Top tips for getting tenancy deposit protection right

By Marc Da Silva

Despite the anti-landlord policies adopted by the government, many investors continue to be drawn to the buy-to-let market as the returns routinely outperform those of other investments

Buy-to-let returns continue to beat many other mainstream investments, including commercial property, UK government bonds and cash, while remaining a highly popular alternative to the volatility investors often risk when investing in the stock market.

Yet, many landlords are putting their property investments - probably their biggest assets - at risk by failing to comply with basic legislation, such as placing their tenants’ deposits in a government-backed tenancy deposit scheme within 30 days of receiving the deposit.

Deposits taken on assured shorthold tenancies in England and Wales by landlords or letting agents must be protected within 30 days in any one of three government-backed insurance based or custodial deposit protection schemes operated by MyDeposits, Deposit Protection Service (DPS) and the Tenancy Deposit Scheme (TDS).

Insured scheme

The insurance product enables landlords or agents to retain the deposit during the tenancy but in return pay a protection fee to the scheme.

Custodial scheme

The custodial scheme allows landlords or agents to hand over the deposit for protection during the tenancy, with no fees attached. The scheme is funded entirely from the interest earned from the deposit pool.

There are separate tenancy deposit protection schemes in Scotland and Northern Ireland.

The three appointed scheme administrators in Scotland are Letting Protection Service Scotland, Safedeposits Scotland and MyDeposits Scotland.


In Northern Ireland, the schemes are Deposit Scheme Northern Ireland, MyDeposits Northern Ireland and Letting Protection Service NI.

Although it has been mandatory to hold a tenancy deposit in a tenancy deposit scheme since 2007, as many as 300,000 landlords are estimated to be running the risk of a heavy fine for not placing money into a government authorised scheme, research reveals.

Even if the property is managed by an agent, it is the landlord’s responsibility to ensure the deposit is properly protected.

Here are some top tips from the Residential Landlords Association for getting deposit protection right:

+ If you accept the deposit in installments, remember that each individual payment would need to be protected within 30 days of receiving each part.

+ If you have an agent managing the deposit protection, ask for a copy of the deposit protection certificate – if your agent doesn’t protect the deposit on time then you will be liable for between one and three times the deposit amount.

+ If you choose to use insurance-backed deposit protection such as TDS Insured or DepositGuard, include a stipulation in the tenancy agreement about what will happen to any interest the deposit generates at the end of the tenancy.

+ Ensure you include in your tenancy agreement all the reasons that you might need to use the deposit – e.g. cleaning, redecoration, damage, removal of items, replacement of items, rent arrears, gardening, etc. If you have not put a clause stating that the deposit may be used to cover loss in the instance then should a dispute arise you may be unable to claim the money from the deposit.

+ Ensure you make a thorough inventory and check in/out report which includes the condition, age and cleanliness of all items – this will give you a good starting point in any deposit deduction claims.

+ Remember that you must serve the prescribed information along with the scheme leaflet within 30 days of receiving the deposit. It is generally a good idea to have evidence that the tenant received such as their signature or proof of postage.

https://www.landlordtoday.co.uk/breaking-news/2017/7/top-tips-for-getting-tenancy-deposit-protection-right

Agents sought by firm offering possible way around future deposits cap

By Graham Norwood

An alternative to traditional deposits, already tested in the German rental market, is now being introduced into the UK - and claims it may offer a way around future restrictions on deposits hinted at in the government’s Queen’s Speech last week.

Flatfair is a system under which tenants pay it a so-called ‘flatbond’ – just one week’s worth of rent – ahead of the tenancy. In return, landlords are covered for 12 weeks of rent.

Tenants, as with a traditional deposit, remain liable for up to six weeks of rent in case of damages. Should there be a dispute at checkout, the case is decided by an independent government authorised dispute resolution provider. There are no yearly renewal fees.

The company is now looking for agents to join the Flatfair network, using the platform for free and entering a revenue-sharing agreement.

