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.

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.

Landlords in the firing line – again!

Landlords are under fire again today. This time for not giving renters enough information about their tenancies. In a new survey by the National Landlords Association, reported in Landlord Today, more than two thirds (67%) of tenants say they don’t get enough information about their rights and responsibilities. This is hard to believe. Landlords have to give new tenants a copy of the government’s How To Rent guide when they sign their rental agreement.  If they don’t, they can’t use the section 21 (no fault) eviction procedure if they need to – although this may not be an option for much longer.

It would help landlords if the Ministry for Housing, Communities and Local Government (MHCLG) which issues the guide and updates it on a regular basis – could get new versions out in a timely manner. When the tenant fees ban came in on 1 June, a new version was released but the MHCLG didn’t update it until the last minute. This is important because the new form includes changes to form 6a. This stipulates that landlords and letting agents cannot use a Section 21 eviction procedure if they have taken a ‘prohibited payment’ from a tenant and it has not been refunded in full.

Any landlord signing a rental contract with a new tenant that week, could have been forgiven for not handing over the correct version of the guide but would still have found any Section 21 notice invalidated by using the wrong version.

That aside, despite an apparent lack of knowledge of the How to Rent guide, there is a positive message from the NLA survey. Most tenants have a good relationship with their landlords. More than two thirds (68%) say they have never had any cause for complaint. And another 12% say any complaints they do have are dealt with properly.

So the majority of landlords are clearly doing the right thing and most tenants are happy. If the landlord or agent has handed over the How to Rent guide at the outset of the tenancy, surely they have fulfilled their side of the bargain. Many do a lot more and spend time talking tenants through what they can expect.

But as several readers point out in Landlord Today, although it is important for tenants to know their rights and responsibilities, you can’t force people to read the small print.

The focus is now on property management – but make sure you get it right!

Letting agents have been told today, that by not including property management in their services, they could be losing out on “thousands of pounds of potential income”. New research from outsourcing supplier ARPM, reported in Letting Agent Today, shows that many agents typically offer let-only. By offering a full management service too, ARPM calculates they could boost average annual income by up to 80% per tenancy. That’s big money.

The report reveals an untapped market of almost one million landlords in London alone who just use letting agents to find them tenants – or don’t use one at all. With private rentals expanding across the country year-on-year and many landlords living remotely from their investment property, there is huge potential for growth. And a chance to claw back the estimated £400 per letting that agents are expected to lose as a result of the tenant fees ban.

Property management is a business that shouldn’t be entered into lightly

But – and this is a big but – property management is a serious business. The government has property agents in its sights right now and poor service in our sector is soon to be outlawed by the advent of stronger regulation and the need for recognised qualifications. So, like marriage, this isn’t a client relationship to be entered into lightly.

As chartered surveyors and professional managing agents, we have long-standing experience in this market. Our lettings division Life by Ringley, based in Manchester and servicing clients across the region, has a clear understanding of the wide-ranging needs of landlords and tenants. We provide both basic and full management services, with fees clearly stated from the start. Click here to find out more. o.uk/

As well as managing rental property, Ringley specialises in leasehold blocks. Rather than a one-size-fits-all approach, our Blockcare offer has something for everyone, from a basic service to fully managed options. Fees are charged according to the level of management you require. Sign-up is easy and almost everything from site reports, minutes, invoicing and accounts can be done online. We can take us much or as little of the hassle out of your management requirements as you want us to.

We even have a tailor-made package for you to use if you can’t afford a managing agent! So click here to find a package that suits your needs.

Tenant Fees Act now in force

The Tenant Fees Act came into force in England on 1 June. This is a very important change in the law for everyone living and working in the private rented sector.

The key change is that landlords and letting agents can’t charge tenants a fee for anything that isn’t listed in the Act as a permitted payment. Allowable payments are:

  • Rent
  • Tenancy deposit
  • Holding deposit
  • Payment in the event of a default
  • Payment on variation, assignment or novation of a tenancy
  • Payment on termination of a tenancy

Also, landlords and letting agents can still take payments for council tax, utilities, TV licences and for communication services such as telephone and internet. Fees can’t be charged on anything that isn’t on the list above, including:

  • Credit checks
  • Inventories
  • Cleaning services/professional cleaning
  • Referencing
  • Admin charges
  • Gardening services

Landlords and agents do need to read the small print – or in this case, the Act – because there are some other changes you will need to know about. Go to https://www.gov.uk/government/collections/tenant-fees-act to see the Act in full.

There are now a number of limitations on the way rent is paid. Holding and tenancy deposits are capped at one week’s rent and five or six weeks’ rent accordingly and it is not acceptable to ask for an additional deposit to be paid by renters with pets. It is permissible though to charge a higher rent if a tenant moves in with their cat, dog or rabbit.

Fees are still allowed for replacing lost keys or electronic fobs but charges must now be evidenced in writing to demonstrate that they are reasonable. Landlords and agents are also still able to charge interest on overdue rent but the caveat here is that the fee only kicks in when the rent is more than 14 days late. Interest can only be charged at 3% above the Bank of England’s annual percentage rate for each day the rent is outstanding.

Tenants can no longer be charged a penalty for contractor call outs or missed appointments but deductions can be made from the tenancy deposit if there is a clause in the tenancy agreement that has been broken, such as not returning the property to the state it was in at the beginning of the tenancy.  Charges can also be made for work or repairs that are deemed necessary before the end of the tenancy if the damage is the fault of the tenant and the landlord or agent needs to provide accurate evidence of any costs incurred.

To be absolutely certain that landlords understand the new rules, ARLA has developed a toolkit that explains the new legislation in detail. Go to https://www.arla.co.uk/tenant-fees/ to download a copy.

Later in the week, we will take a look at the industry response to the new Act and asking what will be the likely impact on landlords and agents.