to Proptech to make these processes easier. This is the trend to watch and we’ll be blogging on this again in the coming weeks.

Insurance: are you covered?

Your landlord should be insured for this kind of damage but what about the contents of your flat?

Insurance, like braces on your teeth or income tax, is a necessary evil. It’s a topic that needs be taken seriously. We’ve blogged before about the importance of ensuring you have the right cover in place. So we want to share some new research from Aviva with you.

According to the insurer, which provides cover for one in four UK households, a growing number of renters are putting themselves at risk by choosing to remain uninsured. Aviva polled 2,057 people in June, including 567 respondents living in rented accommodation and 585 respondents who own their house with a mortgage. The results are interesting.

First, the vast majority of renters taking part in the survey, don’t have any form of protection in place; life insurance, critical illness cover or income protection. This means they may have trouble paying their rent if they unexpectedly have a drop in income and compares badly to homeowners. Three out of five people with a mortgage told Aviva they have some kind of protection insurance in place.

The research also reveals that only two out of five households living in rented accommodation have contents insurance. This rises to nine out of ten homeowners with a mortgage. Aviva calculates that this means almost six million renting households could be without any insurance cover at all if their possessions are damaged by fire or flood or stolen.

The reality, of course, is that the responsibility of buying a house or flat often triggers the purchase of life insurance and contents cover. And buildings insurance is a standard requirement. This is not the case for tenants, who are also likely to spend a larger proportion of their income on housing costs and so have less spare cash. Aviva found that on average renters spend 35% of their income on rent, compared to the 25% spent on a mortgage. And people living in the private rental sector are paying the most, with figures averaging out at 40%; this is considerably higher for many people renting in London.

No surprise then that insurance is an expense too far. If you’re young and single, the need for life insurance may seem negligible but contents insurance is a different matter. People living in flats may feel they have added protection from theft due to block security, concierge staff or just knowing there are plenty of other people for thieves to choose from. However, fire, as we all know too well, is often devastating and can leave people literally with just the clothes they are standing up in. And leaks from neighbours’ flats can quickly destroy fixtures and fittings as well as personal possessions.

Never assume your landlord’s insurance will cover you. It may pay for redecoration if the bathroom upstairs floods but it won’t pay out for that damaged laptop or your book collection. So if you are renting your home, think again about contents cover. It’s cheap and quick to buy online. You may never need it – but is it worth taking the risk?

Want to make money from short-term lets? Check your lease first!

Thinking of sub-letting? Think again…

Many of us now use short-term lets to pay for our holidays or to make a regular income.  As we’re right in the middle of the holiday season you might be tempted to give it a go. But before you do – think again. Here’s a cautionary tale for renters or leaseholders thinking of using Airbnb or another online platform to make a bit of extra cash.

Toby Harman was taken to court in July and was hit with a whopping £100,000 fine for renting out his London flat on Airbnb. He had been renting out his ‘cosy studio apartment with a hot tub’ on the short-term lettings website since 2013. Sounds great if you fancy a bijou London base for a spot of sightseeing. Unfortunately for Toby, he was caught out when Westminster City Council discovered the host masquerading on Airbnb as ‘Lara’  was in fact one of their tenants. It turned out that Toby was sub-letting his flat in strict breach of his social housing tenancy agreement. After a failed appeal he was evicted and told to pay back £100,974 in unlawful profits.

This case revolves around the dos and don’ts of social housing but the same rules are likely to apply to any homeowner who doesn’t own their freehold. If you are renting, it goes without saying that your landlord may not be thrilled to find you are sub-letting his property. Eviction is the likely outcome if you’re caught out and you could end up in court. And if you are a leaseholder, don’t even think about going down the Airbnb route without first checking your lease. Read the small print – the devil is always in the detail.

Most leases state that a flat can only be used as a private dwelling and short-term lets are very unlikely to fit the bill. This is clear from the widely reported 2016 case of Nemcova v Fairfield Rents Ltd (now known as the Airbnb ruling). Well worth a closer look if you’re in any doubt.  

The other important point to note was highlighted earlier this year in the case of Bermondsey Exchange Freeholders Limited v Ninos Koumetto. This case draws attention to the fact that most residential leases don’t allow owners to share possession or occupation of their flat or to use it for a commercial purpose (which includes AirBnB lettings) without consent of the freeholder. By all means talk to your landlord but don’t be surprised if you get a negative reaction.

What all these court cases clearly show is that short term lets are a minefield if you live in a flat. So tread carefully!

Renting – what do you think about it?

Despite all the bad press that renting often seems to attract, most people are happy with their rented home and have no complaints about their landlord. This is the good news for the rented sector from the latest English Housing Survey Private rented sector report, published yesterday.

Private rentals are the second biggest housing sector in England. The government estimates the PRS at 4.5 million households compared to 14.8 million owner occupiers, with about one in five households in England renting their home.