“The revolutionary approach introduces more choice to tenants, offering more than double the usual protection to landlords, improved payout terms and access to a larger pool of reputable tenants” according to the founder of Flatfair, Franz Doerr.

“Furthermore, Flatfair streamlines and digitizes the entire deposit and flatbond registration process, including change of sharer, claims and payments, providing transparency and penalizing tenants for unscrupulous disputes - all of which will significantly reduce letting agents’ and landlords’ operational headaches” says Doerr.

The flatbond is not an insurance product and was developed together with the support of the Financial Conduct Authority’s innovation hub.


Doerr says the status of his service, which is insured by European insurers for debt collection and contract disputes, makes it easier to transact “micro-claims” such as covering the costs of cleaning, which may not be covered by traditional insurance.

“Insurance policies can only be distributed by a regulated representative or broker - most letting agents therefore cannot advise on an insurance policy but [they can advise] on the flatbond” he adds.

Doerr says Flatfair has just achieved what he calls “critical mass” and is establishing a UK-wide distribution network of partnered letting agents; he also pledges that it will soon offer free tenant referencing and inventory checks and discounts on some services for agents, landlords and tenants.

The service comes to the UK just as the government has announced a possible extension to its proposed letting agents’ fee ban, to also cap rental deposits paid by tenants.

Doerr’s background is in finance and consultancy, most recently at Deutsche Bank; chief operating officer of Flatfair is a former Google marketeer, Daniel Jeczmien.

https://www.lettingagenttoday.co.uk/breaking-news/2017/6/agents-sought-by-firm-offering-possible-way-around-future-deposits-cap

Frustrated homebuyers in a fight to the finish with Bovis

By Julia Kollewe
Housebuilder has admitted it let buyers down on quality and service but six months on, some are still battling to get problems fixed

Bovis has admitted it built homes too quickly. Photograph: Bloomberg via Getty Images

At the Bovis annual meeting in May the chairman, Ian Tyler, apologised to homebuyers for “letting them down” and admitted the company had been cutting corners to reach ambitious targets. Quality and customer service had suffered in the past two years, he said. Tyler indicated that hundreds of homebuyers had suffered. “We absolutely got it wrong. We have compromised along the way ... We built too quickly. We started sites too early and handed over too early.”

Bovis had used subcontractors that “may not have been of the highest quality”, he said, but added that most customer complaints had been resolved.

This was news to Rob Elmes and his wife who moved into a £320,000 three-bed Bovis property in Inkberrow, Worcestershire, in February. He turned down a £3,000 cheque from Bovis to complete by 23 December because, he said, the property was riddled with problems. Five months on the couple were still battling to get them fixed.

“The main issue is the speed at which things are being fixed and the lack of communication. It is a case of one step forward, several steps back. This shouldn’t happen with a brand-new house,” Elmes says, though after Money intervened his problems were resolved.


Stung by such accusations, Bovis has retrained 90% of its 1,100 staff and appointed a new customer experience director. The firm also set aside £7m to rectify build issues and, in a few cases, pay compensation after it emerged homeowners were pressured to move into incomplete homes before Christmas. It issued a profit warning in late December and its then-chief executive, David Ritchie, quit not long after.

The new chief executive, the ex-Galliford Try boss Greg Fitzgerald, will unveil changes to the business in September.

Tyler said Bovis had slowed down production by adding a three-week “noncompressible” period between final inspections and handover to customers to iron out any issues. The firm is aiming to build 1,500 homes between January and June, which means output this year will be 10%-15% lower than in 2016. It will issue a trading update on 6 July.

There are reports on the 2,200-strong Bovis Homes Victims group on Facebook that buyers are again being pressured to complete on unfinished homes. Bovis denies this. Some allege they are not being allowed to have a “snagging” survey before moving in. Bovis says it will “accommodate inspection requests where it is practicable to do so”.

