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Em Morley

6 Landlord Responsibilities to Their Tenants – Required By The Law

Published On: June 11, 2019 at 9:01 am

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Tips from a property professional

Renting a property comes with its benefits, such as not having to deal with any refurbishment and repair issues, which are down to the landlord. If a pipe bursts or any device stops working, a renter only needs to make a call to the property owner to fix the problem.

But the landlord’s responsibilities don’t stop here. Below, we are going to discuss the common landlord property obligations that are required by the law:

  • Obtain an Energy Performance Certificate (EPC) for the property;
  • Protect the tenant’s deposit in a government-approved scheme;
  • Keep the rented properties safe and free from health hazard;
  • Make sure all gas and electrical equipment is safe;
  • Inspect if the tenants have the right to rent in England;
  • Give the tenant a copy of the ‘How to rent’ checklist at the start of the tenancy;

Provide an Energy Performance Certificate for the property

A landlord is obligated to provide EPC to buyers and tenants before they market their property, be it to sell or rent.

EPC contains:

  • Recommendations on how to reduce energy consumption and save money;
  • Information about typical energy costs of the property.

From 1st of April 2018, properties rented out in the private sector are required to have a minimum energy performance rating of E on their Energy Performance Certificate (EPC).

It is illegal to rent a property, which does not meet the minimum requirements of an E rating. A fine of up to £4,000 can be charged in case of violation of the rule.

This means that if the property is with a rating of F or G, it cannot be rented out.

Protect the tenant’s deposit in a government-approved scheme

Letting agents or landlords are required to protect the tenant’s deposit and provide proof of its protection within 30 days. When the tenancy ends, the landlord must return the deposit within 10 days. in compliance with the law.

Landlords can choose between two categories of deposit protection schemes:

  • Custodial

Landlords hold the entire deposit, using the custodial protection scheme, for the duration of the rental period. At the end of the tenancy, the deposit must be returned according to the agreed amount and the property condition.

  • Insurance-based

With this scheme, the landlord holds on to the deposit during the tenancy, but he (or she) can’t use this money to cover expenses, because the funds legally belong to the tenant. If there is a dispute at the end of the tenancy, the landlord must forward the disputed amount to the insurance protection scheme.

According to Dean Davis, a spokesperson of the tenancy cleaning team at Fantastic Services, there is a rise in landlords being sued over unprotected deposits at both the start and end of the lease. Although landlords are bound by law, many still fail to comply.

Keep the rented properties safe and free from health hazards

Low housing standards lead to illness and injury to almost half of UK tenants, according to new studies.

Hazards are rated according to how seriously they are going to affect someone, with category One being the most serious.

Examples of category Оne include:

  • Exposed wiring or overloaded electrical sockets;
  • Dangerous or broken boiler, a faulty gas boiler;
  • Bedrooms that are very cold;
  • Leaking roof;
  • Mould, both visible or invisible;
  • Extremely cold conditions;
  • Fire risks;
  • Rats or other pests;
  • Risk of falling down on stairs, floors or outside paths;
  • Lack of security due to badly installed doors or locks;

The council can take legal action against the landlord if there is category 1 danger in the property.

Ensure that all gas and electrical equipment is safely installed and maintained

By law, the landlord must keep all gas appliances in good condition. The landlord should arrange a Gas Safe registered engineer to carry out a gas safety check every 12 months and provide a copy of the landlord’s gas safety record to the tenant.

Landlords must also make sure that the electrical system and all electrical appliances in the property are safe to use.

Check that the tenant has the right to rent a property

The new legislation that came in power in 2016, requires all landlords and agents in England to check the tenant’s right to rent. Neglecting these checks might lead to landlords facing penalties of up to £3,000 per every tenant living in the property.

Landlords can rent property only to a person who has the right to rent. This could be a British citizen, people from the European Economic Area, or a Swiss National. This also includes Non-EU citizens who have a visa.

Landlords must be provided with original and genuine documentation, which proves that the tenant has a right to live in the UK and they should also check the authenticity in the presence of the holder.

Provide the tenant with a copy of ‘How To Rent Checklist’

As part of the new Section 21 legislation for landlords in England that rolled out in October 2015, landlords must provide an up-to-date version of the “How to rent” brochure at the outset of the original tenancy. Landlords are also obligated to give a new copy at the outset of any subsequent tenancy. The checklist can be sent via email to the tenants.

Highest Number of Buy-to-Let Products Since October 2007

Published On: June 11, 2019 at 8:13 am

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Highest Number of Buy-to-Let Products Since October 2017

The latest Moneyfacts report shows that the number of buy-to-let (BTL) products available is the highest on record since October 2007. Currently, the number of products stands at 2,396, and in October 2007, it stood at 3,305. Since June 2018, the number of available BTL products has increased by 21%, and in the past month alone it has risen by 143 products.

Meanwhile, average BTL mortgage rates have also risen over the past 12 months, with the average two-year BTL fixed rate mortgage increasing by 0.17% (from 2.88% in June 2018 to 3.05% this month). Both rates still stand significantly lower than in October 2007, where the average two-year BTL fixed rate stood at 6.36%, while its five-year counterpart stood at 6.39%.

