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The Legalities of Letting

Posted on 12 November, 2019 at 11:15 Comments comments (0)

Landlord responsibilities have increased tenfold over the last few years as the government has introduced a raft of new legislation designed to protect tenants. The difficulty is that the vast majority of landlords are not seasoned professionals, but rather people who purchased or inherited an extra property and use it to prop up their income. This means that many landlords struggle to keep on top of the changes. However, failing to comply with legal obligations as a landlord can be a costly mistake, particularly if the relationship between tenant and landlord breaks down and the landlord seeks to recover possession of the property.

We've compiled some common questions and provided some top line tips:

What legal obligations should landlords be aware of and what paperwork needs to be in place before a tenancy begins?

Three very important legal obligations for landlords to remember are:

1) A valid Gas Safety Certificate. This must be renewed each year on expiry by a Gas Safe engineer and the tenant must be given a copy before they move in. 

2) An up to date Energy Performance Certificate which provides the property's energy efficiency rating. From April 2018, minimum energy efficiency standards mean that newly-rented homes and those with renewed tenancies must have an Energy Performance Certificate (EPC) rating of 'E' or above. On the day that the tenant signs their tenancy agreement, landlords must issue them with an EPC.

3) Protect the tenant's deposit in one of the government approved schemes. Once the deposit is protected, landlords must provide proof and details of the scheme to the tenant and issue them with the prescribed information. The deposit must be protected within 30 days of having received the money.

What tips and advice would you give for making sure these are met?

If you are not confident in your knowledge of landlord legislation, seek professional help. We often have landlords contacting us with a problem which has presented itself as a result of non-compliance and sometimes it can be more difficult to put right later down the line, so it's best to get it right first time.

Enquiries from concerned landlords who are unsure of their obligations have increased so much so that we now have to offer compliance advice on Right to Rent, Deposit Protection, EPC and Gas Safety, to help landlords get it right and avoid paying penalties. You may decide it's better to hand over the responsibility to a reputable managing agent.

Are there any new developments they especially need to be aware of?

From April 1st, 2020, the rules on energy efficiency standards will extend to covering existing tenancies too, meaning landlords will no longer be able to rent out homes with an EPC rating of 'F' or 'G'. Fines for doing so will be up to £5,000.

Are there any common pitfalls they need to avoid - and how can they do this?

Some landlords will be aware of the Caridon Property Ltd v Monty Shooltz case. In short, a landlord failed to obtain a possession order based on their Section 21 Notice, because a judge ruled that the requirements of the Deregulation Act 2015 meant their failure to issue a gas safety certificate before the tenancy began invalidated the subsequent Section 21 Notice for repossession. What is so crucial to recognise in this situation, is that there is nothing landlords can do to ressurect this issue. If they failed to provide a gas safety certificate before the tenancy commenced, even if they provided it since, landlords cannot evict a tenant using a Section 21 Notice. So, ensure you ALWAYS have this covered.



Impact of Tenant Fees Act continues to be felt

Posted on 8 October, 2019 at 8:25 Comments comments (0)

David Cox, ARLA Property Chief Executive, said: Although it's positive to see that supply has risen, it is nowhere near enough to counterbalance the rapid pace of rising rents, which have reached a new record high for the fourth month running. Two thirds of agents reported landlords raising rents last month, which is a significant increase when compared to the two fifths of agents who witnessed rises in August last year."

Unfortunately, the impact of the Tenant Fees Act will continue to be felt by tenants, as in order to keep their heads above water, landlords will continue increasing rents to cover additional costs they now have to bear".

ARLA Propertymark last week issued it's August Private Rented Sector Report.

* The number of tenants experiencing rent rises rose marginally in August with 64 per cent of agents witnessing landlords increasing them, compared to 63 per cent in July.

Year on year, this figure is up from 35 per cent in August 2017, and 40 per cent in August 2018.

The Most Affordable Place to Rent in England

Posted on 8 October, 2019 at 8:00 Comments comments (0)

If you're bored of your salary being swallowed up by your rent? It may be time to move to Durham. The city has ben named the most affordable place to rent in England, with just 23% of your monthly salary going towards rent there. Other northern cities closely follow in the latest Affordability Index, with tenants in Lancaster and Liverpool having to spend just 24% of their salary on rent.

At the other end of the scale, Brighton and Bath have been crowned the most expensive cities for renters, where you'll be expected to spend 52% of your salary on rental payments.. These are closely followed by Oxford, where you will, on average, spend 51% of your salary towards rent.

Westminster and The City of London almost make the 'most expensive' list - but surprisingly they don't actually top it for percentage of salary spent (perhaps because London salaries are often weighted).