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The National House Building Council, the standard-setting body and main home construction warranty provider for new-builds in the UK, carries out spot checks at key stages of the build process but has been criticised for signing off homes riddled with “snags”. It says its inspections significantly reduce the number of defects: “Our inspectors are not on site at all times and it is ultimately the builder’s responsibility to ensure that homes conform to the building regulations and NHBC technical standards.”

Other allegations on the Facebook group include shoddy painting or plastering, faulty plumbing, cracks in tiles or brickwork, the wrong fittings being installed, creaking and moving floors and more serious structural issues.

Dave Howard and his wife, Ann, set up the group in January 2016. They say it took them two-and-a-half years to resolve all the issues at their home in Bicester, Oxfordshire. “We are working constructively with Bovis, having resolved all the problems to our satisfaction with our property,” Howard says. He is one of five members from the Facebook group who are joining the company’s 12-member homebuyers panel, which will have an advisory role.

While things may have improved for some new buyers, Howard says “existing owners with problems are still being given the runaround and are not being treated with the respect they should be as customers”. He says the carelessness displayed by contractors sent by Bovis to fix defects was shocking.

A couple in Norwich were among more than a dozen Bovis homebuyers who have contacted the Eastern Daily Press. James and Rachel Hipperson told the local paper that there were holes in the wall, fittings and parts of the conservatory missing, cracks in the floor and problems with drainage.

Industry experts have called for closer supervision, especially at bigger sites, and a change to work practices.

A recent customer satisfaction survey from industry body the Home Builders Federation showed Bovis dropped down a notch from last year to a two-star rating, putting it at the bottom of the league table of 34 builders. Rival Persimmon was stuck at a three-star rating, and of the major housebuilders only Barratt and Bellway boasted a five-star rating.

A survey conducted by homelessness charity Shelter found homebuyers’ satisfaction with the condition of their new homes on moving in has declined by 10%, to 78%, over the past five years. It found 38% experienced more problems than expected, up from 27% in 2012, and 69% reported six or more issues to the builder, up from 56%.


https://www.theguardian.com/money/2017/jun/24/frustrated-bovis-homebuyers-bovis-quality-problems

Rents in Britain up by average of 5.75% year on year

Average rents in Britain increased by 5.75% year on year in the first quarter of 2017 to £770
although there is some regional variation, according to the latest index figures.

Some areas of the South East reported slight falls in rent and other areas, such as the East Midlands and Yorkshire saw increases of over 7% year on year in the first three months of the year compared with the same period in 2016.

The rental index from lettings agents Belvoir is based on average advertised monthly rents, which are obtained from property portal Rightmove and since it began in 2008 rents have moved broadly in line with wages and large movements over and above 5% rarely happen.

According to Belvoir chief operating officer Dorian Gonsalves there are several reasons for rental increases of over 7%. He said that they have been pushed up by a rise in HMOs and some Belvoir offices experienced an increase in premium properties, which can affect the data. For example, if the majority of an agent’s properties rent at £600 per month, and they take on a premium property at £2,200 per month, this impacts on the average.

‘Interestingly, a new, non-statistical trend has been observed. Belvoir offices are reporting a large rise in areas with low availability of properties, particularly in market towns. This is down to a lack of new landlords bringing new stock to the market, which we believe is directly related to recent tax increases such as the 3% stamp duty on buy to let homes and changes to the way mortgage interest tax relief is treated,’ Gonsalves explained.

‘As a result of this stock shortage, properties are often rented to the highest bidder, typically the wealthier tenant, which is raising rents beyond the traditional 4% to 5% plus or minus trend,’ he added.

Belvoir has found that the average number of offices seeing landlords add six to10 properties has fallen from 15% in the second quarter of 2016 to 10.9% an d the number of landlords selling property has also fallen. Gonsalves suggests that there has been a fall in new landlords entering the market but no big sell off by current landlords.

