TPO appoints new council chair

By Marc Da Silva

When a tenant paid his initial one month’s rent in addition to a tenancy deposit in exchange for the keys to his new rental property last year, he did not expect a few weeks after moving into the flat to be contacted by the landlord wanting to know where his money was.

When it materialised that the letting agent had had not passed on his deposit or initial rent payment to the landlord, the tenant issued a worthwhile compliant to The Property Ombudsman (TPO) which was upheld by the Ombudsman, who ordered the letting agency to pay the money owed to the landlord totalling more than £4,000, together with £250 compensation to the tenant.

But to make matters worse, the London-based company failed to pay the award, despite the fact that TPO members are required to comply with any award and direction given by the Property Ombudsman and accepted by the complainants.

Failure to pay the fine subsequently resulted in the agency’s expulsion from the residential agency ombudsman, which means that the company in question cannot legally trade as a letting agency, because as many of you will undoubtedly know, it is mandatory that all letting agents and property management agents register with one of three government-approved redress schemes, none of which will allow previously expelled agents to join.

Although in most cases disputes are resolved without a formal referral, these government approved schemes, run by The Property Ombudsman (TPO), Ombudsman Services Property and the Property Redress Scheme (PRS), provide fair and reasonable resolutions to disagreements between members of the public, including buy-to-let landlords, and property agents, ensuring that tenants and landlords have a straightforward option to hold their agents to account when required.

To help strengthen its offering, TPO has appointed Baroness Warwick, the current chair of the National Housing Federation, as the scheme’s new council chair, after Lord Best officially stepped down from the role after his eight-year term came to an end.


Baroness Diana Warwick (pictured beside) said: “I am delighted to succeed Lord Best in this important role and hope that the qualities and skills I bring will help to reinforce the commitment to high standards that he has fostered.

“I share the Property Ombudsman Scheme's values of independence and public service and strongly support its purpose in providing free, fair and impartial service to buyers, sellers, tenants and landlords of property in the UK.”

Reflecting on the appointment, the Property Ombudsman, Katrine Sporle, said: “I look forward to working closely with Diana who has spent many years helping the government make and shape laws, and debate public policy matters."

"She will be a great asset to TPO which aims to raise standards in the industry and protect consumers from unfair practices.”


https://www.landlordtoday.co.uk/breaking-news/2017/5/tpo-appoints-new-council-chair

Landlords urged to hold off from incorporating until after Budget

By Marc Shoffman

Port of Vancouver USA

The National Landlords Association (NLA) is urging members to hold off from incorporating in case the Government tries to clamp down on limited companies being formed to mitigate income mortgage interest relief changes.

Richard Lambert, chief executive of the NLA, said the Chancellor hinted in his Autumn Statement that the Treasury is concerned by the drop in tax revenues as a result of businesses across the economy incorporating to reduce their tax bills.

He warned that landlords, many of whom are incorporating to preserve mortgage interest relief, should wait to see whether a consultation is launched in next week’s Budget before making a decision.

It comes as the proportion of landlords intending to take out commercial loans to fund their property purchases has doubled over the past 18 months as they look to mitigate the impending buy-to-let tax changes.

Research by the NLA shows that the proportion of landlords planning to use commercial loans has risen from 10% in July 2015 – when the changes to taxation were first announced – to 19% at the end of last year.

The changes to taxation will take place from April and, once fully phased in by 2021, will prevent landlords with buy-to-let mortgages from deducting their interest payments or any other finance-related costs from their turnover before declaring their taxable income.

This rise coincides with increasing numbers of landlords telling the NLA’s quarterly landlord panel that they would form a limited company to preserve the mortgage interest relief perks. One per cent of landlords said they would incorporate in January 2016 and the figures now stands at 6%, which the NLA says equates to a rise from 20,000 to 120,000.

Lambert said: “Over the past year more than one hundred thousand landlords have formed a limited company in order to beat the tax changes, and this overlaps with an increasing intention to look to commercial loans to fund future purchases.


“While commercial loans are available to non-incorporated landlords, they tend to be a source of funding more commonly used by limited companies looking to expand their property portfolios, so we’d expect to see this trend develop as the year plays out.”

http://www.propertyindustryeye.com/landlords-urged-to-hold-off-from-incorporating/

Letting agent launches new Airbnb service which passes on financial benefit to landlords

By Rosalind Renshaw

A new home-sharing service has launched, allowing tenants to sub-let their homes in Airbnb-style – but passing on some of the financial benefit to the landlord.

Letting agents Lavanda says London landlords could benefit to the tune of a 10% uplift in rental yields.

The firm claims to be offering an innovative and fully compliant letting product.

While home sharing via platforms like Airbnb is a fast-growing activity, the drawback is that it has largely been conducted in breach of tenancy agreements, planning permission, mortgages and insurance policies.

Lavanda claims to get round this with a new form of lease, which entitles the tenant to sub-let for up to 90 days a year, while Lavanda itself manages the properties.

A portion of the sub-letting income is shared transparently with the landlord.