Most renters are happy in their homes says the latest English Housing Survey

According to the survey, the vast majority (84%) of private renters say they are ‘satisfied’ or ‘very satisfied’ with their current accommodation, though satisfaction levels are higher among owner-occupiers (95%).  Private renters are also less happy with their tenure, at 69%, compared with 98% of owner-occupiers. In a country where owning your own home is a key aspiration for most people, this is not unexpected.

Compared with social renters and owner-occupiers, private renters spend the most money on housing. On average, they spend a third of their household income on rent. And there are no surprises in the fact that Londoners spent more on rent than people living outside the Capital. What is more unexpected is that despite the often high cost of renting in comparison to paying a mortgage – and the number of renters who receive Housing Benefit –  the majority of people polled said they found it ‘easy’ or ‘very easy’ to pay their rent.

And despite the difficulties of getting onto the house-buying ladder, more than half of private renters thought they would eventually buy a home – even though a sizeable proportion freely admit they have no savings. Younger renters were more likely to think they would eventually become home owners. But without any clear idea of how this might happen, this sounds more like the optimism of youth, rather than a sign of increasing affordability in the housing market!

Is it time to ditch licensing schemes?

Passports are fashionable in the rental sector right now. Last month we had deposit passporting and now we have the concept of a so-called rental property passport.

This is the suggestion of  Theresa Wallace, head of lettings customer relations at Savills and current chair of The Lettings Industry Council. Speaking at The Property Ombudsman Conference last week, she told delegates the passport “could rapidly improve the quality of accommodation and landlords, and would be far fairer than the slew of licensing schemes now in force”.

Could the idea of rental property passports signal the end of licensing schemes?

It would be based on the DVLA model which manages the details of almost 50 million drivers and 40 million vehicles. Letting Agent Today outlines how the passport might work.

  • Each rental property would have a unique reference number. These are already allocated to properties by the Land Registry;
  • Any property without a reference number would not be ‘official’, so may have been illegally converted;
  • Every advertisement for a rental property must include its reference number and would also include the equivalent of a ‘property MOT’ certificate to ensure it had passed appropriate tests. 

Delegates at the conference were told that Hunters have already successfully piloted the scheme and that the Lettings Industry Council has found a not-for-profit supplier who may be able to operate a PropTech portal. This would mean the properties could be quickly and easily viewed by the public and Trading Standards.

If you are a landlord – or a tenant – we’d like to know what you think about this idea, so do leave your comments below.

Looking forward to the flat of the future

Ever wondered what the flat of the future will look like? Laura Geode from American Proptech company Homebase has some interesting ideas. Most of them revolve around IoT or the internet of things. This means greater connectivity between the devices and appliances in our homes; something we will soon all take for granted.

First, says Laura, our homes will talk to us. Many of us already have AI assistants in the form of Alexa or a Google hub but this technology is evolving fast. For flat owners and renters, a digital concierge will soon be there to turn on your lights, rent a car from the block’s car-sharing service or find a film for you to watch.

The internet of things will transform the way we live

And what about fixtures and fittings? Laura predicts that from windows to appliances and light bulbs to locks, there will be dozens of IoT devices in each unit making them more user-friendly and energy efficient. Picture this: your refrigerator door features a screen showing a digital image of all the food inside of it. You click on the chicken breasts and a list of recipes appears, all based on the food you have in stock. Missing an ingredient? There’s a one-click option to buy and have it delivered to you in time for tea!

Developers are keen to take up this technology but Laura says it’s important to approach it correctly. Most properties that try to be “smart” start with installing IoT devices like thermostats and locks, she says. Instead, developers should start with property-wide wi-fi, Bluetooth, and sensors. This network infrastructure allows devices to work seamlessly together.

In America apartment blocks feature air conditioning as standard. In the UK this may be essential in future as global warming takes hold. So in order for a block air conditioning system to be as energy efficient as possible it needs to communicate directly with the lights, thermostats and windows in the building. That’s not possible without network infrastructure in place.

Above this, says Laura, will sit the building operating system. This means residents will be able to control all of their devices from a single app and property managers can collect building-wide data too. This data makes it possible to find ways to run blocks more efficiently and create a better resident experience. And if all this sounds a bit far-fetched, don’t forget that the 5G technology we need to make all this possible, is already here.

Finally, Laura urges block owners and managers – especially in the rented sector –  to constantly ask themselves “How can we provide more things ‘as a service’?” From dog walking to wifi, residents want to live somewhere that makes their life easier. Hospitality and block management are coming together. And that won’t stop anytime soon. 

Buy-to-let – where can you get the quickest returns?

UK rents are going up. According to new figures from HomeLet, rents have increased by an average of 13.9% in five years. The average rent in the UK is now £941 a month, – an increase of £17 – on the same time last year. Rents in June increased in all 12 regions monitored by HomeLet, led by gains in Northern Ireland, where rents are up 4.7% year-on-year.

