Written By Em

Em Morley

Watchdog Warns Landlords and Tenants about Letting Agents

Published On: February 16, 2013 at 9:43 am

The Government and journalists have been discussing whether private rental sector landlords should have stricter regulations put upon them, as a consequence of a high amount of people living in rental accommodation at a record high.

However, landlords are also trying to protect their income in a time of high living costs and the expectations associated with this.

Watchdog Warns Landlords and Tenants about Letting Agents

Landlords who have large portfolios, or have another full-time job often rely on letting agents to manage their properties. However, watchdogs are warning landlords that some agencies provide a poor service and charge excessive fees for doing so.

Additionally, tenants could also fall victim to letting agents’ fees, as some agencies charge fees to landlords that they then have to pass on to tenants in order to safeguard their income.

Expectedly, The Office of Fair Trading (OFT) has received more than 4,000 complains against letting agents from both landlords and tenants, and states that there needs to be changes in the way that letting agents practise. One of the most common complains is that letting agents often charge fees that are not expected after the contract is signing, or are gradually implemented into the contracts.¹

Additionally, there are long periods in which problems are not resolved because of a lack of communication between letting agents and landlords, and letting agents and tenants.

Senior Director of Goods and Consumers at the OFT, Cavendish Elithorn, says: “Our findings shows that tenants and landlords are often dissatisfied with their agents but we also know that most agents want to do the right thing.

“It’s important that tenants ask for key information, but we also believe the Government, industry, and enforcers working together can have a real impact and improve overall standards in the lettings market.”1

Ian Potter, Managing Director of the Association of Residential Letting Agents (ARLA), also comments: “The OFT’s report highlights some of the problems with the rental sector.

“Today, the sector is expanding as home ownership becomes out of reach for many; however lack of regulations and pressures on housing supply mean some unscrupulous landlords and agents are able to take advantage of consumers, and are driving down the reputation and standards of the sector as a whole.”1

¹http://www.justlandlords.co.uk/news/Watchdog-warns-Landlords-and-Tenants-about-Letting-Agents-1635.html

Concerns as More Tenants Fall into Rent Arrears

Published On: February 13, 2013 at 4:48 pm

Author: Em Morley

Categories: Finance News

Tags: tenants are falling into rent arrears

Housing associations around the UK are becoming worried about the fact that more tenants are falling into rent arrears.

There are also concerns about the welfare reforms due to take effect in April, as landlords believe that circumstances will worsen, particularly as many social housing tenants will receive less housing benefit.

Rent guarantee insurance can cover landlords if their tenants fall into arrears. However, housing associations can house thousands of tenants, which could lead to landlords finding a policy that covers all of their properties difficult.

Concerns as More Tenants Fall into Rent Arrears

The Rhondda Taf Citizens Advice Bureau housing association in Wales claimed to have seen a 165% rise in rent arrears during the present financial year.¹ And Chief Executive Erika Helps thinks that this will only get worse.

On BBC Wales’ Sunday Politics show, Helps said: “We’ve seen a really significant increase in people coming to us with rent arrears and obviously that’s given us big cause for concern as the welfare reform changes are starting to impact more people who are going to see themselves struggling to pay their rent in the future.

“We’re going to see a lot more people coming to us with financial difficulties, needing help in budgeting and managing their benefits in the future.”1

Nick Bennett, Chief Executive of Community Housing Cymru, also says: “When it comes to the housing association model, rent is the income stream which helps generate the income to service the debt that we borrow; the £1.5bn we borrow to increase the supply of affordable housing in Wales.

“The housing association model has been probably the most successful public private partnership in Western Europe and these changes really do threaten the viability of that model.”1

Despite this, a spokesperson for the Department of Work and Pensions has defended the reforms, particularly the debateable bedroom tax. They say: “Our reforms are not about making people homeless. They’re about restoring fairness to a system that has been spiralling out of control.

“It’s right that tenants in social housing, who are living in homes that are larger than their needs, make a contribution towards their rent or move to more appropriately sized accommodation, and this is exactly what people renting in the private sector do.”1

¹http://www.justlandlords.co.uk/news/Housing-Associations-concerned-over-increase-in-Rent-Arrears-1630.html

Landlords urged to let out empty shops

Published On: February 8, 2013 at 9:23 am

Author: Em Morley

Categories: Property News

Tags: commercial landlords,rent arrears

On the whole, it can be said that commercial landlords have had a difficult year. A rising number of high-street shops have entered administration and some landlords have experienced rent arrears.

A growing number of landlords are now relying on their unoccupied property insurance to get them through financially while they look for another tenant. With this in mind, the chief executive of a town business group has said that landlords and letting agents can do more to find new inhabitants.