Lavanda can also provide the tenant with a hotel type of service in return for a monthly fee, which is also shared with the landlord.

Guy Westlake, CEO of Lavanda, said: “Our product taps into the way people want to live today, ultimately powering maximum yield to landlords and a more affordable rental proposition to tenants.

“Home sharing and serviced living are the new norms. It is time to embrace and professionalise this market, and we are excited to help the industry take its first steps in this direction.”

The business aims to capture 10% of the London lettings market within the next five years.


The company – which provides three core products, lettings, Airbnb management and serviced living – has a 30-strong team which includes ‘growth manager’ James Robotham, a former senior negotiator at Knight Frank.

A new home-sharing service has launched, allowing tenants to sub-let their homes in Airbnb-style – but passing on some of the financial benefit to the landlord. Letting agents Lavanda says London landlords could benefit to the tune of a 10% uplift in rental yields. The firm claims to be offering an innovative and fully compliant letting product. While home sharing via platforms like Airbnb is a fast-growing activity, the drawback is that it has largely been conducted in breach of tenancy agreements, planning permission, mortgages and insurance policies. Lavanda claims to get round this with a new form of lease, which entitles the tenant to sub-let for up to 90 days a year, while Lavanda itself manages the properties. A portion of the sub-letting income is shared transparently with the landlord. Lavanda can also provide the tenant with a hotel type of service in return for a monthly fee, which is also shared with the landlord. Guy Westlake, CEO of Lavanda, said: “Our product taps into the way people want to live today, ultimately powering maximum yield to landlords and a more affordable rental proposition to tenants. “Home sharing and serviced living are the new norms. It is time to embrace and professionalise this market, and we are excited to help the industry take its first steps in this direction.” The business aims to capture 10% of the London lettings market within the next five years. The company – which provides three core products, lettings, Airbnb management and serviced living – has a 30-strong team which includes ‘growth manager’ James Robotham, a former senior negotiator at Knight Frank.

First-time buyers would benefit from Brexit, says Moody's

Ratings agency says fall in house prices and less competition triggered by vote to leave EU would make homes more affordable

First-time homebuyers in the UK would benefit from a vote to leave the EU, according to a leading ratings agency.

Moody’s said a fall in house prices triggered by a Brexit would make it more affordable for people trying to get on the property ladder for the first time.

“First-time buyers would benefit from lower competition for housing, as house price and rental inflation would slow down if immigration is curbed,” said Gaby Trinkaus, a vice president and senior analyst at Moody’s.

Trinkaus added that whatever the outcome of next month’s referendum, the outlook was picking up for first-time buyers in the capital.

“Regardless of the referendum vote, the ambitious affordable housing agenda for London following the mayoral election will help those looking to get on the housing ladder,” she said.

Last week, Christine Lagarde, managing director of the International Monetary Fund, said a vote to leave the EU at next month’s referendum could cause a house price and stock market crash.

“We have looked at all the scenarios. We have done our homework and we haven’t found anything positive to say about a Brexit vote,” she said.

Estate agents also claimed thousands of pounds could be wiped off the value of UK houses if Britain votes to leave the EU.

Prices in London could fall by as much as £7,500, while homeowners in the rest of the country could lose £2,300, the National Association of Estate Agents said.

However, Moody’s suggested Brexit would be positive for cash-strapped first-time buyers who are currently priced out of the market.

UK prices rose in March at their fastest monthly rate since 2004, the latest official figures showed, boosted over the month as buy-to-let investors rushed to complete purchases ahead of a stamp duty rise in April.

House prices increased 2.5% over the month, taking the average price of a home to £291,820 according to the Office for National Statistics.

Moody’s said London’s property market could be more affected by Brexit, and that landlords could struggle to pay mortgages because of falling rental demand.

Trinkaus said: “A decline in rental demand could hit landlords’ ability to pay their mortgages on buy-to-let properties if London becomes less attractive to foreign nationals.”

Moody’s also warned that self-employed people in Britain would be more at risk than employees from fluctuating pay in the event of Brexit, potentially affecting their ability to make mortgage repayments.

House prices increased 2.5% over the month, taking the average price of a home to £291,820 according to the Office for National Statistics.

Moody’s said London’s property market could be more affected by Brexit, and that landlords could struggle to pay mortgages because of falling rental demand.

Trinkaus said: “A decline in rental demand could hit landlords’ ability to pay their mortgages on buy-to-let properties if London becomes less attractive to foreign nationals.”

Moody’s also warned that self-employed people in Britain would be more at risk than employees from fluctuating pay in the event of Brexit, potentially affecting their ability to make mortgage repayments.

https://www.theguardian.com/business/2016/may/19/first-time-buyers-brexit-moodys-eu-referendum

Why do landlords refuse to let to housing benefit / DSS tenants?

And what can be done about it?

The tenants organisation DIGS is organising a #YesDSS campaign this month.  They are angry that so many landlords and letting agents in London refuse to let to DSS tenants.

