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!

Right to Rent: unfair to landlords and tenants?

Should landlords be expected to act as border control officials when renting to a new tenant? This is the question that a Judicial Review of the government’s controversial Right to Rent policy, which obliges landlords to undertake immigration checks on prospective tenants, will be asking as it gets underway today.
The Right to Rent scheme was rolled out nationwide in 2016, meaning that landlords must now check the immigration status of would-be tenants. Understandably, this initiative has proved really unpopular. Landlords are already under pressure from the government (see my blog Landlords under fire, posted on 11 December) and certainly don’t want to take on responsibility for ensuring that tenants have a legitimate right to rent a home.
When the scheme came into effect, the Joint Council for the Welfare of Immigrants (JCWI) thought it was so potentially discriminatory that it put forward – and won – a legal challenge, gaining the right to launch a High Court case against the Home Office. As I write this blog, a full hearing is taking place before the High Court today and tomorrow.
The JCWI’s legal challenge is being supported by the Residential Landlords Association (RLA), which has carried out research to find out how landlords feel about the scheme. The RLA found that, as a result of the Right to Rent policy, 44% of landlords are now less likely to rent to someone without a British passport, mainly because they are scared they may be prosecuted if they get something wrong. Landlords also say that, as a result of Brexit and the continuing uncertainty around the future status of EU nationals in Britain, they are now less likely to rent their property to anyone from the EU or the European Economic Area.
According to Landlord Today, the RLA is calling for Right to Rent to be scrapped, arguing that it discriminates against those unable to easily prove their identity and foreign-born nationals who have documents unfamiliar to landlords. It is also calling for urgent guidance for landlords to be issued by the government, explaining clearly the rights of EU citizens to rent property, especially in the case of a no-deal Brexit.
The whole situation is reminiscent of the Windrush scandal that came to light earlier this year. Landlords are not government officials and shouldn’t be expected to act on behalf of the Home Office or to make a judgment call around who is and isn’t legally entitled to rent a property. Landlords are under enough pressure from excessive taxation and a new raft of regulations without being expected to act as immigration officers too.

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.

Renting for life – what’s the problem?

Letting Agent Today claims that a third of millennials will never own their own home. The report quotes new research from interiors firm Thomas Sanderson showing why the rental market is seeing such strong demand: it reveals that 28% of people under the age of 35 have no money set aside for a deposit on a house. Of the remaining 72%, the average amount people had saved was just over £6000 – that’s under a fifth of the average deposit for a house in the UK. And 30% of Britons aged 18 to 35 years old say they have given up on the idea of owning their own home completely.

What all this adds up to, is that large numbers of us will be living in the rented sector, not only while we are young and single but once we’re married and start a family, into middle-age and beyond. Research from the Resolution Foundation and Shelter predicts that by 2025, 33% of families with children living in London will be renting.

So given that more of us will be renting for longer – or for our whole lives – should we be moving to a regime more like the European model. In Germany for example, tenants have extensive rights including security of tenure, assured rental rates and protection from hardship caused by unfair practices.

These aspects of a highly-regulated rental market are great for tenants but may be viewed less favourably by landlords the majority of whom, understandably, want to be in control of their own property. They want to be able to decide who lives in it and for how long. If tenants prove troublesome they want to be able to evict them. Conversely, if tenants are happy in their home, easy to deal with and pay their rent on time, most landlords will let them stay for as long as both parties are happy.

Getting the balance right by ensuring legislation works for both sides of the renting equation is the job of government – but it’s not an easy task. New legislation coming forward aims to tackle some of these issues and stronger regulation around property agency will undoubtedly help too. Dealing with the fall-out when landlords and tenants clash is part and parcel of our role as property managers. Alongside our technical and professional role as agents we often feel we should win prizes for diplomacy too!

Vidhya Alakeson, director of research at the Resolution Foundation, said recently that families who rent need security in a regulated market. “With children attached to schools and parents to work, it is critical for households – and for society – that families can find stable and secure rented accommodation to raise their children in.” That sounds about right to us. What do you think?

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!