Belvoir offices reported that 43% of tenants are staying between 13 to 18 months, 29% are renting for 19 to 24 months and 18.2% are renting for over two years.

The report also shows that average void periods seem to currently be on the increase with more properties, some 60%, taking up to two weeks to let whereas less are being let within a week, suggesting a slight slowdown in tenant demand.

However, despite increases in rents in some regions, rent arrears are not increasing, and Gonsalves said this suggests that tenants are currently coping with landlord rent rises.

Looking ahead to the general election outcome, he pointed out that whilst some initiatives may help some tenants, the general view seems to be to ‘curb’ smaller buy to let investors in favour of large landlords.

‘This could cause a further decrease in stock levels, making it much tougher for tenants to secure a property, especially as demand is expected to continue to increase over the coming years,’ he explained.

‘All parties are promising an increase in the building of new homes, but the reality is that unless land is sold or developed at a discount, it will be quite difficult to provide rents at anything less than existing landlords are doing. This is already the case in London where large landlords, who are backed by the Government, or Housing Associations and are now entering into the private rented sector can make renting viable at existing market rents,’ he added.

http://www.propertywire.com/news/uk/rents-britain-average-5-75-year-year/

Is the day of the tenant’s deposit about to be over?

By Rayhan Rafiq Omar

http://image.newsdog.today/origin_24b2fa19ed5ebd3d4ee10b94a8d4d590

It’s without doubt the most painful and stressful part of renting: forking over large amounts of money to keep landlords feeling comfortable.

The tenancy deposit was so abused that it took major legislation and punitive rules about returning deposits in a timely manner.

Legislative guidance is always tricky. Boris Johnson’s ‘London Rental Standard’ didn’t quite hit the mark: https://twitter.com/rentpro/status/867698819856822272

For many tenants, the fact they need to hand over one deposit while a previous landlord still holds their cash is debilitating. We all witness the stress this causes tenants.

To help, a number of solutions have come to market in just the last 12 months.

Some of these solution providers have already faced off with spats on twitter about which method is better: looking at you Curran McKay and Kristjan Byfield.

If you weren’t witness at the time, it’s well worth a read: https://twitter.com/curranmckay/status/815978914912862208

So what can tenants do instead of handing over a deposit?

If you guessed insurance, it’s certainly the most funded option: Curran McKay’s Reposit is backed to the tune of £400k and Jon Notley’s Zero Deposit Scheme has the backing of ZPG.

The product is fairly simple: instead of handing over a six week deposit that you may or may not get back, pay one week’s rent to purchase insurance for your landlord in-lieu of handing over a deposit.

Whether the claims process for these new insurance products are to landlords’ expectations is yet to be tested.

There’s no doubt that – given the choice – many tenants would prefer this option. But one thing is for certain at this point: it won’t be the tenant’s choice.

If a landlord wants a deposit, will a tenant really forgo the property? And what incentive does a landlord have for wanting insurance instead of a deposit?

A smart colleague of mine is often heard saying if the customer experience isn’t ten times better than what people normally do, then people will stick with what they normally do.

Enter Kristjan Byfield of Base Property Specialists and his new product: The Depositary.

The service hasn’t yet launched, but is clearly targeted at helping lettings agents by automating the process of administering deposits.

The Depositary has partnered with TDS, the largest deposit protection scheme, which would make it much easier for a landlord’s agent to adopt the system.

Will this be better for a tenant? If you read the twitter spat, then Byfield certainly believes it’s a win for the tenant with better communication and no need for extra fees.

In a world where legislation in England will soon mirror that of Scotland by banning tenant admin fees, reducing risk and cost will be top of mind for lettings agents.

That could play into the hands of The Depository and prevent the adoption of insurance-based deposit replacement schemes.

But then again, with Zoopla’s backing of Zero Deposit Scheme, that could make offering the choice to tenants an automated option that pays agents a commission for introductions.

Either way, tenants should win with increased choice to suit their concerns. It’s about time Generation Rent benefited from innovation.