Darren Cook, Finance Expert at Moneyfacts, said: “The BTL market has experienced a number of regulatory changes during recent years, however, it seems that product competition within this specialised mortgage area is continuing to grow. A 21% increase in availability to 2,396 products over the past 12 months indicates that providers are keen to offer potential BTL investors plenty of choice within the sector.

“Despite this increasing competition in terms of the total number of products available over the past year, average rates have unfortunately not fallen, and have instead followed suit, with the average two-year fixed rate increasing by 0.17% to 3.05% and the average five-year fixed rate increasing by 0.11% to 3.54% over the same period.

“The largest concentration of BTL product choice can be found at the maximum 75% loan-to-value (LTV) tier, where there are currently 352 (44%) two-year fixed rate products available and 374 (48%) five-year fixed rate products available. Coincidently, the average fixed rates at the 75% LTV tier for the two and five-year sectors are currently 3.05% and 3.55% respectively, equalling or near-equalling the average rates for both terms across all tiers.

“The increase in the BTL average rates contrasts with the downward trajectory of their residential mortgage counterparts, where product competition seems to have instead resulted in rates falling. This disparity in trends is likely to be attributed to the different approach lenders take to risk between these two sectors, and that economic uncertainty may be having a more adverse influence on the BTL mortgage market than it is having on the residential mortgage market.”

Buy-to-Let Mortgage Rates have Increased, Latest Property Master Mortgage Tracker shows

Published On: June 10, 2019 at 10:00 am

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New buy-to-let mortgage research has now been released by online mortgage broker Property Master, revealing the costs for the majority of fixed products have begun to increase. 

Property Master warned last month that this was likely due to the Bank of England’s decision to revise upwards its forecasts for growth in the UK economy.

It is widely believed that this movement is the Bank positioning itself for more increases in base rate than the financial markets had previously been forecasting.

Angus Stewart, Property Master’s Chief Executive says: “It looks very much as if the Bank fired the gun on interest rate rises in its Inflationary Report last month.  

“We have seen in our most recent Mortgage Tracker increases in the monthly cost of five out of the six categories of fixed rate buy-to-let mortgages we track.  Of course, a great deal of uncertainty persists as Brexit is still not resolved and now the search is on for a new Prime Minister.”

“There is some comfort for landlords facing increased rates in that competition amongst mortgage lenders for business has been fierce in recent years and that has fuelled the growth in the number of buy-to-let mortgage offerings to a ten-year high.  

“There are an estimated more than 2,100 products to choose from but with lending criteria varying considerably between the operators landlords cannot assume that all of these possibilities are open to them.”

The Tenant Fees Act also came into force during the same week that Property Master’s Mortgage Tracker was noticed to be picking up increases in the cost of buy-to-let fixed rate mortgages.

Stewart has also commented: “Increases in mortgage costs are particularly unwelcome in the current climate of rising regulatory costs.

“This new Act which bans landlords and letting agencies from charging fees to tenants for things such as referencing, inventories and contracts, and limits deposits to five weeks’ rent continues still further the squeeze on landlord finances.” 

The results from Property Master’s June 2019 Mortgage Tracker also reveal the monthly cost of five-year fixed rate buy-to-let mortgage offers for 50% of the value of a property to be up by £7 in that month, compared to the previous month of May.

The Mortgage Tracker also shows:

  • Five-year fixed rates for 65% of the value of a property increased month on month by £5
  • Five-year fixed rate buy-to-let mortgage offer for 75% of the value of the property was the only one of six categories tracked to fall in monthly cost, but only by £1
  • Its three categories of two-year fixed rate buy-to-let mortgages all increased with the largest rise being £6 per month

Homeowners can build property extensions without planning permission

Published On: June 10, 2019 at 9:10 am

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Homeowners can build property extensions without planning permission

Planning permission can be a real issue for homeowners, with time consuming red tape sometimes meaning it can actually be easier, or quicker, to move to a new property.

Planning permission laws changed in 2014, with temporary rules allowing homeowners to add an extension without having to apply for planning. The measures proved popular, and have now been made permanent.

How much can you extend a house without planning permission?

Homeowners can now build a single-storey rear extension on their property of up to six metres for terraced or semi-detached homes, or eight metres for detached homes, without applying for planning permission.

What does this mean for landlords?

Since relaxing the rules for planning permission in 2014, over 110,000 extensions have been built. This is a great benefit for landlords as they have greater flexibility in tailoring their rental property to attract tenants, plus could help keep those tenants in the property longer term.

Is it only residential properties affected?

Under the permitted development rights, property owners will be allowed to convert shops into offices without having to go through the planning process. The Ministry of Housing, Communities and Local Government have also softened planning rules to allow high street shops, offices and betting shops to temporarily change to certain community uses such as libraries or public halls.

Housing Minister, Kit Malthouse, said: “These measures will help families extend their properties without battling through time-consuming red tape.