More effort

Mark Cordell from Bid4Bury has ordered Edmundsbury Borough Council to meet with landlords within the community in order to persuade them to fill their empty commercial properties. Mr Cordell highlighted one particular unit that has been empty for over 12 months. He said that the unit, ‘costs £48,000 a year in rent and £28,000 in business rates. You have to be making at least £100, 000 before you can make that work.’[1]

Cordell says that figures such as these suggest that commercial landlords, ‘need a reality check.’ He goes on to say, ‘the council, the landlords and the agents need to work harder to get these units back in use. At the moment there seems to be a policy of let’s sit and hope for the best. I am not comfortable doing that.’

Landlords urged to let out empty shops

Argument

Commercial landlords however can argue that by reducing their rent prices, they will lose a substantial part of their income. With unoccupied property insurance covering void periods, some landlords feel that there is no reason to actively seek new buyers.

Cordell argues that large empty commercial properties are an eyesore and makes towns unattractive to suitors and warns the situation can easily get worse. He said that, ‘they(visitors) feel that part of the town is run down. It then becomes difficult to attract new tenants here. That is our Achilles heel.’[1]

Solutions

Mr Cordell said that a possible solution could be for commercial landlords to let out their unoccupied properties for a short-term basis, suggesting they become pop-up shops. This, Cordell believes, will generate landlords some income, improve the image of a town and defy the risk of defaults on long-term arrangements. In addition, he says that shops should consider doing more themselves, like staying open later in the evenings or opening later on Sundays

[1] http://www.justlandlords.co.uk/news/Landlords-urged-to-find-new-Tenants-for-Empty-Shops-1625.html

Landlords Concerned over New Council Tax Rules

Published On: February 7, 2013 at 2:26 pm

Author: Em Morley

Categories: Landlord News

Tags: council tax on empty properties,landlords with empty properies

Landlords across Nottinghamshire are concerned that new Government legislation will lead to them facing large Council Tax payments for unoccupied properties.

At present, taxpayers are exempt from Council Tax payments in the first six months that their property is empty. From this April however, changes in legislation will allow local councils’ discretion to make their own decisions in regards to agreeing to any discounts.

Abolish

Nottingham City Council is one council that plans to abolish all Council Tax breaks for empty, unfurnished homes, with other councils in the region planning to greatly reduce the discount. In another potentially expensive move, Nottingham City Council plan to charge 150% to landlords whose properties have been unoccupied for in excess of two years.

It must be noted however that exemptions will remain for certain circumstances, such as tenants requiring hospital treatment or residential care.

Extra costs

Matthew Evans, a property owner planning on renting out his house in the Forest Fields district of the city, said that he had not factored in any additional costs. Evans said: “Hopefully I’ll be able to rent the house out easily enough, but if it takes a couple of months I will now be left with not just the mortgage to pay but also the Council Tax bills.

“I understand that houses should not just sit empty for months on end but this is also going to affect people who are just trying to quickly sell or rent their own homes, which can be hard enough as it is.”[1]

Private landlords with a larger property portfolio have also voiced their concerns over the changes in legislation. One portfolio owner said that he was disgusted by the changes and said his company were “immediately thinking about leaving the market.”

He went on to say: “We have properties of outstanding historical interest or are listed that neither the City Council nor County Council could afford to restore. We want to restore those properties and you don’t just let to the first tenant that applies.

“These properties take about four months to let. We think we’re doing a social service here by keeping the heritage of Nottingham going and we are being heavily penalised for it.”[1]

Incorrect answer

Nottingham landlord Shad Ali, member of landlord group East Midlands Property Owners, believes that the imminent change in legislation is not the answer to the problem of empty homes. Ali said: “We don’t think it’s going to address the issue of derelict houses and empty properties because many of the properties need investment and have been empty for a long time.”[1]

East Midlands Property Owners suggest that the cost of repairing the standard empty and unfurnished property, “could be about £15,000 or £20,000.” It believes: “If landlords are going to be charged Council Tax on empty properties in between tenancies these charges will only be put back onto the tenants, therefore increasing rents.”[1]

Categorically, the group said: “This policy will only lead to an increase on rents at a time when rents should be kept to a minimum.”[1]

Revenue

Nottingham City Council has argued that their proposed changes in empty property Council Tax discount will produce an additional £2.6m per year. This, they state, will be used to help tenants on low incomes.

The Council is also setting up a support scheme. This will say those who do not currently pay Council Tax due to low income will have to pay 8.5% in the coming year.