You can view the websites of the three schemes mentioned here:

https://getreposit.uk/

http://www.zerodeposit.com/


http://www.thedepositary.com/

http://www.propertyindustryeye.com/is-the-day-of-the-tenants-deposit-about-to-be-over/

New courses launched to help landlords ‘minimise the risk of a dispute’

By Marc Da Silva

Buy-to-let returns continue to beat all other mainstream investments, including commercial property, UK government bonds and cash, while remaining a highly popular alternative to the volatility investors often risk when investing in the stock market.

But some landlords are putting their property investments - probably their biggest assets - at risk by failing to comply with basic legislation.

“In recent months, our adjudicators have reported seeing an increase in cases where appropriate documents and evidence aren’t available or are incomplete,” said Michael Morgan, director of dispute resolution at the Tenancy Deposit Scheme (TDS).

To help landlords minimise the risk of a dispute arising with tenants, the TDS has announced new dates for its Academy courses, delivering training on disputes and adjudication to property professionals and landlords.

TDS’s popular Foundation Course and Adjudication Workshops, which will be held in major cities across the UK, will provide accredited Continued Professional Development (CPD) certification.

The Foundation Course is a full day training session focussing on the key points of tenancy deposit protection and is designed specifically for landlords, as well as property managers, administrators and inventory suppliers.


The training session will cover a wide range of topics covering legislation, tenancy agreements, check-in and check-out procedures, calculating damage and whether disputes are appropriate or not.

The Adjudication Workshop is a half-day course that teaches landlords how to ‘think like an adjudicator’. It will focus on TDS’s Alternative Dispute Resolution programme, discussing various scenarios and case studies.

Attendees will hopefully leave with a better understanding of what evidence an adjudicator looks for in disputes and provides tips for presenting a case, and resolving disputes.

Morgan added: “We still see cases where tenants raise the same arguments challenging the accuracy of check-in reports – claiming they never got one, never signed it, or that it did not show the property’s condition accurately. These are all issues that can be addressed in advance with good check-in and check-out procedures – and it’s not difficult to document that has happened in the event of a dispute.

“Our CPD courses are designed to help landlords and property managers to minimise the risk of a dispute arising by helping them create well-documented check-in and check-out report, supported by good quality photographs.”

Courses will run throughout the summer and into Autumn, at the dates and cities below:

Foundation courses                                                         Adjudication workshops

Manchester         31st May 2017                                     Birmingham         22nd June 2017

London                 14th June 2017                                     Manchester         19th July 2017

Newcastle            12th July 2017                                       London  13th September 2017

Exeter                    27th September 2017      

Cardiff                    22nd November 2017

https://www.landlordtoday.co.uk/breaking-news/2017/5/new-courses-launched-to-help-landlords-minimise-the-risk-of-a-dispute

Major landlord to scrap tenancy deposits

By Marc Da Silva

Rental operator Get Living has announced that it is to abolish tenancy deposits for new residents from July and return existing deposits collectively worth £3m to more than 3,000 existing tenants.

Get Living is behind the country’s largest single-site PRS scheme at the former London 2012 Athletes’ Village, now called East Village, E20, which features 1,439 homes, with a further 4,000 homes in the pipeline across the UK.

Deposits will be returned to all tenants on the condition that they meet various requirements, which include having passed referencing or possessing a guarantor and being up to date with their rental payments.

Neil Young, CEO of Get Living, said: “We know that the cost of living can be high so, as a responsible landlord with a long-term perspective, it is important for us to be able to identify and address areas where we can alleviate the burden on our residents.

“Scrapping security deposits as a pre-requirement and returning deposits to current residents is yet another step we are taking to show we are firmly on the side of renters.”

Young hopes that deposit-free renting “becomes the norm” to help make the PRS even more attractive for renters.


