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Rogue Landlord Complaints Underestimated?

by Sarah Halloran

A survey commissioned by the Housing Charity Shelter has found that complaints over rogue landlords have increased by 27% over the course of the last three years. The stories behind those figures are quite alarming but the Charity feels that the actual numbers of landlord problems are even higher and that many tenants are simply not reporting their problems through fear of reprisals.

In the last year alone, 85,000 complaints were submitted to local authorities across England and Shelter found that 62% of these issues involved serious or life threatening situations. An additional 781 cases needed the involvement of local health services due to private landlord behaviour or neglect.

Shelter are urging their supporters to petition their local councils and they believe that the situation is even worse than the figures suggest.

“Despite the significant increase in complaints, we believe that the number of rogue landlords is still underestimated,” said Campbell Robb, Shelter’s Chief Executive.

“Some local authorities don’t keep records of complaints and tenants often hold back from complaining out of fear of the consequences or because they don’t believe their voices will be heard, even though such a high proportion of complaints are about life-threatening issues.”

The figures have come after a two year campaign by Shelter to highlight the growing problems with regards to rogue landlords and to encourage the government to put effective measures in place to tackle them.

In a response to these moves, the government has set up its own dedicated taskforce to tackle these problems. Under the scheme, local authorities will be given all the support they need to deal with rogue landlords and to bring about prosecutions.

In addition, £1.8m will be invested to tackle so-called ‘sheds with beds’ – slum properties that are unfit for habitation – while the plans will also remove limits on the fines that can be imposed on landlords.

Shelter may have welcomed the proposals but they insist that there is more work to be done.

“There is still much to be done,” Mr Robb continued. “It’s ultimately local authorities that must do everything in their power to support people who are suffering by cracking down on the worst offenders in their area.”

Those wishing to add their name to the charity’s campaign are invited to e-mail their local council while Shelter are urging any tenants experiencing problems with rogue landlords to get in touch with them for advice without delay.

 

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Labour slams government over ‘unscrupulous letting agents’

by Sarah Halloran

Letting agent rip offs are under the spotlight once again after new findings from Shelter released this week. In a survey of 5,000 tenants, the organisation found that 23% claimed that they had been unfairly charged by an agent at some point for contract renewals, repeated credit checks and even for viewing a property.

The poll found that the most common complaint was in regard to ‘administration’ – a term which covers a wide range of charges and tends to average at around 14% of the tenant’s property charge. In some cases, this amounted to a non-refundable, one-off fee of up to £540.00.

Typically, a 10% charge would then be applied for an initial credit check and further 8% fees levied for contract renewals. Incredibly, charges for repeated credit checks of up to £150.00 were made while some tenants were even asked to pay £100.00 simply for viewing a property.

“It’s scandalous that some letting agents are creaming off huge profits from the boom in private renting by charging both tenants and landlords fees that are totally out of proportion to the service they provide,” said Kay Boycott, Director of Campaigns, Policy and Communications at Shelter.

Jane Ingram, who is president of the Association of Residential Lettings Agents (ARLA), acknowledged that standards needed to be raised and pointed to her organisation’s repeated requests to the coalition government.

“Standards in the lettings industry do need to be raised. That’s why we have long-called on the Government to act swiftly and introduce a robust licensing system designed to protect consumers,” she said.

The figures have led to an attack on the government by the Labour Party who accused the coalition of standing by and doing nothing while the crisis deepens.

“Unscrupulous lettings agents are ripping off tenants by charging them fees they didn’t know they would face, and exploiting landlords and tenants alike by failing to protect the money they hold for them,” said Jack Dromey MP, the Shadow Housing Minister.

Mr Dromey went on to underline the effect these charges in having at a time when many families are struggling to cope financially.

“As the growing housing crisis and double dip recession put the one million families in the private rented sector under pressure, this is the last thing they need,” he added.

Shelter also found that some agents were double charging their fees to both landlords and tenants while some renters asserted claims that they feel vulnerable in the current climate.

Calls for the government to act are increasing and the only certainty is that this situation will only be repeated until action is taken.

