Stay put – when is it safe to leave?

Stay put policies have really come under scrutiny in recent months. In a high-rise block the concept is sound – but only if all the many aspects that add up to successful compartmentalisation are in place. This means sub-dividing buildings into a number of compartments to restrict the spread of fire but it relies on effective fire doors, fire stopping applied correctly to windows and service access points and so on.

Both the public and the property industry are now painfully aware that when a fire broke out at Grenfell Tower on 14 June 2017, proper attention had not been paid to the passive fire protection that was needed to make compartmentalisation work. Stay put utterly failed that night and the result was horrendous loss of life. Once the policy was finally abandoned and residents advised to leave the building, it was too late to safely evacuate.

Grenfell has forced government to take a fresh look at Approved Document B – which is the part of the building regulations that deals with fire safety. Stakeholders are being consulted and changes made. However, so far, those changes haven’t included any advice around escape plans, ie what should residents do if stay put has to be abandoned?

The RIBA drew the government’s attention to this issue earlier this week, saying that too much emphasis is still being placed on building design and construction to resist the spread of fire, while aspects such as warning residents of a fire, escape plans and access for the fire service have not been prioritised.

The architects’ body wants guidance on escape plans to be included in Approved Document B, as well as a requirement for:

  • at least two staircases in new multiple occupancy residential buildings;
  • the introduction of centrally addressable fire alarms, which allow fire crews to quickly find which alarm has been activated; and
  • sprinklers to be fitted in all new and converted residential buildings and  retrofitted in existing residential buildings above 18 metres.

Jane Duncan, chair of RIBA’s expert advisory group on fire safety, said: “We simply cannot allow buildings to continue to be built to regulations and guidance that everyone, including the government, acknowledges are deeply flawed.”

We agree. While the government is still shaping its response to Grenfell, let’s hope it does too.

Know your onions – and your tomatoes!

Could you tell the difference between cannabis and tomatoes? One Scottish letting agent was caught out recently when she found a tenant growing what she thought was cannabis in the bedroom of a rented property in West Lothian.

In fact, the letting agent was left red-faced when the plants turned out to be tomatoes! However, the agent was right to be vigilant and right to report her suspicions when she got back to the office. Cannabis farms are on the increase and growers often choose rented properties to grow their plants.  

The bad news for landlords is that the law holds you responsible if you allow your rented property to be used for the production, cultivation, possession or supply of cannabis. Weed is a Class B drug and the penalties under section 8 of the Misuse of Drugs Act, 1971 are severe. You could end up with a criminal record or a hefty fine.

So what are the warning signs to look out for? Here are a few pointers:

  • If you know what cannabis smells like, this might give you a clue even when the plants are out of sight. It is one of the major tell-tale signs of being near a drug farm.
  • Equipment such as lighting racks and ventilation fans being taken into the property may be a sign of tenants being up to no good – the neighbours might also have spotted such activity.
  • Have the windows been blacked out or permanently covered? This may be a sign that lighting conditions are being controlled for the cultivation of a cannabis crop.
  • Is there evidence of strong lights being left on day and night?
  • Constantly misted windows and signs of condensation might indicate the higher than normal temperatures being maintained within the building.
  • Growers are likely to be using ventilation and extraction fans 24/7 – you would be likely to hear the sound of these as soon as you approach the property.
  • annabis farms require a lot of power and energy – unusual cabling running out of the property could be used to tap into illicit supplies of electricity from street lighting.

If you or your property agent does become suspicious, call the police immediately. Don’t tackle any of the occupants yourself as they could respond violently.

The moral of this story is that not only should landlords and property agents be vigilant and be aware of the tell-tale signs of illegal activity in rented properties  – but they also need a rudimentary knowledge of horticulture!

Don’t forget the smoke alarm!

Landlords and letting agents are the target of a new smoke alarm awareness campaign launched this week. West Yorkshire Fire and Rescue Service is promoting ‘Let it, don’t forget it’ in a new video urging private sector landlords and letting agents to make sure smoke and carbon monoxide alarms are fitted in their rented properties. The fire safety video, which you can watch on YouTube here, highlights the changes in the law that were introduced in 2015.

The Smoke and Carbon Monoxide Alarm Regulations 2015, oblige landlords to take responsibility for fire safety in their properties. At least one smoke alarm must be installed on every storey and carbon monoxide alarms must be fitted in any room containing a solid fuel burning fire or stove. Either hard wired or battery powered alarms can be installed and your local fire service can offer advice if needed. But the landlord’s obligations don’t end  there. Either they or their letting agent must make sure all alarms are working properly at the start of each new tenancy.