He added: “We have great relationships with our residents and, given they are taking such good care of our homes, why should we hold six weeks’ rent?”

https://www.landlordtoday.co.uk/breaking-news/2017/5/major-landlord-to-scrap-tenancy-deposits

ARLA Propertymark backs holding deposits to stop ‘time-wasting tenants’

By Marc Shoffman

CREDIT: http://www.house-saver.co.uk/LiveEditor/images/moneyIntoHouse.jpg

A holding deposit capped at two weeks’ rent would help ease the burden on agents of tenants shopping around for multiple properties, ARLA Propertymark claims.

The trade body says there is a concern that the lettings fee ban will result in tenants shopping around with “impunity”, potentially wasting agency time and resources, but David Cox, chief executive of ARLA Propertymark has expressed hope that the Government will avoid this by allowing holding deposits.

He said: “The letting agent fees ban introduced in Scotland in 2012 resulted in tenants putting offers on multiple properties, creating significant additional work for both letting agents and landlords.

“The Department for Communities and Local Government has recognised this burden and therefore in the consultation they propose that agents will be allowed to take holding deposits from tenants which will be refunded to successful applicants and forfeited if tenants withdraw.

“This should overcome the issue of tenants putting down offers on multiple properties with impunity.


“The consultation asks what limits should be imposed on holding deposits and we believe they should be capped at two weeks as that figure will act a deterrent to such action by tenants while still being affordable.”

http://www.propertyindustryeye.com/arla-propertymark-backs-holding-deposits-to-stop-time-wasting-tenants/

House prices post first quarterly fall in four years as market stagnates

By Isabelle Fraser

House prices were 0.2pc lower in the three months to April than in the preceding three months CREDIT: DAVID ROSE

The quarterly rate of house price growth fell for the first time in more than four years, as the housing market stagnates.

House prices were 0.2pc lower in the three months to April than in the preceding three months, according to Halifax. This is the first quarterly decline since November 2012.

They fell 0.1pc between March and April, but the average price was still 3.8pc higher than the same month last year, less than half of the annual rate of growth last year.

This dip follows on from lower Nationwide house price data and a six-month low of mortgage approvals according to the Bank of England. Howard Archer, an economist at IHS Markit, said that this "fuels our belief that the housing market is being increasingly affected by the increasing squeeze on consumers and their concerns over the outlook."

Hansen Lu, at Capital Economics, said that a house price correction "seems unlikely", adding that "price growth has stalled because prices are so high", rather than any effect of the snap election. Huge levels of price growth in the last two years has led to a crunch on affordability.

The picture is not the same across the country, as in some areas - particularly in northern cities - prices are soaring as growth in the south slows. Jonathan Hopper, managing director of Garrington Property Finders, said that "the mediocre average figures mask the wildly different conditions at opposite ends of the market".

“Properties in some regions continue to see double-digit price reductions, while at certain price points in the most in-demand areas, gazumping is back with a vengeance.

“Such volatile conditions are being driven by two conflicting forces – patchy demand but a near universal shortage of supply. With Royal Institution of Chartered Surveyors reporting that the number of properties coming onto the market has fallen for 13 months in a row, in many areas buyers outnumber the number of homes for sale."

Martin Ellis, Halifax housing economist, said: “A continued low mortgage rate environment, combined with an ongoing acute shortage of properties for sale, should nonetheless help continue to underpin house prices over the coming months.” Mr Archer has forecast that house prices will grow by just 2pc this year.

http://www.telegraph.co.uk/property/house-prices/house-prices-post-first-quarterly-fall-four-years-market-stagnates/

Suspend or extend: Agents back request over letting fees consultation

By Rosalind Renshaw

https://www.ezytrac.co.uk/wp-content/uploads/2016/12/buy-to-let-landlord-disadvantaged-by-letting-agent-renewal-fees.jpg

A number of influential agents have backed an official request by ARLA Propertymark asking the Government to suspend or extend the consultation on the fees ban.