Ensuring your home is fit to live in

Here’s an interesting situation. In a recent case that ended up in the High Court, a tenant had signed a two year tenancy on a house and paid £34,000 in rent for the full term of the contract. After the tenant moved in, part of the front garden wall collapsed, blocking a side passage. This caused internal damage to the house and as a result the tenant complained that the property was not habitable. A structural engineer’s report, obtained by the tenant, showed that part of the retaining wall could collapse at any time, posing a risk to the house. He concluded the property wasn’t safe to live in.

Most of us would assume that this would be enough to entitle the tenant to at least part of his rent back and for the landlord to immediately carry out the repairs needed to make the house safe. But under the law as it stands this isn’t necessarily the case. What is known as ‘significant disrepair’ is enough to make a case against your freeholder under section 11 of the Landlord and Tenant Act 1985, but – shocking though it sounds –  if a property is ‘not safe to live in’ that is not, at the moment, a basis for a claim.

In this particular case the tenant was lucky. The tenancy agreement contained a clause headed Premises uninhabitable, which stated,

“The rent or a fair proportion of the rent shall be suspended if the Premises or any part thereof shall, at any time during the tenancy, be destroyed or damaged by any risk insured by the landlord so as to be unfit for occupation and use…

After an appeal by the landlord, which was judged unreasonable, the tenant won. And rightly so but it was only the clause in the tenancy agreement that kept the law on the tenant’s side. In future we hope that tenants won’t have to rely on a clause like this to be treated fairly and to be reassured that their home is safe. The Homes (Fitness for Human Habitation) Bill is due for its second reading in the House of Lords on 23 November. If enacted, this new legislation will give tenants the right to take landlords to court if their home is unsafe. A recent report in The Guardian quoted figures from Shelter, revealing that more than a million homes are thought to pose a serious threat to the health or safety of the people living there. That’s a staggering one in six of the privately rented homes in the country.

This is nothing short of scandalous and change is badly needed. With cash-strapped local  councils responsible for chasing up any requests for repairs that are ignored by landlords, inspections by environmental health officers to investigate problems such as mould, damp and fire risk take far too long.

The changes set out in the Bill will make no difference to landlords’ existing obligations but will simply make it quite clear that rented property must meet certain standards. Let’s hope Parliament lends its support to a change in the law that is long overdue.

Wages and rents go up – but is that the whole picture?

Figures released today by the Office for National Statistics reveal that after almost a decade in the doldrums, wages are finally on an upward trend. Compared with a year earlier, says the BBC, wages excluding bonuses rose by 3.2%. This is the biggest rise since the end of 2008.

This is great news after years of wage stagnation. But for renters, less encouraging is the news that rents have also increased. According to the latest figures from HomeLet, the average cost of renting a property outside London rose by 1.7% in the 12 months to October. And tenants in the capital faced an even bigger jump of 4%, according to the referencing firm.

HomeLet’s rental index is based on new rental contracts agreed by landlords and agents using its referencing service. It reveals that the average rent in the UK hit £928 per calendar month in October – up 2.1% on the same month in 2017. Outside London, the average rent in the UK is now £768pcm. Within Greater London tenants are paying an average monthly rental of £1,543pcm. Perhaps most surprising is that rents are increasing even faster than London in Northern Ireland and Scotland – which showed a 4.5% and 4.2% rise respectively over the last 12 months. The average rent in Northern Ireland is £653 pcm and £647pcm in Scotland.

However, rent rises are not the whole story. In the last 10 years the Consumer Price Index, which measures the average cost of goods and services, has overtaken rents, with the East of England and London the only areas where rental growth has outpaced inflation.  What this means is that in real terms, in most parts of the country, rental payments have actually become more affordable. According to Hamptons International, which monitors the rental market, in the last decade rents have actually risen 22% but inflation has risen by 24% over the same period.

Letting Agent Today reports that in the East of England, real rents have risen 7.5% during the last 10 years.  And in London, real rents are up a mere 0.5% since October 2008. However, inflation has outpaced rents in all other regions across Great Britain, resulting in negative real rental growth.

However, Aneisha Beveridge, Hamptons International’s head of research thinks this is only temporary, predicting that over the next few months inflation could begin to fade. Then rental growth will pick up pace.

If this is likely to be the case then ensuring your landlord is providing best value for money is paramount. Are your rental needs flexible or do you need to be in a particular area for work or schools? A good letting agent is always your first port of call to help you find the rental property that best meets your needs – and your finances.