Failure to comply could mean a fine of up to £5000, so we suggest landlords make provision for tenants to sign the inventory when they move in, to record that the required alarms have been tested by the landlord and that they are satisfied they are in working order.

Renters also need to take responsibility for their own fire safety and test the alarms in their home regularly. We recommend doing this monthly. It only takes a few minutes and it could save a life. If an alarm isn’t working inform the landlord straight away.

In July 2018 the letting agent responsible for a property in Huddersfield where two little boys died in a house fire was jailed for 12 months for failing to fit smoke alarms.

West Yorkshire Fire and Rescue Service were called to the blaze.  Dave Walton, deputy chief fire officer said: “On the third year anniversary of the boys’ loss we want to remind landlords and letting agencies of their responsibilities. Do not take the risk with people’s lives and do not think that a fire ‘will never happen’ – it could… If you are a private sector landlord or letting agent then take your responsibilities seriously and take heed of this warning.”

To read the government regulations on fire safety in rented (but not long leasehold) homes, click here

High Court: Right to Rent does breach human rights

The High Court has ruled today that the government’s controversial Right to Rent scheme breaches human rights law.

Right to Rent was introduced by Theresa May when she was Home Secretary, as a key strand of the Government’s increasingly discredited ‘hostile environment’ for illegal immigrants. No one wants to find they are renting their property to someone who is living in the UK illegally. But the problem with the Right to Rent scheme is that it puts landlords, not the Home Office, in the driving seat. Landlords are personally responsible for checking the immigration status of tenants themselves, which is regarded as completely inappropriate by landlord organisations because they could face prosecution if they get it wrong and are found to be renting to someone who has no right to UK residency.

Last year the Joint Council for the Welfare of Immigrants (JCWI) brought a case against the government, backed by The Residential Landlords Association (RLA) and Liberty, claiming the policy is incompatible with human rights law because it drives discrimination against non-UK nationals who might be in the country legitimately and British ethnic minorities.

Today, the JCWI got the verdict it was hoping for. The High Court has ruled that the scheme does breach the European Convention on Human Rights and that discrimination by landlords is taking place “because of the Scheme.” The judge, Mr Justice Martin Spencer said that the safeguards used by the Government to avoid discrimination, namely online guidance, telephone advice and codes of conduct and practice, have proved ineffective. He concluded that “the Government’s own evaluation failed to consider discrimination on grounds of nationality at all, only on grounds of ethnicity.”

The RLA is now calling on the government to accept the decision, scrap the Right to Rent, and come up with a better way to sensibly manage migration, “without having to rely on untrained landlords to do the job of the Home Office.”

Is noise getting you down?

Noise levels in blocks of flats around the country may have been higher than normal last week as thousands of children let off steam during half term. But for most people living in flats, noise that reaches nuisance levels is an unwelcome but rare occurrence. The right to ‘quiet enjoyment’ of your living space is included in leases as standard and if your neighbours continually play their music at ear-splitting levels or have noisy parties every weekend, you are within your rights to complain to your building manager.

Unfortunately the advent of short lets on Airbnb and other online platforms is hiking up the number of complaints from flat owners about noise in their blocks

Property manager Ian Smallman, a director of Principle Estate Management, said in the press this week that noise and anti-social behaviour due to short-term letting is a growing problem, especially in city centre locations.  “Occupiers… often complain about groups, usually younger people, being rowdy and partying until the early hours of the morning, causing damage to the communal areas and more often, just being a nuisance” he said.

In fact, Airbnb lettings may be in breach of the lease, so if your block is affected, talk to your block manager. The starting point is always to look at the lease and see what, if any, restrictions it puts on sub-letting.

The freeholder can then apply to the First Tier Tribunal for a determination that the leaseholder is breaching their lease under section 168 of the Commonhold and Leasehold Reform Act 2002.  Decisions made in the cases brought so far haven’t been particularly consistent but the recent case of Nemcova v Fairfield Rents Ltd did offer guidance that is likely to be followed in future.

In the meantime, property guru Phil Spencer’s property advice site MoveiQ.co.uk has done some research and discovered that the London borough of Kensington and Chelsea is the noisiest place in the country to live. It was followed closely by Islington, Southwark, Haringey and Newham. Belfast and Edinburgh were the only places outside London to feature in the top 10.  