“By making this permitted development right permanent, it will mean families can grow without being forced to move.

“This is part of a package of reforms to build more, better, faster and make the housing market work – and sits alongside our drive to deliver 300,000 homes a year by the mid 2020s.”

New Online Landlord Universal Credit System to Allow Direct Rent Payments

Published On: June 10, 2019 at 8:03 am

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The pilot of a new online system allowing tenants in receipt of Universal Credit to pay rent directly to private rental sector (PRS) landlords has been successful. 

Started on 3rd October 2018, Caridon Landlord Solutions has been working alongside The Department for Work and Pensions (DWP) to bring out this new system. It will replace the two existing UC47 forms, cutting down processing time from in excess of three weeks to just two hours in some recorded cases.

DWP aims to officially launch this online system before the end of 2019, although a date has yet to be confirmed.

The current system requires landlords to download and fill out a form from GOV.UK, in order to apply for an Alternative Payment Arrangement (APA) to have the housing element of Universal Credit paid directly to them.

Caridon Landlord Solutions provides specialist advice on Universal Credit and Housing Benefit to private landlords, letting agencies and housing associations. It points out that the existing UC47 system has caused a whole host of problems, which have discouraged landlord from letting to tenants in receipt of Universal Credit. Subsequently, this has made it difficult for tenants to keep hold of homes they wish to remain living in.

Sherrelle Collman, Managing Director of Caridon Landlord Solutions, says: “This current system can be complicated as there are two types of UC47 forms. The first is the secure form, which can only be submitted by post or via email.  

“However, to submit by email, landlords must have a secure email address recognised by DWP, including gsi or gov.uk owing to the fact the form requests personal details such as a tenants’ National Insurance number and the landlord’s bank details. 

“This helps to ensure that all parties comply with data sharing regulations as set out under the General Data Protection Regulation (GDPR). The none secure form can still be submitted via email, however, the process can sometimes be slower as the claimant’s case manager has to contact the landlord to request bank details, because due to the non-secure data certain types of personal information cannot be submitted in this way.

“Caridon believes that the paper forms are taking weeks to be processed, sometimes getting lost along the way and all the while rent arrears are mounting up. We have been working closely with DWP, not only to get payments made directly to landlords where necessary, but also to speed up the process so that landlords have greater confidence in the system.” 

As well as providing support to landlords in the case of rent defaults, the UC47 is also used for historical debt collection, where a tenant has fallen into eight weeks or more of arrears and the landlord wants to apply for third party deductions. In these cases, DWP takes a small percentage of the claimant’s personal allowance and transfers it to the landlord towards the rent arrears.

Sherrelle adds: “We have been working with DWP to develop an agile online system, making suggestions for adjustments to ensure it is as user friendly and efficient as possible.  Landlords are now receiving confirmation of direct payments within 48 hours which is such an incredible improvement.”

Rising Rents are Making Young People Less Mobile, Reports the Resolution Foundation

Published On: June 7, 2019 at 9:54 am

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Rising Rents are Making Young People Less Mobile, Reports the Resolution Foundation

Rising rents are making young people less likely to move to UK cities, where average salaries are higher, a new report from the Resolution Foundation indicates.

The number of young people living in private rental housing who moved for a new job has almost halved in 20 years.

Despite the higher wages available, financial incentives for moving are lower, researchers say.

“Pay gains are being swallowed up by high housing costs,” claims the Resolution Foundation’s Lindsay Judge. “For young people, in particular, there are real advantages to moving when it comes to trying new roles and developing skills – and housing should not be a barrier that prevents them doing this.”

Although unemployment has fallen, the think tank found that rents have climbed the fastest in higher-paying areas of the UK.

Private rents have increased by almost 90% in the UK’s highest-paying local authority areas, while they’ve risen by just over 70% among the lowest-paying locations.

In 1997, after housing costs were deducted from salaries, private tenants moving from a low-paying area (such as East Devon) to a mid-paying area (like Bristol) would have received an average financial gain of about 16%. Today, that would be a mere 1%.

Of course, millennials and generation Z have other reasons for not moving, aside from money.

Some people prefer to live near to their parents and friends, while others may find it harder to relocate because of their children.

Responding to the report, David Smith, the Policy Director of the Residential Landlords Association, warns: “The biggest threat to rent levels are the policies being pursued by the Government, which are choking off the supply of homes for private rent, as demand is increasing. We warned ministers that this would happen, but they have not listened.

“Instead of attacking the private rented sector, we need pro-growth policies that recognise the need for more homes of a good standard and at an affordable rent. Making renting less attractive for landlords will not make a substantial difference to the availability of property. We must focus on building more homes to address this.”

The Royal Institution of Chartered Surveyors has raised concerns that average annual rent rises will likely be around 3% for the next three years, as a result of demand for rental housing continuing to outstrip supply.

Government data shows that 10% of private landlords, representing 18% of tenancies, are already planning to decrease the number of properties that they let, while 5% of landlords, representing 5% of tenancies, plan to sell all of their properties.