Written By Em

Em Morley

Lack of Flexibility in the Regulations for Flood Re

Published On: October 1, 2014 at 9:39 am

The British Property Federation (BPF) has raised apprehensions over the lack of flexibility in the regulations for Flood Re, the affordable flood insurance scheme.

Flood Re is an arrangement between the insurance industry and the Government, to make sure that affordable cover is available for those in high flood risk spots. It is designed to ensure cover for all homeowners, however, millions of landlords and owners of leasehold flats will be unprotected against spiralling insurance premiums.

As well as leasehold properties in large blocks, homes in council tax band H and houses built after 2009, Flood Re will exclude private rental homes.

The BPF has been calling the Government to include leasehold properties within the scheme, stating that it is unfair to favour those who live in a house, over those who live in a flat. As there are almost five million leasehold properties in the UK, and a minimum of 800,000 of these in flood risk areas, this leaves many properties unprotected.

Lack of Flexibility in the Regulations for Flood Re

In their campaign, the BPF has required proof from the Government that leaseholders will not be affected by the exclusion. In their response to a Government consultation, the BPF greeted the Government’s pledge to monitor homes that are not included in the plan.

The regulations show no sign of a method that would allow amendments to Flood Re to include any new types of property at a later date. This has led the BPF to be concerned that the commitment to monitoring other types of property would not have any positive effects.

More issues with the regulations have caused other worries. Common hold properties are considered commercial property by their insurance policies, are included in the scheme. This has caused confusion over who is included, as leasehold properties have been excluded due to their policy being classed as commercial. The BPF have requested clarity from the Government as to why some commercial policies are covered by the scheme.

Furthermore, the regulations do not show any sign as to why the threshold for leasehold blocks included was for blocks of three units or less, consequently excluding any two-up, two-down conversions.

Director of Policy at BPF, Ian Fletcher, says: “There is a last change for Parliament to amend the legislation on Flood Re, so that leaseholders, small businesses, and other groups enjoy the safety net it provides.

“Having been campaigning for the inclusion of leasehold properties in Flood Re for a while, a repeated source of frustration has been the lack of explanation or evidence for many of the decisions made, and the regulations that have been set out so far do not do much to assuage these.

“The Government’s intention to monitor the impact on various excluded groups is welcome, but a suck-it-and-see attitude to affordable flood cover is not ideal for either householders, or people trying to run a small business.”¹

¹http://www.landlordtoday.co.uk/news_features/Flood-Re-regulations-fail-to-address-property-industry-concerns

Tips for Students Becoming Tenants

Published On: September 30, 2014 at 2:42 pm

Author: Em Morley

Categories: Property News

Tags: renting for the first time,student tenants,tips for students

With the start of a new academic year comes the beginning of many new tenancies.

If you are a student renting for the first time, it can be easy to disregard your tenancy deposit until it comes to moving out. But it is always important to remember that what you have done, or do, during your tenancy could result in you losing money from your deposit when you leave.

Getting the full amount back depends on how you act as a tenant from the day you move in. The Tenancy Deposit Scheme (TDS) has compiled some advice to help you keep your money.

Protecting the deposit

Initially, you should ensure that your landlord or letting agent has protected your deposit in a Government-approved scheme. If you think any deductions are unreasonable at the end of your tenancy, you can apply to the scheme to raise a dispute and challenge reductions.

Protecting deposits is a legal requirement for landlords, and must be completed within 30 days of the tenancy starting.

The check-in report

You should be given a check-in report, including an inventory, upon moving into the property. The report will outline the condition of the home and its contents when you arrive.

Tips for Students Becoming Tenants

When you leave at the end of the agreement, you must ensure that the property is in the condition that it was at the start, although you are allowed fair wear and tear. The check-in report acts as your evidence to the state of the property when you moved in.

If you explore the house and discover any damage or dirt not included in the report, or if a description is unfair, you could end up taking the blame at the end, and be charged to put it right.

Often, you will be asked to sign this document to prove that you agree with the contents. Not signing is usually taken as acceptance of the report. You should check it over, correct it if needed, and return it as soon as possible.

It is also a good idea to take photographic evidence, but ensure these are dated and labelled. You could send these to the landlord and letting agent, but keep a record of them being sent.