Deputy leader of the council Graham Chapman said that their scheme was favourable compared to other councils. He said on the reductions: “It’s a national initiative from the Government, it’s a way they have proposed to offset the reductions in Council Tax benefit and we’re taking advantage of it because the alternative is to make some poor and disabled even poorer.

“Secondly, one of the most intractable jobs we have in the city is caused by empty homes. Thirdly, the biggest landlord in the city that will have to pay these bills is the council itself.”[1]

Residents are being advised to contact their local council for full details of the changes in their area.

[1] http://www.nottinghampost.com/Landlords-fears-council-tax-changes/story-18077813-detail/story.html

Government Proposes Changes to Bailiffs

Published On: February 1, 2013 at 5:09 pm

Author: Em Morley

Categories: Property News

Tags: bailiff regulations,commercial landlords

The Government has proposed changes to the regulations of bailiffs, meaning that they will no longer be able to visit properties late at night to take debts, and will have tighter regulations regarding the type of property that they can seize.

Additionally, bailiffs will no longer be permitted to enter a property if just children are present, and they will not be able to set their own fees. Some landlords are worried about one of the new rules: that they will have to alert their tenants seven days before sending bailiffs.

Government Proposes Changes to Bailiffs

The new plans will give tenants an opportunity to pay their debts before bailiffs arrive, says a spokesperson for the Ministry of Justice. They say: “If the landlord believes the debtor is likely to avoid enforcement, for a small fee, they can apply to the court to reduce or waive this notice period.

“Commercial landlords will now have to serve a notice of enforcement on the tenant, giving the tenant the benefit of seven day warning before bailiffs can turn up.

“The short, sharp shock of distress will therefore be lost and will enable tenants to remove goods from the property. The court can reduce the period of notice if there is concern that the tenant will avoid enforcement if given too much notice, but this will increase the landlord’s legal costs.

“In the current distressed market, these changes will force commercial landlords to consider more expensive routes of recovery such as litigation or insolvency.”¹

Normally, a landlord can call bailiffs if their tenant constantly does not pay rent, to collect possessions as payment. The new rules may allow tenants to hide their possessions before bailiffs arrive, however. This would leave landlords without income if they do not have rent guarantee insurance.

Leeds law firm Clarion’s’ Paul Burkinshaw says: “One of the primary concerns is that the tenant may take steps to dispose of stocks that the landlord is aware exist during that period of notice, so preventing seizure of the same.

“In the draft regulation, mechanisms did exist for steps to be taken more quickly, however this would simply add cost to the landlord who is already inappropriately out of pocket.”1

¹http://www.justlandlords.co.uk/news/Landlords-wary-of-new-Bailiff-Regulations-1614.html

Tenants Want to Meet Landlord When Viewing Property

Published On: January 30, 2013 at 12:10 pm

Author: Em Morley

Categories: Landlord News

Tags: online letting agency,tenants meeting landlord

It is becoming increasingly common for tenants in the UK to not meet their landlord when viewing rental accommodation. Instead, the letting agent will show prospective tenants around and answer any queries. A new survey has suggested that tenants would much rather meet and query their potential landlord.

Results taken from the survey indicate that around one third of UK landlords now endeavor to self-manage their portfolio. These landlords are becoming a lot more hands-on than other landlords in the market. Marked advantages of this type of approach are meeting tenants and building bonds, alongside saving money.

Tenants Want to Meet Landlord When Viewing Property

A landlord with property in London has suggested the use of agents to find tenants and then vetting applicants in person has proved beneficial in finding the right people. The landlord, Mr Mukherjee said that he uses online letting agency Tenants4U and has had a positive relationship. He explains: “I actually find that online agents are faster and more efficient. I let my last property using the Tenants4U free property letting service; I uploaded the property details to their website and within 3 days I had several viewings organised, eventually letting the property after the first day of viewings. The tenant paid a £99 application fee and that was it. I also got to meet all of the potential tenants and could make my own decision as to who I felt most comfortable renting the property to.”[1]

The managing director of Tenants4U thinks that the more hands on approach from landlords is becoming more popular. Shereena Lingiah said: “As a landlord myself, we provide the service that I would want for my own properties. The lowest possible costs for the landlord, access to major portals such as Rightmove, the possibility of letting a property within a week and someone to help along the way. We aren’t here to replace the high street letting agent, but we are here to provide a high quality alternative for those landlords that are seeking to boost their profits in return for putting in a little extra time.”[1]

A growing number of tenants wanting to meet their landlord, coupled with a cost saving option for landlords, make it no surprise that the online letting industry is soaring.

[1] http://www.landlordexpert.co.uk/2013/01/30/uk-tenants-want-to-meet-the-landlord-when-viewing-a-rental-property/