So if you’re looking for a quiet life, avoid city centres – especially London – and maybe consider moving to one of the quietest places in the UK –Clackmannshire in Scotland, mid Devon or even the Outer Hebrides!

To charge or not to charge?

If the Tenants Bill, now going through parliament, becomes law next year letting agents and landlords will only be able to charge for rent and deposits – now to be capped at 5 weeks’ rent; for a change in or early termination of a tenancy; for utility and council tax bills; and for damage or cost caused by a tenant, such as replacing lost keys.

 The government says it doesn’t want tenants to be “stung by unexpected costs” and intends to make renting fairer and more transparent.This is sound thinking. At Ringley we support making renting and moving home cheaper. We also applaud any attempt to outlaw profiteering from tenants who simply need a home – and there are some very high charges levied, often up to£200 per tenant for ‘referencing and tenancy fees’. 

There are a number of genuine costs that are passed on by letting agents. Tenant finders fees are paid by a landlord to their letting agent, and rightly so. Where landlords are complaining about this, they need to understand the work that goes into the actual referencing of the tenants, obtaining proof of salary and past tenancies from previous landlords.

Likewise referencing fees. These are a legitimate expense for which it is only fair to charge tenants. I believe a letting agent would be negligent if they suggested their landlord clients should accept tenants without referencing them and until the government chooses to provide a free referencing service, references are a necessary disbursement incurred with every new letting.  

If the government is determined to abolish referencing disbursements as well as letting fees then it should centralise and open up the records it holds, providing them free of charge to letting agents and landlords.  

Government records that could underpin free referencing include:  

-PAYE tax records (to verify earnings), easy now all employers must file electronically,

– CRB checks (to verify ASBO cases and criminal activity)

– Housing Act court cases (to check previous evictions and breach actions)

– Land Registry data (to verify guarantors)

– Tenancy Deposit Service disputes (to gauge tenant waste/neglect)

Consideration would also have to be given to those cases that don’t get as far as the court process – for example, tenants who wreck a property and leave it to the landlord to foot the bill. Without previous landlord references they could move on and do it again, so maybe some kind of review system for tenants could be developed, with the proviso that if it has been a bad exit from the tenancy, landlords could keep their references anonymous. It would also help if the government could compel the credit agencies to share credit checks

Moving on to tenancy fees, most letting agents adopt the same tenancy for every let and so it is reasonable to assume that this task involves no more costly administration than filling in the direct debit form to pay the rent. That said, at Ringley we pay for and use legal software that automatically updates our agreements when laws change. We do need to input the details of the tenancy and set up the tenancy in the system to ensure that it collects rent on time and recognises when inspections are due. We are also liable to ensure that if things are done via the internet, that the person really is who they say they are on the passport and that we have checked this. Also, non-UK resident tenants need a ‘right to rent’ check. If this is not carried out, the landlord can be fined.

However, given that there are mobile Apps such as PlanetRent that take all the admin out of the deal (offers, referencing, move in monies, e-signing contracts, move in checks and compliance), for just £12 a tenancy an agent can do the whole transaction without a shred of paper.  Admin staff can be redeployed to lettings, management or accounts, saving agents a lot more than £12.  If a landlord wishes to use his/her own agreement then they should pay the costs of any additional administration incurred.  This would make a huge difference, both financially and time-wise to both landlords and agents.

So some payments are legitimate and others are not. As the Tenants Bill continues its passage through Parliament, let’s hope sufficient scrutiny is given to determining which are which.

Take-aways from National Residential Investment Conference

 

Today I have been talking about the rental market at this year’s sold out National Residential Investment Conference, held each year in London.

Among other topics, in the spotlight during the course of the day was JLL’s recent research on the institutional (non-Housing Association) sector.  Having analysed seven residential developments comprising 911 units with an average scheme size of 130 homes, JLL reveals that average gross to net is 26.6% with an average rent premium of 9% for high quality build-to-rent developments and 3% rental growth.

The average tenant across these schemes is 31 years old, achieving circa 30% more than the mean UK salary.  Tenants are prepared to pay to be in a BTR or multi -family scheme and are not over extending themselves with rent to income at 28%, compared to the UK over-burdened rate of 40%.

JLL also identified these net initial yields:

  • London Zones 1-2 suggested yields 3.5%
  • London Zones 3-6 suggested yields 3.75%
  • Regions 4.15 to 5%
  • Glasgow the highest at 5%

Urbanisation remains the trend, with 4bn of world’s 7.5bn now living in cities.