Your responsibilities

Tenancy agreements differ, but what is in them will explain which deductions can be made from your deposit. If you do not meet the responsibilities outlined, then you could risk losing money. Some obvious duties include: paying the rent on time, keeping the property clean, and not changing the property.

Smoking is generally not permitted in most tenancy agreements, due to the smell left behind and fire risks. Pets are typically not allowed, although you could get permission from the landlord. Gardens are a difficult area, as some tenants consider it an issue for the landlord to take care of, but the tenancy agreement may put you in charge of maintaining the garden.

The landlord is responsible for maintenance and repairs, and for keeping the home safe and habitable. However, tenants are accountable for letting the landlord know that works needs to be done. If repairs are needed, you should tell your landlord or agency as quickly as possible; if a problem is left, it could worsen, and you could be held responsible for delaying work.

Always record any communications relating to maintenance. If you meet face-to-face or speak on the phone, you should send a follow-up email to confirm what was agreed.

These are general examples, although if you do not meet any terms of the agreement, you could be at risk of losing some of your deposit. Your landlord may be flexible in changing some terms, but you should always get this in writing, or have the agreement updated.

Your housemates’ responsibilities

If your housemates are not fulfilling their duties, you could end up taking the blame and losing your deposit. Bills, rent, cleaning, and all other responsibilities are usually deemed joint obligations.

It is a good idea to discuss this when you move in. Be clear over what is paid, when, and by whom. Create a cleaning rota and ensure it is kept to. If anyone causes damage, agree if this person is responsible, or if you will all accept blame.

Changing tenants

It is common for students to leave their accommodation throughout the year, for various reasons.

You must tell your landlord or agent if a housemate has left, and whether they can be replaced. The agreement will be updated, and the deposit protected in the new tenants’ name. If the tenant who is leaving remains an official tenant, then they could face problems getting their deposit back.

Do not take it upon yourself to sub-let the property, unless you have written permission from the landlord. This is when you rent out a spare room to someone whilst you are still a tenant. In the majority of tenancy agreements, this is against the terms, and could get you evicted.

Records

The TDS receive many disputes due to arguments being unresolved. If you always keep evidence of communications with you landlord or agent throughout the tenancy in writing, you will have good documentation of what has been said.

The deposit is your money, and if the landlord decides to deduct, they must be making a reasonable case. Keeping your own records will help to end disagreements quickly, and support your side.

The Letterbox Scam

Published On: September 27, 2014 at 11:36 am

Author: Em Morley

Categories: Property News

Tags: idendity fraud,letterbox scam

£5m has been stolen this year by fraudsters who target flats.

In a con called the letterbox scam, criminals steal an individual’s identity from post that is delivered to communal hallways in flats.

Residents of shared buildings are easy targets for the thieves, as unsecured letterboxes give them easy access to personal post, says Financial Fraud Action UK.

£5m has been taken in the scam, which comprises obtaining personal information contained in letters of innocent victims.

Areas that the fraudsters have targeted include Bromley, Harrow, Manchester and Twickenham, say Financial Fraud Action UK’s intelligence team. The amount stolen through mail has increased by 10% on the same period last year.

Criminals gain entry to blocks of flats and take post from communal letterboxes that are broken, unlocked, or even unsecured in the entrance hall.

Agents Warn Not to Fall for Identity Fraud

Some of the most prized letters contain financial information, such as card numbers or passwords. Post that includes credit or debit cards is also being used to illegally buy goods or withdraw money. Chequebooks are also used to make fraudulent payments.

Utility bills are also full of information that a criminal could use to commit identity theft.

Personal post, such as birthday cards and family letters, is even used to obtain information about a victim, which can be used to collect confidential details.

Financial Fraud Action UK said that banks are trying to avoid the risk by sending important documents in unmarked envelopes and disguised packaging.

Director of Financial Fraud Action UK, Katy Worobec, advised people to stay alert when expecting key post.

Flat residents are also instructed to receive online bank statements and utility bills, and collect their mail as quickly as possible.

Worobec says: “Letters and packages can be a key source of information for criminals aiming to defraud you, so make sure your mail collection points are as secure as they can be.

“Documents containing personal or financial information are of particular value to fraudsters, so keep a special look out if you’re expecting to receive something important.

