Tessa Shepperson Newsround #95

Some landlord and tenant news items that caught my eye this week.

Lettings ‘clubs’

An interesting news item about a lettings organisation ‘Lifestyle Club’ which calls itself a club in order to avoid tenants rights in what a Judge described as ‘entirely contrived’ arrangements.

The company has now been fined £22,299 after being prosecuted by Camden Council after it failed to license two HMO Properties and failed to respond to statutory housing notices served by the Council.  The company owner and the owner of the property were also fined in their absence (as neither attended the hearing).

Describing yourself as a ‘club’ rather than a lettings organisation is a fairly common scam and Ben wrote about it here.

Rogue landlord enforcement

With this example before us, it is good to see that government is starting to take tackling rogue (or rather criminal) landlords seriously with the publication of a guidance document.  With separate guidance for landlords and tenants.

Housing minister Heather Wheeler said:

This package of support for those working on the front line of the private rented sector will ensure they are fully equipped to make use of any new powers which can improve the lives of tenants trapped in poor quality accommodation.

This, along with our further guidance for tenants and landlords on their rights and responsibilities, builds on the ongoing work which sets out to make renting fairer and more accessible for all whilst also ensuring that everyone has a home which is safe and secure.

I have not had time to read it yet – has anyone got any views on it?

Zero deposit schemes in the spotlight

A couple of articles in Property Industry Eye looking at these.

One covers a story from the Daily Mail about a single mother who was left with a £1,318 bill at the end of her tenancy.  She paid a monthly fee of £76.80 but when she left was told the landlord claimed £1,318 and she either had to pay this or pay a further £120 fee for arbitration.  The scheme she signed up for was not an insurance scheme – in fact on a quick reading of the article it is hard to see what benefit the tenant gets from it.

I suspect that after 1 June (when the Tenant Fees Act 2019 comes into force) it may be illegal.

The other article looks at the commission paid to letting agents by these schemes.  This can be as much as 30% which will be very attractive to agents many of whom will lose up to 20% of their income when the Tenant Fees Act comes into force.

Under the Tenant Fees Act, agents need to give tenants a choice whether to opt for a no deposit scheme or a traditional deposit.

However, agents ALSO need to comply with agency law and inform their landlords that they are receiving a commission.  If they don’t then they will be deemed to be making a ‘secret profit’ and their landlords are entitled under law to claim this commission from the agents.

I have written about agency law before on this blog and we now have a short ‘Legal Basics’ course on agency law for members of my Landlord Law service.

Note that ARLA propertymark have published a useful factsheet on Deposit Free Renting Schemes which you will find here.

Rents – increase or decrease?

The story of rent rises or decreases seems to depend on who you are listening to.

An article in Landlord Today claims that rents are increasing as the tenant fees ban approaches.  This is based on data from Homelet’s rental index which seems to indicate that rental values have gone up 3.3% in the past 12 months.  More than last year.

However, the DPS says its records show that the average UK rent price is now at its lowest level for three years!  The article says

The average UK rent fell to £757 per month in Q1, with private tenants paying £5 (0.64%) less than in the previous quarter and more than £14 (1.87%) less on an annual basis.

The decline continues the overall downward trend seen in the first three quarters of 2018, which The DPS believes may be due, in part, to a reluctance among tenants to move until the Government’s tenant fee ban comes into effect on 1^stJune 2019.

The killer question though is will rents go up after the tenant fee ban has come into force?

Who can landlords let to after Brexit?

This is the question asked by the RLA who are campaigning for the government to provide more guidance to landlords.

David Smith, policy director for the RLA, said:

Landlords and agents are not border police and cannot be expected to know who does and who does not have the right to live here.

The Government needs to publish clear and practical guidance for landlords and agents about the implications of Brexit on who they can and cannot let to.

If it does not, more landlords will become increasingly fearful about letting to non-UK nationals with the potential of facing prosecution.

The result will be they will avoid renting to anyone who is not a UK national, making life difficult for EU nationals.

Snippets

• A trial using blockchain technology indicates that conveyancing times could be reduced from three months to a few weeks.
• New guidance has been published to help people working alone
• The number of empty homes rises across England
• Liverpool City Council have released some pictures of poor properties found by their landlord licensing scheme inspectors
• A company claims that the letting fees ban is part of a drive to reduce the size of the lettings industry
• A new Labour shadow housing minister has been appointed