The conference also threw up some interesting statistics on the changing nature of UK households. The number of people getting married is on a downward trend. In tandem with this, the average number of children per couple is reducing and people continue to start their families later than previous generations.  The knock-on effect of all this is that two thirds (or 17 million) of UK households do not contain children.

In terms of future property provision, this means that what the  UK needs are more homes suited to couples with no children, retirees and single sharers.   As a result, we anticipate that micro-living solutions and co-living will get more air space going forward.

The Collective at Old Oak is one of the first purpose-built co-living developments in the UK.

So what is micro-living, I hear you say. Isn’t that just an HMO?  Rightly or wrongly, for most of us HMOs tend to conjure up visions of badly converted, poorly maintained housing stock – not the purpose-built, thoughtfully designed new spaces now coming on line.  The Collective at Old Oak is a good example, although arguably it could be termed student accommodation for grown-ups!

So the answer is surely not more HMOs, but well-designed spaces concerned largely with common, outside-the-apartment space.   This puts me in mind of 1930s mansion blocks with their own restaurant and no individual kitchens to speak of.

At Ringley we manage some of these, which – without all the original amenities that have gradually been lost over time – are often now just cramped flats.  I trust in future these shared spaces will be better designed and the ‘outside-the-home’ spaces will be more about living than eating.

Landlords beware – Don’t believe everything you read!

 

A property management company that promised a guaranteed rental income to landlords, even if tenants failed to pay, has come under scrutiny from the Advertising Standards Authority (ASA). An advertisement running on the company website has been judged to be misleading following a complaint and has been banned from future use.

Always read the small print may be an overused phrase but it continues to be good advice, particularly when money is involved. Where this advertisement was concerned, the ASA judged that there was a particular problem with what wasn’t included in the small print.

Letting Agent Today reported this week that, in February, the website www.reliancepropertymanagement.co.uk carried a banner stating: Relax while your rental income is guaranteed! Receive your rent on time, every month, even if your tenant fails to pay. That’s a guarantee that would make any landlord sit up and take notice. None of us wants to miss out on a good deal but was this promise really one that could be relied on?

In fact someone did query whether or not rent really would be guaranteed in all circumstances and asked the ASA to investigate the claims. The advert in question stated that landlords would be paid each month whether or not the property was tenanted and claimed to be “taking away the risk” for landlords. The key phrase used was “giving you confidence in your rental income so you can rely on it, whatever happens”. Landlords were referred to the Ts & Cs for further explanation of the service but on investigation the ASA ruled that the company did not make clear each significant limitation that applied to the promise of guaranteed rent.

Nor was it made clear to landlords that the guaranteed rent was based on an agreement through which the property manager became the tenant and then sub-let the landlord’s property to other tenants. The ASA determined that this information was likely to be critical to any decision whether or not to sign a contract and the advert was therefore in breach of the ASA’s advertising code.

There are important lessons to be learned here. First, when advertising a product or service, any limitations must be made absolutely clear in marketing communications otherwise they will be in breach of the ASA code. Second – and this is a lesson for life, not just for property – if something sounds too good to be true, it probably is!

Could your phone keep you out of rent arrears?

Everyone tries to avoid falling into rent arrears. Sometimes it happens due to financial problems and sometimes it’s just a simple mistake. Rising rents in property hotspots are adding to the problem. But using a payment automation platform could make all the difference, according to one PropTech entrepreneur, who says a simple SMS message generated by an automated system could be enough to keep most tenants on track.

Neil Cobbold, chief operating officer at PayProp UK explains that seeing the live status of a portfolio via an automated system can quickly and easily show letting agents which tenants are in arrears in real time. These tenants can then be automatically reminded via their mobile phone to pay their rent.  According to Neil, around 90% of text messages are read within three minutes of receipt and a staggering 64% of tenants who are in arrears respond within 48 hours of being reminded. “Automating arrears management processes could save agents and their clients thousands of pounds each year,” he told Letting Agent Today in October.

Neil also suggests that increasing automation could help future-proof letting agents against the higher levels of transparency and regulation which are now being introduced by government into the lettings sector. (Read more on this at  https://bit.ly/2OB5IKY ) “With incoming laws requiring mandatory Client Money Protection scheme membership and banning up-front fees, it’s vital that agents can easily prove their transparency by producing a record of all incoming and outgoing payments…” Automated payment systems are a quick win for agents and could really help tenants to make their payments on time.