“If you move house or flat, make a point of changing your address details as soon as possible with your bank, and other important organisations, to ensure sensitive mail doesn’t fall into the wrong hands.”¹

Here are important tips for preventing the scam:

Ensure your letterbox is secure and cannot be accessed by anyone else. Tell your landlord or letting agent if it is damaged.
Collect your mail frequently.
Inform your bank, card issuer and other important organisations if you change your address.
If you cannot collect your mail, guarantee that someone trustworthy will pick it up instead, or use a mail collection service.
Take note of the dates you are expecting important documents, or receive these online.
Try collecting cards and chequebooks in person, if possible.
Use a mail redirection service when moving house.
If you believe your post has been stolen, contact the sender and Royal Mail.

¹http://www.telegraph.co.uk/finance/personalfinance/bank-accounts/11122849/Fraud-experts-warn-on-hotspots-where-flats-are-targeted-with-letter-box-scam.html

UK Housing Shortage sees Sharp Rise in BTL Investors

Published On: September 24, 2014 at 5:03 pm

Author: Em Morley

Categories: Property News

Tags: high demand for housing,short supply of housing,UK housing shortage

Investors are snapping up a rising number of the UK’s lacking housing supply, causing a sharp increase in buy-to-let mortgage lending.

The Council of Mortgage Lenders (CML) have revealed that buy-to-let lending reached £2.4bn in July 2014, a rise of 26% over the year, and 9% higher than June.¹

The high demand and lack of supply of properties is causing a rapid increase of house prices. This is enticing investors, who are trying to make good profits from property values and rental income.

The Office for National Statistics found that the average house price in the UK rose 10.2% in the year to June 2014, reaching £265,000. In London, they jumped 19.3%, to £499,000.1

Opponents to the buy-to-let market claim that it abuses the country’s housing crisis, making it harder for first time buyers to find suitable properties.

UK Housing Shortage sees Sharp Rise in BTL Investors

Defendants however, say that investors are supplying the demand of the private rental sector by creating more homes available for renting.

However, CML’s figures also revealed that there has been a rise in first time buyer lending.

July saw 30,200 first time buyer loans, 3% more than June, and 25% higher than the previous year. The value equated £4.6bn.1

The recovering economy, low interest rates, and schemes such as Help to Buy have aided firs time buyers, by making mortgages cheaper and easier.

Paul Smee, Director General of the CML, says: “The market has shown steady growth in house purchase and buy-to-let over the past few months with general improvements in economic factors across the UK allowing for more people to enter the property market.

“There have been many factors over the past year that could have caused disruption but the market has remained resilient and lenders have shown themselves adaptable to this change.”1

Officials would like to see tighter mortgage lending, as they are concerned that some borrowers are taking expensive mortgages.

The Financial Conduct Authority (FCA) has enforced stricter affordability tests on borrowers, and the Bank of England are restricting high loan-to-income mortgages.

¹ http://www.landlordexpert.co.uk/2014/09/23/uk-housing-shortage-has-seen-a-sharp-rise-in-buy-to-let-investors/

Is your Rental Property Gas Safe?

Published On: September 23, 2014 at 5:08 pm

Author: Em Morley

Categories: Landlord News

Tags: gas safety

Research by British Gas and Shelter has found that one in ten landlords cannot confirm that their tenants are living in a gas safe property.

The shocking study also discovered that 14% of landlords were not aware of their legal obligation to have their rental properties checked for has safety each year.

Is your Rental Property Gas Safe?

These figures arrive in time for Gas Safety Week, a time when they can be reminded that they must maintain gas safety. Only 90% of respondents said that their rental properties had an active gas safety certificate (CP12) and that the boiler was serviced annually. 7% stated most/some/none of their properties had the certificate and checks. This leaves 3% who cannot confirm that their tenants are not at risk of carbon monoxide poisoning.P

It is a requirement by law that rental properties have a yearly gas safety check and certificate, and this is the responsibility of the landlord. If landlords do not stick to these regulations, they could be fined, and even imprisoned.

Campbell Robb, Chief Executive of Shelter, says: “Renters deserve to know that their homes are not just accidents waiting to happen. Landlords must carry out gas safety checks every year. Failing to do so is not just against the law; it is a danger to peoples’ lives, and that just can’t carry on.”¹

British Gas and Shelter are working together to ensure safety within private rented houses, and Gas Safety Week is highlighting the responsibilities of landlords.