The research, conducted by Open Property Group, used data from salaries from the Office for National Statistics to analyse the affordability of rent in 49 cities. The findings are based on a single tenant renting in each city. If the tenant was found to be spending over 30% of their gross income salary towards rent, this was deemed as 'unaffordable'.

CAMBRIDGE appears at Number 7 of the least affordable places to live, with an average monthly rent of £1,225.00  and an average salary of £31,941.00 (46% of rent).

Private Renters Are Satisfied or Very Satisfied

Posted on 24 July, 2019 at 10:25 Comments comments (1)

The Office of National Statistics has released the English Housing Survey 2017 to 2018: private rented sector.

The finding of the report concluded: The majority of private renters are satisfied with their accommodation and tenure, though not as satisfied as owner occupiers.

* The majority (84%) of private renters were satisfied or very satisfied with their current accommodation, though this was not as high a propertion as owner occupiers (95%).

* Private renters had the lowest of satisfaction with tenure at 69%, compared with 98% pf owner occupiers.

Most private rented sector tenancies ended because the tenant wanted to move.

* Of those who had lived in their current home for less than three years, 72% moved house because they wanted to. . Main reasons for moving in the past three years were job related (18% of moves), to move to a better neighbourhood (16%) and to move to a larger home (13%).

* Of those who did not move solely by choice, reasons included being asked to move by landlord (10%), and moving due to the end of a fixed term tenancy (8%).

Compared with social renters and owner occupiers, private renters spend the highest proportion of their income on housing. Despite this, the majority said they found it easy to pay their rent.

* On average, private renters spent a third (33%) of their income on rent. This compares to 28% for social renters and 17% for mortgagors. The proportion of household income spent on rent was higher for private renters in London (42%) than for the rest of England (30%).

* Most private renters said they found it easy or very easy to pay their rent.

* One in five private renters (20%) received Housing Benefit. Of these, 85% reported that the benefit covered part of their rent.

One in five households in England live in the private rented sector, making it the second largest tenure.

* 4.5 million households live in the private rented sector in England, 19% of all households. By comparison, 17% (4.0 million) live in the social rented sector and 64% (14.8 million) are owner occupiers.

Nearly two thirds of private renters had no savings.

* 63% of private renters report having no savings. Just over a third (37%) reported having some savings. 11% of private renters had savings of £16,000 or more.

More than half of private renters thought they would eventually buy a home. A sizeable proportion of those expected to buy but did not currently have any savings.

*Over half (58%) of private renters thought they would eventually buy a home. Younger renters were more likely to think they would eventually become homeowners. 77% of those 16 to 24 thought they would buy, compared to 40% of those aged 45 to 64.

* Of the 42% of private renters who thought they would not eventually buy a home, most (64%) said it was because they could not afford to do so.

* There was no apparent link between those who thought they would eventually buy a home and those who had substantial savings that could go towards a deposit: 12% of those who eventually planned to buy had substanstial savings of £16,000 or more.Overall, 42% of those who intended to buy, had some savings.


The Future Doesn't Look Bright For Landlords

Posted on 14 May, 2019 at 11:20 Comments comments (0)

Alarm bells over the health of Britain's private rented sector have been raised for the second time in two weeks, leading some to worry that a rental crsis is on the horizon. 

Many landlords will have seen their profits slashed over the past three years as biting tax changes have taken their toll. Two pieces of legislation, one proposed and one incoming, are likely to have a further impact on landlords in the coming years..

Landlords have issued a stark warning over the health of Britain's private rented sector as more and more property investors look set to sell up in the face of falling profits.

The findings follow a wide-ranging study of almost 2,500 landlords by the Residential Landlords Association study released last week, which found that a quarter of private landlords are looking to sell at least one property over the next year.

Letting Fees Comes Into Force 1st June 2019

Posted on 9 February, 2019 at 7:35 Comments comments (0)

The introduction of a ban on fees charged by landlords and letting agents looks set to finally become law on June 1st this year, the government has announced.

Following it's third reading in the House of Lords, the Tenant Fees Bill is likely to receive Royal Assent in the coming months.

Speaking to The Lords, Lord Bourne of Aberystwyth said: "We need to enable agents and landlords following Royal Assent to become compliant, but we intend for the provisions to come into force on June 1st 2019.

"This would mean the ban on letting fees would apply to all tenancies signed after this date".

The new law will not just mean a ban on letting fees, but also the majority of other upfront fees payable by tenants to rent a property in England.

There will also be a cap on the amount of refundable deposit a tenant would be required to pay to the value of five weeks' rent as well as a cap on the amount of holding deposit a tenant will be required to put down to secure a property to the value of one week's rent.

The government believes the Bill will make renting in England fairer and more affordable for tenants by reducing the costs at the outset of the tenancy, at the same time as improving transparency in the private rental market.