Also, rental yields are at their highest level for two years, according to the latest Buy to Let Britain report. The average yield now stands at 4.5% – the highest rate since the first quarter of 2017.

Buy-to-let: where’s the best UK location?

Great news for landlords, particularly those with buy-to-let property. They are under increasing pressure from the government in the form of additional tax, property reforms and new regulations – with more to come in the next few months. So research from Benham and Reeves could be required reading for anyone thinking of investing in the BTL market in the near future.

The report looks at the best parts of the UK to buy your BTL property. It ranks locations on the time it takes to recoup the investment on purchase and stamp duty costs, based on annual rental return. Benham and Reeves say Scotland is the now best place to invest. They claim annual rent is repaying stamp duty and average property prices in just over 17 years.

Northern Ireland comes out second, followed by England and then Wales. In Scotland, buying a rental home in Glasgow shows the quickest returns at 13.3 years, followed by Belfast at 15.8 years and Aberdeen at 17.8 years.

In England, Nottingham and Newcastle show the fastest returns. And in London, Tower Hamlets is the best location, closely followed by Barking and Dagenham, Newham and Greenwich.

But making a good return on a rental property is complicated. There are other things to take into account. Contingency budgets, capital growth and the impact of gentrification or other types of development on the location you choose must all be considered.

What this research really shows is that BTL isn’t the best way to make a fast buck. It’s a long term investment that needs careful thought. With so much changing in the market, only those who are prepared to stay the course – and understand the obligations and responsibilities of providing homes for tenants – should think about putting their money into rental property.

Deposit passporting – have your say

In June we blogged about the idea of rental deposit passporting. The idea is to make it easier for renters to transfer deposits directly between landlords when moving from one property to the next,

Housing Secretary James Brokenshire MP has now announced a Call for Evidence on tenancy deposit protection in England that, among other things, invites views on passporting.

Deposit passporting – what do you think?

The government hopes to get a better understanding of the problems tenants face in providing a second tenancy deposit when moving from one tenancy to the next. It is also searching for ways to speed up the return of deposits to tenants at the end of their contract. The Call for Evidence will look at whether current thinking on making deposits affordable are meeting tenants’ needs and whether the market can offer improved products.

The results from the Call for Evidence will help the Tenancy Deposit Protection Working Group. This is looking at whether improvements can be made to deposit protection to the benefit of tenants and landlords. ARLA Propertymark is part of the working group – which has been running for the last 12 months. ARLA supports the idea of moving deposits between tenancies. But it says any solutions that the government comes up with must consider the interests of all parties.

“For deposit passporting to work, we need to ensure that both the outgoing landlord’s deposit can be used if needed, while the incoming landlord has certainty they will get the full deposit they have agreed by the tenant,” said ARLA this week.

“Affordability for tenants of any bridging loan or insurance policy will be key if deposit passporting is going to be a workable and affordable solution for the future of deposits.”

So if you are a landlord, a property manager or a tenant with strong views on how this could work in future, you can download the Call for Evidence and have your say by email to DepositReform@communities.gov.uk or online by 5 September.

Making rental deposits easier to transfer

Good news for tenants today. In future it could be made easier to free-up rental deposits when moving from one property to another via “deposit passporting”. Speaking at a major housing conference in Manchester, Communities Secretary James Brokenshire said this was one of  the ways that the housing market could be made fairer.

Deposit passporting sounds like good news for tenants but what about landlords?

“Ministers are inviting proposals to make it easier for renters to transfer deposits directly between landlords when moving from one property to the next,” he said.

This is because some tenants find it a struggle to provide a second deposit to their new landlord. Until their original deposit – on the home they are moving out of – is returned by their current landlord, many renters find themselves in danger of getting into debt or becoming trapped in their current home. With more than 4 million people living in the private rented sector, the government want to understand the scale of this problem.

Shelter welcomed the news. “A deposit passporting scheme would help the country’s hard-pressed renters avoid having to stump up a fresh deposit before they’ve got the old one back, ” said the housing charity in The Times.

But what about landlords? There is a reason why deposits are withheld until the check-out process has been completed – and that’s because not all renters leave properties in good order.  It may not always be possible to inspect a property until after the tenant has left. And any damage may not be immediately obvious. If the deposit has already been “passported” that could leave the previous landlord high and dry.

The suggested solution set out by James Brokenshire today is that the previous landlord should still be able to claim part of the deposit for any damages, and the tenant could top up the deposit if necessary. So could it work? Maybe.

The next step is a Call for Evidence. The industry will be asked to consider whether the scheme should be government-backed, or whether existing deposit schemes could be tweaked to take passporting on board. The Secretary of State told the press today: “We need to do this thoughtfully”. Let’s hope he means it.