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Labour Highlights Issues of ‘Rip-Off’ Letting Fees

by Sarah Halloran

The issue of an unregulated private letting industry has hit the headlines on a number of occasions in recent weeks and one of the problems faced by tenants has been highlighted this week by Labour’s Opposition Government.

Hilary Benn, the shadow secretary of state for communities and local government has spoken out over the high charges placed by letting agents and has claimed that some are genuinely ‘ripping off’ landlords and tenants. The numbers in question don’t just relate to commission charges as Labour are also concerned about fees for add-ons such as reference checking and sending renewal letters.

The Labour Party underlined their concerns amidst claims that in 2013, the numbers of homes rented out privately is set to exceed social housing for the first time and their findings suggest that agents’ charges vary to a huge extent.

The charges for reference checking range from a mere £10.00 all the way up to an unnecessarily excessive £275.00 while the charge for renewing a tenancy -  a process which involves sending an e-mail or a letter and asking for it to be signed and returned – varied from £12.00 right up to £220.00.

“What is actually £220 of cost in terms of administration if you had just to send an email, open an envelope, stick it on file?” Asked Mr Benn.

“That seems to me a rip-off. It’s a problem not just for tenants but also for landlords.”

Hilary Benn and his party have promised that they will look into ways in which caps can be introduced in the private sector and this is a move that has been widely welcomed by Landlords and Tenants Groups right across the country.

“Anyone can set themselves up as a letting agent, and then potentially abscond with hundreds of thousands of pounds of people’s cash,” said Ian Fletcher, Director of Policy at the British Property Federation.

“It is therefore counterintuitive that estate agents who handle relatively little cash are regulated, but letting agents who handle lots of cash are not.”

Labour has conceded that part of the problem lies in the fact that the levels of social housing weren’t increased when they were in power. As a result, more and more home seekers are turning to the private rental sector as they are unable to get on to the property ladder and into home ownership.

In the present day, the Labour Party recognise that the private sector is therefore meeting an urgent need and it seems set to press on with finding a solution to any excessive agents’ charges.

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Scale of Rental Arrears Revealed

by Sarah Halloran

Recent reports have shown just how much of the UK are relying on renting their homes while many of those are facing the prospect of having such an arrangement on a permanent basis. As a financial comparative, it’s widely claimed that renting is more expensive than buying and the struggle to maintain payments seems to be getting worse.

A report generated by Receivers Templeton LPA, who comprise part of the LSL Property Services Group, is suggesting that over 100,000 people across Great Britain are more than two months behind with their rent. This represents a significant increase of 24% compared with a year ago and the numbers are at their highest since 2008.

In addition, the number of eviction court orders for tenants increased by 6% in the first quarter of 2012 and by 5% over the figures declared twelve months ago.

Paul Jardine of Templeton LPA suggested that the rise was, in some part due to the increase in the number of rental contracts but that falling incomes and genuine hardship were significant contributors to the final statistics.

“As the private rented sector grows, the number of tenants in dire financial straits is steadily climbing. Falling wages in real terms have been compounded by rising rents, pushing a greater number of rented households over the edge financially,” Mr Templeton said.

“With the instability in the labour market and wider economy, and public sector cuts still to come, the section of renters in multiple months of arrears is likely to continue its expansion.”

Meanwhile, the Housing Organisation Shelter are claiming that the situation is being compounded by higher rents that are rising towards unaffordable levels.

“This is yet more evidence of the crushing impact rising rents and stagnating wages are having on family finances,” said Shelter’s Kay Boycott.

“Shelter research found that average private rents are now unaffordable for working families in more than half of England, with many paying up to half of their income each month. And with homeownership out of reach for so many, hundreds of thousands of families are beginning to realise renting looks set to be a way of life, not just a temporary stopgap.”

In recent weeks, there have been calls from Shelter and others for the government to look at ways in which they can overhaul the rental sector. The findings from Templeton LPA cannot differentiate between those who are hit by higher rents compared to others who have lost their job or are suffering financial issues due to other factors. Everyone does seem to be agreed however that the statistics can only get worse over the course of the next few months.