David Cox, Chief Executive of ARLA Propertymark, said: "With the Tenant Fees Bill completing it's passage through the House of Lords, it appears the Tenant Fees Ban will come into force on June 1st 2019.; subject to parliamentary scrutiny in the House of Commons.

"This now gives agents the legal certainty they need to prepare for a post tenant fees ban world. To learn about the intricacies of the legislation, we encourage agents to come to our regional meetings".

Why Section 21 is necessary

Posted on 22 January, 2019 at 5:50 Comments comments (0)


Currently, there is a nationwide campaign headed up by Generation Rent and supported by The Salvation Army and Crisis amongst others. The campaign has over 50,000 signatures so far, calling for Section 21 to be scrapped.

NO-FAULT EVICTIONS

Section 21 evictions, also known as no-fault evictions, are used when a landlord needs the property to be vacated for any number of reasons at the end of a tenancy agreement. These can include the following, althought the Section 21 Notice does not require any rationale for a notice to be served:

* Wanting to sell the property

* Wanting to move into the property themselves

* Wanting to renovate or extend the property

LANDLORDS

For landlords, Section 21 Notices are neccessary as it gives them the ability to regain possession of their property at the end of a tenancy agreement without need for justification.

When there are reasons for repossession before the end of the contract, the only way they can do is with a Section 8 Eviction Notice where they'll need a reason such as damages or rent arrears.

LACK OF SOCIAL HOUSING

The real issue appears to be the lack of social housing because if there were enough social housing available for tenants, there would not be so much reliance placed upon the private rental sector and therefore there would be more stability for those that rent.

The current situation is that the affordable housing supply is low. Whilst right-to-buy gave people the financial incentive to own their own property, the government hasn't been replacing these properties. This in turn, has meant that those who would have ben able to live in council housing have had to enter the private rental market; this has left landlords inundated with the type of tenants that may be reliant on benefits, that may be vulnerable, or have any number of other issues, making the private rented sector not the most appropriate solution. However, without the availability of social housing it is the only solution.


IMPORTANT CHANGES FOR LANDLORDS

Posted on 15 December, 2018 at 7:05 Comments comments (0)

If you rent out a property classed as a House in Multiple Occupation (HMO) you need to make sure you are aware of some recent changes.

A HMO is a property that is rented to a number of unrelated tenants who share facilities like bathroom or kitchen. They can include shared houses or flats above commercial premises.

On October 1st, mandatory HMO licensing was extended to include one and two storey properties. An HMO must now be licensed if: 

* it is let to five or more people from more than one household.

* at least some tenants share a kitchen or bathroom

and

* it is not a purpose-built flat in a block of three or more flats.

The government has introduced these changes with the intention of raising standards and so that good landlords who work hard for their tenants do not face unfair competition from rogue landlords who ignore their obligations.

Application forms are available at local council offices or on their websites.

Failure to apply for a licence if one is required is a criminal offence and may result in prosecution or a civil penalty.

Landlord Legislation

Posted on 14 September, 2018 at 6:05 Comments comments (0)

We now live in a world where a good managing agent is worth their weight in gold, but a poor one can be a massive liability. Minor compliance failures can cause significant problems for landlords.

Gas Certificates and Section 21.

Posted on 4 August, 2018 at 8:20 Comments comments (0)

Landlords, did you know that if you did not provide a gas safety cerificate at the start of a tenancy (be it a first agreement or written renewal after 1st October 2015), before the tenant moved in, you may find that any Section 21 Notice served during the term is invalid.

If you gave your tenant a tenancy after 1st October 2015, but failed to serve a gas safety certificate prior to them moving in, then your AST will be treated as an assured tenancy and possession using a Section 21 Notice will not be possible, just as if you failed to protect the tenant's deposit within 30 days.

Landlords need to be aware of the risks that if they go to court, their case may get struck out by the judge. We are sure more judges will be briefed about this legislation and more tenants will be informed about this type of defence.. If you are a landlord in this situation, then you may have to rely on a Section 8 procedure, but this is only possible where there has been a breach of tenancy.

The only way in which this can be rectified is with the introduction of new legislation.

Landlords should take the following actions to ensure they are compliant with current regulations regarding gas safety certificates:

- Ensure that tenants are provided with a gas safety certificate in advance of the start of their tenancy and certainly before the tenant moves in.

- Also remember as well as the gas safety certificate, you must provide a valid energy performance certificate (EPC) and a copy of the new updated (9th July 2018 ) government 'How To Rent Guide'.

- Keep a detailed record of the date and time of issue of the certificate on the tenancy file. Ideally, the tenant should sign an acknowledgement to confirm date and time of receipt. This could then be used as evidence in any susequent possession action.

- In a case where a gas safety cerificate was not served at the start of the current tenancy and a replacement tenancy is being contemplated, ensure that the latest certificate is served before the replacement tenancy begins.


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