The agents include Hunters, whose founder and chairman is Kevin Hollinrake, now a Tory MP and regularly touted as a future housing minister.

ARLA Propertymark chief executive David Cox yesterday wrote to the Secretary of State at the Department of Communities and Local Government, Sajid Javid.

Currently, the consultation is due to end on June 2 – just days before the General Election on June 8.

Citing the election ‘purdah’, DCLG has already cancelled a series of ‘workshops’ where agents could have had a platform for their views. DCLG has said it may hold workshops after the consultation has closed.

Cox’s letter to Javid says:

“As the UK’s largest professional body for the lettings industry with over 9,000 members, ARLA Propertymark requests that you extend the time limit for the consultation to ban letting agent fees in light of the recently announced General Election.

“We were pleased that a key part of this consultation process, as set out by DCLG, was to engage the sector and host a number of workshops throughout the country to discuss the implementation of the fee ban and proposals in the consultation.

“This was most welcome as it would have allowed agents to gain clarity from officials on some of the points raised in the document and share their views on the proposals.

“However, as it is likely the fee ban will become a manifesto pledge in the coming weeks and therefore a political issue, this work cannot properly take place during purdah; when civil servants will need to take extra care to remain impartial and objective.

“General Election guidance also makes clear that statements which refer to future intentions of the Government should not be handled by a Department.

“Therefore, ARLA Propertymark asks that the Government either extends the consultation for a further period beyond the election, or suspend it until a new government is in place.

“Either way, we request that the consultation does not close until the now-cancelled workshops have taken place; as the Department originally committed to do as part of the consultation process.”


The letter is endorsed by Hunters, plus Belvoir, Chestertons, Connells Group, Countrywide, Dexters, Felicity J Lord, Foxtons, haart, Hamptons,  JLL, Knight Frank, Leaders, Martin & Co, Romans, Savills, Sequence and Your Move. It also has the backing of two of the tenancy deposit schemes, TDS and mydeposits.

http://www.propertyindustryeye.com/suspend-or-extend-agents-back-demand-for-lettings-fee-ban-consultation-to-be-suspended-or-extended/

Councils want 'tiny' flats banned and jail for rogue landlords

By Graham Norwood

A body representing 370 councils in England and Wales wants the government to close a legal loophole which allows the conversion of houses into multiple tiny ‘units’ which are then let as self-contained flats.

The tactic is reported to have been used by some landlords to secure the maximum level of housing benefit payments which are paid on behalf of tenants direct to landlords.

The Local Government Association claims the loophole abuses legal exemptions and the lack of clarity in environmental health, planning and housing benefit rules to avoid detection, and is resulting in widespread abuse of taxpayers’ money as well as housing tenants in poor and often dangerous accommodation.


The LGA is also calling for more prison sentences for the worst landlords, rather than imposing fines. It says some fines can be as low as £1,000 for serious safety offences and claims these are often offset by profits at the expense of exploited and vulnerable tenants whose lives may be at risk.

The association says private landlords pocketed £9.3 billion in Housing Benefit in 2015, twice that of £4.6 billion in 2006. The micro sub-division of properties - called the Lockdown model - is thought to have contributed to this sharp rise and the loophole which first started in London is now spreading across the country.

Landlords can convert homes into a maximum of six small self-contained studios with en-suite showers and portable cooking equipment, without planning permission, but the LGA says electricity supplied to the different properties is often run on stolen meters or hotwired supplies, creating fire hazards.

Under recently-introduced legislation, councils can issue the worst landlords with fixed penalty notices of up to £30,000 for offences including failure to comply with improvement and overcrowding notices. Councils can also apply banning orders when new government regulations come into force later this year.

But the LGA says the micro-conversion loophole being exploited by rogue landlords is undermining these new powers, and states that councils need streamlined housing and planning powers to stop landlords converting properties into “micro flats” without planning permission to protect tenants.


https://www.lettingagenttoday.co.uk/breaking-news/2017/4/councils-want-tiny-flats-banned-and-jail-for-rogue-landlords

What does 2017 have in store for the BTL mortgage market?