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Action Required to Make Home Ownership More Than Just a Dream

by Alison Feemantle

Earlier in the week we saw the reaction of Shelter, the housing and homelessness charity to a survey claiming that property rental could soon become a permanent way of life for many. The organisation suggested that the government had to wake up to the reality that only a quarter of the UK population may be owning their own home by the year 2025 and to ensure that improvements were made in all areas.

“It’s time government woke up to the fact that ‘rental Britain’ is here to stay,” said Shelter’s Chief Executive Campbell Robb.

While these are apt comments, some observers were surprised that the organisation didn’t take the opportunity to suggest that home ownership needs to be more affordable. To be fair however, Shelter have been vocal on this subject in the past but for the time being, this particular challenge has been taken up by another charity – the Joseph Rowntree Foundation.

The organisation focuses on potential buyers between the ages of 18 and 24: At present it claims that 2.4 million of them live in private rented accommodation but as they attempt to save for home ownership, ‘inflated’ house prices mean that they face an uncertain future.

The foundation then calls for major reforms in order to avoid a permanent rental trap by the start of the next decade. By 2020 it claims that young people will be staying with their parents for longer and they will subsequently need to call on those parents to help them purchase their own home.

Those that decide that staying at home has run its course face the prospect of a long period of private rental.

“The challenges facing young people by 2020 will require fundamental changes to the UK housing system. Young people are particularly vulnerable in a badly functioning housing system due to their lack of resources and opportunities,” the report states.

It goes on to echo the comments made by Shelter in suggesting that huge reforms are needed in the private rental sector.

“There is a particular need to reform the private rental sector, balancing the interests of both landlords and tenants. The growing number of families living in the private rental sector will create a need for more stability in the sector,” the report concludes.

While Shelter and the Joseph Rowntree Foundation may be approaching things from slightly different angles, they both agree that home ownership may become just a distant dream unless more positive steps are taken to address the issue.

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Rental Trap or New Way of Life?

by Alison Feemantle

In previous weeks, studies and surveys have told us that many families are currently caught up in a rental trap. With the lack of available mortgages and the struggles for first time buyers to raise a deposit for a new property, a significant proportion of potential buyers are having to be patient in the current climate.

However, there are increasing suggestions that this pattern is set to become a permanent way of life for this and possibly future generations. A study by Cambridge University which has been published by The Observer suggests that much of the UK buying public face being locked out of the market for the long term.

In the present day, the survey claims that 35% of the population are homeowners although that figure has dropped from 43% in 1993. It goes on to claim that further decline is set to follow and that as few as 27% of us will own our own homes by the year 2025.

The report indicates that those with families are in the greatest danger of renting for life as they continue to spend over half their income on monthly rental charges. As a result, there is simply no money left to save for a deposit and they remain locked in to the prospect of renting on a permanent basis.

“The worse the economy, the more the likelihood of this group’s housing being in the private rented sector,” the report continues. “In London, if current trends continue, tenants will soon outnumber owners, with important political, social and economic implications.”

The news has been met with resignation in some areas and the housing organisation Shelter says that the government has to recognise that renting has now become a ‘way of life’ for many families. It has gone on to call for major investment in the private rental sector in order to improve standards in all areas.

“This report shows what is fast becoming the new reality of our housing market in the current economic climate: home ownership continuing to fall while renting becomes a way of life for British families,” said Shelter’s Chief Executive Campbell Robb.

“Yet despite the growing pressure on the rental market, the government’s recent housing strategy virtually ignored the sector and did little to address the issues of affordability, stability and quality that so many renters face. It’s time government woke up to the fact that ‘rental Britain’ is here to stay.”

Many of those families would naturally want to retain a hope that they can still move into home ownership and as such, will be hoping that the future isn’t as bleak as the report suggests. As far as Shelter are concerned however, maybe a proportion should really be considering that rental has now become permanent.

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Rental Demand Continues to Outstrip Supply

by Alison Feemantle

Renting is back in the spotlight this week with the news that more and more homes are being put on the private rental market by owners who simply can’t sell their properties. However, it seems that despite this increase in available homes, demand in the rental sector is still outstripping supply by some considerable margin.