This is set out on the DIGS website here in a post which makes several points:

• That ‘No DSS’ is a form of discrimination
• Many people have no choice but to claim benefits
• Social housing is being reduced and is ‘under attack’ by government
• ‘No DSS’ leads to homelessness and increases stress, and
• Landlords and letting agents have got away with too much for too long

The article ends up by saying

Letting agents blame “No DSS” on landlords; landlords blame it on council bureaucracies, mortgage lenders and insurers. Yet the truth is that all of these people need to take proactive responsibility for ensuring that no-one is denied a decent, secure and affordable place to live simply because they don’t earn enough money.

The article links to David Lawrenson’s (rather good) article in the guardian on why landlords won’t let to DSS tenants but does not really address the points he makes.

The problem

I agree that it is disgraceful that so many decent hardworking people are unable to find somewhere to live, just because they need to claim benefits to support themselves.

However, I think that the DIGS campaign is targeting the wrong people.

There is a big difference between the private and the social sector.

• The private sector is largely made up of ordinary people who have purchased one or two properties as an investment – for example, to supplement their pension or provide for their families
• The social sector consists mostly of not for profit organisations whose ‘raison d’etre’ is to provide modest cost accommodation for people of modest means.

Now clearly it is the social housing sector which is best suited to provide housing for housing benefit tenants. Unfortunately though, it is currently haemorrhaging properties through right to buy which are not being replaced.

As DSS tenants are clearly unable to buy their own home, this leaves them nowhere else to go but the private sector.

Why private landlords won’t / can’t let to DSS tenants

It’s all very well for the author of the article on the Digs site to brush off the points made in David Lawrenson’s article, but this is not something landlords can do.

For example – insurance. It is essential that landlords insure their properties – this is both for their benefit and for their tenants benefit. However, many landlords will understandably baulk at paying extra insurance premiums if they  take DSS tenants.

Then, if their buy to let mortgage prohibit DSS tenants, they can’t do anything else BUT refuse to take them. If they don’t, they risk increased interest payments or (worst case scenario) foreclosure by the mortgage company. THAT is not going to help the tenants either.

However, I suspect that the biggest problems faced by landlords with DSS tenants are the problems with local authorities.

For example, comments on the Landlord Today report here make the following points:

• They change the allowances to tenants with no warning,
• They backdate enormous (and often fictitious) overpayments which the tenant has no hope of paying.
• They start and stop payments as they wish with no regard for the landlord’s contract with the tenants
• They insist on paying in 4 week cycles instead of calendar month like everyone else
• The council teams are incredibly rude and aggressive to agents and Landlords alike
• They actively encourage defaulting tenants

The first commenter ends by saying

After 10 years of accepting DSS tenants we stopped in Jan 2015 after too many bad experiences- not with tenants but with councils

You may also want to take a look at Kate’s Story on this blog – a true story where a landlord tried to help a DSS tenant but ended up losing out.

Why SHOULD private landlords act to their disadvantage?

Why would any landlord voluntarily let to a tenant where there are likely to be all these problems, when there are plenty of non-DSS tenants around?

To answer the comment from the Digs author

all of these people need to take proactive responsibility for ensuring that no-one is denied a decent, secure and affordable place to live simply because they don’t earn enough money.

I would say ‘why should they?”. They are private individuals, not charities.  It’s not their job to house the homeless.

And unless they are ‘stinking rich’ (which most small landlords are not) I don’t even think they have a moral duty to do this.  Their duty is to their own families.

Letting agents are of course just the businesses who manage the properties, and are duty-bound to get the best financial return for their customers – they would be negligent if they didn’t and could be vulnerable to compensation claims. Although no doubt their staff will also want to avoid problems with ‘difficult’ local authorities.

The real problem

The real problem is that instead of social housing stock being increased, which is what is desperately needed, it is actually being reduced.

Government seems to be hell bent on doing all it can to increase the ‘right to buy’ sell-off and make it difficult for Housing Associations and other social landlords to build any more.

Thus completely ignoring the needs of DSS and other low-income families who have nowhere else to go.  For example, they can hardly stump up the 1/2 million or so needed for an ‘affordable‘ property in London.

Possible solutions

It goes without saying that Local Authorities and Housing Associations should be encouraged to build and acquire property to let to benefit tenants.

There are also other traditional and innovative solutions that could be looked at, such as

• Compulsorily acquiring some of the many properties lying empty
• Using unused areas of land to house the homeless in cheaper and quickly erected ‘container’ and ‘popup’ housing such as is being done in a few places
• Encouraging people to build their own homes from standard parts, as was done here

(Give us your suggestions below!)

These are the sorts of things that tenants organisations should, in my view, be focusing on.

Finally, there are still (I hope) some private landlords, generally landlords with larger portfolios, who are prepared to take on DSS tenants. However, they are generally very experienced in this work, will usually insist on payments being made via a credit union and invariably require a home owning guarantor.

http://www.landlordlawblog.co.uk/2016/02/29/why-do-landlords-refuse-to-let-to-housing-benefit-dss-tenants/