Rogue Landlord Complaints Underestimated?

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.

Scale of Rental Arrears Revealed

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.

Action Required to Make Home Ownership More Than Just a Dream

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.

A Third of Rented Properties are Hazardous

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.

Tenant Checks – A Service No Landlord Should Ignore

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.”

Landlords Warned of Winter Fire Risks

As the winter fast approaches more of us are switching on our heating and turning on the fire.  As a result, this time of year is often when the most fires occur in the UK.  As a result, Landlords are being advised to ensure they have sufficient provisions in place within their properties to ensure protection of tenants and the property itself.

Fire and smoke kill and also cause devastating damage to properties and it’s essential that measures are taken to avoid fatalities and protect against damage to rented property and those properties nearby.

Let Insurance Services has recently released figures stating that rented accommodation is seven times more likely to have a fire than owned property.  That’s an astounding statistic and one that can’t be ignored whether you are a tenant or a landlord.

It’s essential that smoke alarms are fitted in all rented properties to ensure quick warning systems are in place should a fire break out.  Whilst some flats and apartments have fire alarms in communal areas, it’s often too late once a fire in a flat reaches these devices to sound the alarm.  Smoke can kill in seconds and it may not reach the communal fire alarm until it has done its worst.

Surprisingly, it’s not mandatory for rented accommodation to be fitted with smoke alarms.  However, as a landlord you have your tenants, your property and your reputation to protect so is it really worth avoiding installation for the sake of a few pounds or a few minutes up a ladder?  Smoke detectors today are affordable and could make the difference between life, death and total devastation of your property.

Michael Portman, MD of Let Insurance Services, said: “Not having a working smoke alarm doubles the risk of death and with over 27,000 fires a year across the UK, there needs to be a change in legislation.

“Out of 50 people killed in house fires in West Yorkshire over the past five years, 48 were in rented accommodation. What’s more, one fire brigade said that they do 60,000 home safety checks a year and find many alarms that are not working.

“Landlords and agents have a ‘common law’ duty to ensure that their properties are kept free from hazards for the health and safety of their tenants, including fire hazards. We urge all landlords and agents to check that every smoke alarm is in working order and there are an adequate number of smoke alarms are installed.

If you are a tenant living in a property without a smoke alarm fitted it’s vital that you address the issue with your landlord.  Produce statistics from this article if you have to, but make sure your landlord fits a suitable device as quickly as possible.  Fire can break out at any time and you want to be sure you have the means to escape quickly when it does.  You should also familiarise yourself with escape routes so you know what to do should a fire start.

We’ve put together a checklist for landlords and agents that will help to protect your properties and tenants and keep them as safe as possible:

• Fit battery (or mains) operated smoke alarms in your properties. Show your tenants how to test them, and change the batteries between tenancies
• At the start of the tenancy check that the battery works and demonstrate to the tenant that the alarm works
• Check whether your tenancy agreement requires the tenant to ensure the smoke alarm is in a working condition
• At your regular property inspections check the smoke alarms work. If they are not working, produce a new battery at the inspection to fit to the smoke alarm and ask the tenant to pay for the battery there and then
• Check that any working chimneys have been swept

Golden Rules of Property Investment

People have been investing in buy-to-let property for years, nothing new there.  For centuries tenants have been renting from landlords, but it’s only been recently that the average ‘man on the street’ has had unprecedented access to finance products to use for investment purposes.  Until the credit crunch bit, lenders were practically falling over themselves to provide buy-to-let finance.

However, since the economic downturn, the cost of buy-to-let finance for lenders has increased dramatically.  Lenders are now reviewing their lending criteria so that only those cream of the crop investors get the best deals.

If you are serious in investing in property and you have the finances to do so, the market is still viable, but you should review our golden rules of property investment before you start.

Research is King

You wouldn’t buy a car without knowing the make, model or mileage and the same principles apply to property.  Even more so!  Research your market thoroughly including the area you are thinking of buying in, any regeneration plans, the local transport links, and also other amenities such as schools and shops.  Any property 10 minutes away from transport and local amenities is a safe bet!

Location, Location, Location

Consider who your ideal tenants would be.  You need high quality locations to attract quality tenants.

How to Buy Well

When purchasing a property, consider content and price.  This could save you money in the long run if white goods and furnishing could be included in the price too.

Make the Numbers Work

Buy a property that supports capital appreciation.  Make sure you include all the costs involved in the property purchase including legal fees, service charges, stamp duty, contingency and ground rent so that you can afford any void periods that occur between tenancies.  Many people ignore these costs and it can be a catastrophic mistake.

Use the Right Advisors

It’s essential that you use good mortgage and letting advisors.  A regulated advisor will ensure you have access to the best deals that are free from any fees and which operate in alignment with your investment plans.  A good letting agent will work to keep void periods to a minimum.

Don’t Expect to Get Rich Quick

Property investment needs to be approached with care and patience.  This is a long-term investment opportunity.

Supply and Demand

Speak to local agents to see what is particularly needed in your chosen area.  This will help you to meet the need and to attract tenants easily.

Head Not Heart

Don’t be ruled by your heart when making decisions.  If you are not going to be living in your investment property you should only furnish and decorate it to a clean and basic standard unless you want to attract high end professionals.  Speak to local agents to understand the quality that is expected.

Avoid the Gimmicks

Be wary of any deals offering incentives, such as no money down for example.  Also, so-called get rich quick schemes should be avoided like the plague.  A few years ago these might have been worth a punt, but not right now.