The findings have come from the Association of Residential Letting Agents (Arla) who have noted a significant increase in rental properties that have come on to the market as a result of this scenario.

However, in many cases, the homes remain on the market and this could prove a problem for anyone renting and looking for a long term arrangement.

“Renting is often seen as a low-hassle, lower risk option when compared to purchasing a home, yet many people find the prospect of renting a home daunting, whatever their age or experience,” said Ian Potter, Operations Manager at Arla.

“First time tenants – young or old – should remember to keep the process as focussed and simple as possible. Keeping to some simple guidelines can help tenants navigate the process from property hunting to signing a tenancy agreement.”

The organisation has gone on to provide a series of tips for anyone renting for the very first time and these can be found in full at the website – www.arla.co.uk.

Included in the advice is a tip to research your postcode, which has a great bearing on the price you can expect to pay. Sometimes, even moving a mile away from a certain location will have a favourable effect on your monthly charge so remember to ask a letting agent for advice.

Arla also advise that the lettings industry is unregulated and at present, agents do not have to subscribe to an Ombudsman scheme. However, looking for an agent that is Arla affiliated will help to give you peace of mind.

You should also make sure that your deposit is safeguarded. This is a significant outlay for tenants and by securing it in a scheme such as TDS (the Tenancy Deposit Scheme) you can help to safeguard your money.

Arla also advises to get a proper inventory drawn up and agreed when you move in. This will identify any damage to the home – and its contents if you are renting furnished and will prevent any problems when the time comes to move out again.

Full details of this advice can be found on the Arla website and if you are renting for the first time, it makes sense to follow them and be sure of what you are entering into.

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A Third of Rented Properties are Hazardous

by Alison Feemantle

Almost a third of all properties in the private rented sector have major safety hazards according to data released in a Government survey of housing stock in the UK.

The annual English Housing Survey reveals that 28.2% of homes in the private rented sector have what is known as a category 1 hazard.  This is compared to 14.5% of local authority properties, 10.8% of housing association properties and 21.5% of owner-occupied accommodation.

A category 1 hazard is classified by the Housing Health and Safety Rating System and includes any hazard that could cause death, permanent loss of consciousness, lung cancer, the loss of hand and foot, heart attacks, 80% burn injuries, eye disorders and poisoning.

Under the Housing Act 2004, these hazards obligate a local authority to vacate a property of all tenants and to arrange immediate repair and making safe of these hazards.  The most hazardous type of property is flat conversions, with 37.7% having at least one category 1 hazard.  Older properties can also pose more dangers especially those built before 1919.

A total of almost 5 million properties in the UK have such hazards with the most common hazards being those which could cause slips and falls.  Baths, stairs, and showers with inadequate or poorly installed grab rails and handles were the most likely areas to cause issues.

Newspapers recently published a story about how an 85 year old man in Hackney, East London, became stuck in his bath with no heating or food for five days.  Luckily he was able to reach his sink to drink water, but even this suggested the bathroom was too small and not fit for purpose.  The man was only rescued when friends became worried about his whereabouts.

The second largest hazard listed was excess cold and this is especially a problem for those aged 60 or over.  A healthy indoor temperature as at around 21C, but many properties were found to have inadequate heating leading to a serious risk to health.,

The report said: “The percentage rise in deaths in winter is greater in dwellings with low energy efficiency ratings. There is a gradient of risk with age of the property, the risk being greatest in dwellings built before 1850, and lowest in the more energy efficient dwellings built after 1980.”

Other category 1 hazards included biocides, asbestos, lead and radiation, carbon monoxide, and electrical and fire hazards.  Of course, occupier behaviour can also play a major part in the risk these hazards pose and certainly was a factor in over 80% of fires in rented accommodation last year.  However, there were also 2000 fires in the same year associated with faulty wiring and cabling, issues that can be avoided.

All landlords have a duty to protect their tenants and a vested interest in protecting their property investment.  Any category 1 hazards need to be dealt with immediately with tenants vacating the premises if necessary whilst any other reported hazards should be assessed and dealt with as soon as possible or at the very least made safe.