Landlords are also encouraged to fit a carbon monoxide monitor in all of their rental properties.

Tenants are also reminded of their rights and their landlord’s obligation to conduct the checks.

British Gas engineer Ben Whitehouse, says: “There are many things that tenants can do to make sure their home is gas safe.

“Carbon monoxide is a silent killer and can leak from a range of household appliances. That’s why it’s so important to fit a carbon monoxide alarm.”1

Landlords can get more advice at:

http://www.britishgas.co.uk/products-and-services/landlords/gas-safety-certificate.html

¹http://england.shelter.org.uk/news/september_2014/a_tenth_of_landlords_unable_to_confirm_their_tenants_are_gas_safe

Becoming an Accidental Landlord is More Difficult

Published On: September 23, 2014 at 3:38 pm

Author: Em Morley

Categories: Landlord News

Tags: becoming an accidental landlord,landlord mortgage regulation

Changes in circumstances are seeing more homeowners end up in the rental market. Relocation, moving in with a partner, or simple failure to sell their property are some situations that end with mainstream mortgage payers becoming landlords.

A European Mortgage Credit Directive, scheduled for 2016, will regulate certain landlord mortgages. Subsequently, the transition from homeowner to landlord will become more difficult.

Regulation

Presently, buy-to-let mortgages are not subject to any regulation, in contrast to owner-occupier mortgages. As opposed to those with a homeowner mortgage, landlords are seen as business borrowers. Homeowners on the other hand are recognised as consumer and are therefore subject to tighter rules.

An example of the differences is, at present, that older people can gain easy access to landlord loans, but face stricter rules when going for a mainstream mortgage.

Changes

Becoming an Accidental Landlord is More Difficult

From 2016 however, banks will have the power to refuse rental mortgages to homeowners with no intention of using their buy-to-let property as a business investment. This change will particularly hit those homeowners wishing to keep their existing mortgage and easily transfer over to a cheaper buy-to-let rate.

However, banks will usually approve switches to landlord loans if the consumer experiences a change of circumstances. In addition, landlords may also be able to pay a small charge to maintain their residential mortgage and still let out the property.

In the future, this process may require regulation, as it will be viewed as consumer lending.

The Treasury document states: “For the majority of buy-to-let transactions, the borrower is making an active decision to become a landlord, an activity for which they will receive an income and for which they will be taxed as a business.

“There are some situations where borrowers do not seem to be acting in a business capacity. The Government’s view is that such borrowers are consumers and would need to be covered by an appropriate framework.”[1]

Figures

In 2013, 151,000 buy-to-let mortgages were taken out for the purpose of house purchase or mortgaging, accounting for 12% of total lending. These figures are still considerably lower than in 2007, where buy-to-let lending peaked and 339,000 mortgages were taken out for this purpose.[1]

Confusion

The move from the Treasury has attracted criticism from industry experts, who claim that there is little need to regulate aspects of the buy-to-let industry.

Director of the Council of Mortgage Lenders, Paul Smee, said: “It is frustrating that, despite earlier assurances, the buy-to-let position turns out not to have been adequately resolved, resulting in a new proposal for regulating part of the buy-to-let mortgage market.

“The regulatory regime now being proposed is based not on any evidence of a need for additional consumer protection, but purely on ensuring that the European legal requirements are met.”[1]

Mark Harris, Chief Executive of mortgage brokers SPF Private Clients, agreed with Mr Smee. Harris said: “A buy-to-let is an investment, whether the property was inherited, a let-to-buy or purchased independently, and should be treated as such.

“Regulating some buy-to-let loans but not others will add another layer of cost and confusion for lenders, brokers and borrowers alike.

“Buy-to-let lenders already require that borrowers meet certain criteria, including have an income, and have tough regimes in place to prevent gaming; trying to get around the new affordability rules introduced in the mortgage market review.

“Formally regulating buy-to-let is unnecessary and is not being done to provide additional protection to consumers.”[1]

[1] www.landlordexpert.co.uk/2014/09/23/itll-be-much-harder-to-become-accidental-landlords-within-the-next-2-years-as-a-result-of-eu-legislation/