Keep Pricing Real

Never pay over the odds when purchasing an investment property.  You should never pay up-front fees, finder’s fees or commissions prior to completion.

In summary, your aim should be to find a property that generates long-term wealth.  There are many solid investment opportunities out there for those with the finance available.

Spotlight on Below Market Value (BMV) Property

Put simply, Below Market Value or BMV properties as those that are available to purchase below their market value.  Normally this is because the previous owners experienced financial difficulty or needed to dispose of their property quickly without the protracted sales process.  The reason for this is usually the threat of repossession.

The official guidance from the Royal Institute for Chartered Surveyors (RICS) about how a surveyor should value residential property is contained in Appendix 5.1 of the Royal Institute for Chartered Surveyors Appraisal and Valuation Standards (Red Book).  The foundation for the valuation of a residential investment property is normally its market value.  Market value is defined in the Chartered Surveyors hand book as:

‘The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.’

If a property was marketed properly and then a sale agreed, a landlord might consider that they got a BMV bargain.  But this isn’t always the case.  For instance, let’s say an investor buys a property for £180,000 and a year previous to that a similar property sold for £200,000.  The landlord may consider that they have bought the property at 10% BMV.  If we look at the guidance set out by RICS the investor has just actually paid the market price.

So, do BMV properties really exist?  They do and it all depends on whether the property was fully marketed before sale or not.  These situations occur when buyers are given access to ‘motivated or distressed sellers’ who don’t want to go through the normal process of sales and marketing or cannot afford to.

Locating motivated sellers is usually quite simple if you are in a good position to buy.  Targeting your local area with adverts or leaflets is one way.  You could also contact your local estate agents highlighting your interest in property bargains and that you are a potential cash buyer of residential investment properties.  Even if you need to arrange a mortgage for a bargain property it’s still possible to flush out some good deals.  Persistence pays in the current market.  Make your name and number known and make it clear that you are serious about making a purchase.

As with any industry, the BMV industry is rife with rogues and dishonest middlemen.  Those posing as BMV gurus are often anything but and just after preying on those desperate to sell and in a distressful financial position.  Their main concern is with making a massive profit between desperate seller and landlord.  It is much better and easier to search for BMV properties through local estate agents or by offering your own direct service to local customers.

Of course, there are dangers with buying BMV property and this is mostly down to the provisions of the 1986 Insolvency Act.  These provisions could result in a landlord who has bought BMV property legitimately being sued by the previous seller.  If several years down the line the seller has become bankrupt they can take out a court order to reverse the sale or claim the difference back between market value and the agreed sale price.  The reason for this is because the Insolvency Act allows the trustees of a bankrupt to prevent the bankrupt from giving away or selling assets below the normal market price.  A landlord who purchases BMV properties can be exposed to these provisions for up to 5 years.  However, there is a way to protect against this instance by asking the seller to execute a Deed of Solvency.  This declaration states that the seller was solvent at the time of sale.

The Difference Between Freehold and Leasehold

If you are considering owning a property in England and Wales you need to consider the two different types of property ownership that exist; freehold and leasehold.

The majority of properties in England and Wales are freehold which means technically the owner owns their property for an unlimited period.

Leasehold is a temporary right to occupy property or land and will usually involve a lengthy legal document called a lease.  Most flats in England and Wales are leasehold properties and involve lease agreements between landlords and tenants.  The lease document based on contractual and property law sets out the obligations and rights of both the landlord and the tenant.

Leases can apply for a fixed term and historically most flats have leases of 99 years.  More recently, leases have been applied to properties that are valid for 125 years.  You may also see lease agreements citing a period of 999 years although these are quite rare.

Whilst a lease document might be quite complex, the basic premise is that the tenant has the right to live in the property for the lease period stated.  Usually, the lease document will state that the landlord will be obligated to allow the tenant ‘quiet enjoyment’ of the property as long as the tenant meets the obligations of the lease.    The main obligation is that they meet the rent payments on time.

So, what happens when the lease period expires?  If you find that you are occupying your property when your lease expires it could mean that your landlord will ask you to leave.  At this stage you no longer have the right to own the property and the lease will usually include a clause that says the tenant must ‘quietly yield up possession’ upon expiration of the lease.  The good news is, this rarely happens.  The landlord will usually extend the lease well before the current period expires.

When looking for a new property it’s important to know the difference between freehold and leasehold as both interests in land and property vary greatly.  The value of a freehold property will remain maintained when the property market is stable whilst a leasehold property is known as a diminishing asset.  As the lease period gets shorter, the property will start to decrease in value.  The reduction at first is minimal, but over time the value will start to fall rapidly.

Channel Four recognises The Big Property List Blog

National UK broadcaster Channel 4 named The Big Property List Blog as one of their favourite Househunting Blogs this week, rating us alongside such great company as the House Historian and the Rat and Mouse property blogs.

Channel 4 said:

(The Big Property List’s) meaty blog covers big topics in an accessible way. Posts about conveyancing, planning permission and selling at auction sit amongst the more topical house price speculation and other snippets from the news.

Visit the channel 4 website here to see the original article.

Earlier this year Primelocation named The Big Property List Blog runner up in their 2010 Property Blog Awards and we are delighted to be recognised in this way by a national broadcaster.

We are especially delighted that the aims of the blog – information and accessibility are recognised as it has always been our intention to provide a great resource accessible to everyone.

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