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Buy to Let Mortgage Products Soar

by Alison Feemantle

Figures released by the Council of Mortgage Lenders (CML) this week reveal a huge spike in the number of Buy to Let Mortgages taken out in 2011 and although they have yet to reach the boom period of 2007, it’s clear that this is a major growth area for the mortgage industry as a whole.

The findings state that overall, the number of loans agreed leapt by 84,000 with the biggest rise appearing in the last three months of the year when 34,800 buy to let mortgages were agreed. Those figures for the final quarter of 2011 represent a significant increase from 26,300 in the same 2010 period.

By comparing these statistics with 2007, when over 93,000 loans were advanced, the rise is thereby put into some perspective but by the end of the year, this type of funding was worth around 13% of the overall market.

Paul Smee of the CML pointed to a number of factors that have contributed to the increase including a static housing market and an increase in demand for rental properties.

‘These figures do not suggest that buy-to-let is crowding out first-time buyers; more that it is performing a really important role within the overall housing market,’ Mr Smee said.

‘The benefits of the availability of good quality, private rented housing should not be overlooked, especially as there are many households which need the flexibility and mobility that the private rented sector is well-placed to provide.’

Industry experts are now predicting steady growth for an area that is something of a shining light among a depressed market. In addition, some commentators have linked the problems involved in finding first time buyer deals to the increase in buy to let mortgages.

‘The buy-to-let sector is one of the few beneficiaries of the current economic climate,’ said Jonathan Samuels of Dragonfly Property Finance.

‘Buy-to-let is being driven by the weakness of the economy and the continued caution of high street lenders at higher LTVs.

‘Consumers are wary about buying and lenders are wary about lending. The result is soaring demand for rental property, which is pushing yields ever higher’

Overall this may seem to be good news for everybody but there is a suggestion that those who are renting in the private sector may become trapped and at the mercy of greedy landlords. With first time buyer mortgages hard to obtain, rent increases may have to be endured.

Matt Hutchinson of spareroom.co.uk concluded with a warning to landlords.

‘Landlords should weigh up the benefits of retaining reliable tenants against the short-term benefits of hiking rents to take advantage of a booming rental market,’ Mr Hutchinson said.

‘The last thing any landlord wants is rental void periods, and if that means holding off imposing rent rises on current tenants, or even dropping the rent a little, then in the longer term that may be a better course of action.’

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Tenant Checks – A Service No Landlord Should Ignore

by Alison Feemantle

If you are just starting out in the buy-to-let game or you’re a seasoned landlord, you need to understand the importance of carrying out background checks on potential tenants.  It’s a landlord’s market right now with more and more people choosing to rent so you don’t need to bite off the hand of the first person who shows an interest in your property.  You can afford to be a little more choosy.

The National Landlords Association (NLA) has issued a reminder to landlords to carry out checks on potential tenants before they let out a property.

This advice is being given to all landlords so they can confirm the identity of the tenant and ensure there are no reasons why rent payments would be missed.

The NLA carried out recent survey which revealed that almost three quarters of all landlords seeking possession of one of their properties suffered from rent arrears.

After carrying out a number of searches, NLA’s Tenant Check found that almost 1 in 20 tenants had more than one CCJ (County Court Judgement) against their name at a previous address during the first quarter of 2011.

Most tenant check services include a CCJ search, ID check, alias name search, history of previous addresses, together with a bankruptcy check.  A more thorough check, and this is recommended, will include employer and landlord references and an assessment of a tenant’s ability to meet rent payments.

The NLA reported a record number of tenant checks during the month of August and this included the highest number of full tenant checks in any one month.  These figures show that landlords are becoming more and more conscious of the tenants they let their properties out to.

David Salusbury, Chairman, NLA, said: “Getting a proper background check done on all tenants before they move into a property is one of the most important things a landlord can do before handing over the keys.

“It is vital landlords find out basic information about their prospective tenant to help avoid rent arrears or other problems further down the track. This gives the landlord peace of mind that their properties are in good hands and will hopefully mark the start of a satisfactory and hassle-free tenancy.”

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