By Darren Pescod

Can we predict what the next 12 months may bring for the buy-to-let mortgage market? Many experts have attempted to do this, but there is some disparity among their ideas.

Even the quickest look at search engine results for news on house price and mortgage predictions for the New Year reveals a wide range of beliefs. Some believe there will be a marginal increase in mortgage lending, while others have pointed to the likelihood of weaker lending this year. Only time will tell which side has the right answer.

The Council of Mortgage Lenders has predicted this outcome over the next two years, into 2018. A year ago, it predicted gross lending of £261bn for 2017. However, recently it revised this, opting for £248bn instead. Will the true figure be somewhere between these two, or will even £248bn prove to be too high?

Most experts believe house prices will continue to rise in 2017. Some brokers estimate a 1% rise, while others estimate a 2% or 3% rise. Experts at Nationwide Building Society agreed on 2%, while RICS went for a 3% rise. Meanwhile, those at Halifax have hedged their bets somewhat by opting for an estimate of a rise between 1% and 4%.

Prime Minister Theresa May is due to trigger Article 50 in March – the process that will formally start the clock ticking on the UK severing ties with the EU. The housing market did stall immediately following the vote for Brexit last year. Could we see something similar when Article 50 is triggered? It’s possible, but it seems too challenging to accurately predict how the housing market might react through to the end of 2017.


The buy-to-let market will continue to be challenging. The change in rental calculations introduced by the Prudential Regulation Authority this month is already having a significant impact on buy-to-let borrowing.

The stamp duty additional levy introduced this tax year and income tax changes that come into force in this tax year are designed to slow down this sector. The signs are that it will have the desired effect, possibly more rapidly than it was anticipated by the policy-makers.

We have seen the number of buy-to-let deals decrease over recent weeks, as lenders get to grips with the new changes and decide on the best route forward to maintain market share in the buy-to-let arena, they now find themselves in. However, deals can still be had although the amount one can now borrow will most probably be lower than what it was a couple of months ago.

Hopefully, in 2017 we will see a rise in residential purchases to keep the housing market buoyant, although, perhaps it is time that property price inflation started to weaken. We do not anticipate rises in base rate, although mortgage pricing could increase slightly. The big question is how our exit from the EU will take shape and what changes we will see in the economy as a result. All bets are off until we have some idea of what the future will look like.


https://www.landlordtoday.co.uk/breaking-news/2017/1/what-does-2017-have-in-store-for-the-btl-mortgage-market

Landlords need support to deal with changing ‘illegal immigrants’ legislation

The Deposit Protection Service (DPS) wants to see more ‘support and information’ offered to landlords to help ensure that they properly understand the changing rules around illegal immigrants.

From December, it will be a criminal offence for landlords to rent out property to people who are in the UK illegally under new measures being introduced by the government, it was announced this week.

In her first speech to the Conservative Party conference as Home Secretary, Amber Rudd told activists that the government will attack illegal immigration by going after the landlords that provide them with accommodation.

She said: “From December, landlords that knowingly rent out property to people who have no right to be here will be committing a criminal offence. They could go to prison.”

But the DPS is concerned that there is not sufficient information and support available to landlords to help ensure that they do not unwittingly fall foul of the law.

Julian Foster, managing director at the PDS, said: “Although landlords will always want to operate within the law, changes in the regulatory environment can mean that many fall foul of legislation without realising it.

“Pressures on landlords can be significant, particularly those who are also in fulltime work, so it’s vital that they receive sufficient information and support whenever the rules change.

“Anyone letting out property must fully understand regulations that affect them as well as their obligations as a landlord to both their tenants and the authorities.”

https://www.landlordtoday.co.uk/breaking-news/2016/10/landlords-need-support-to-avoid-unwittingly-falling-foul-of-illegal-immigrants-legislation