Saturday 8 June 2024

140% increase in tenancy application fraud

 As if landlords and agents didnt have enough to worry about, recent data has shown a significant increase in rental market competition is driving a rise in tenancy application fraud.

An analysis by tenant referencing firm Goodlord revealed a 140% increase in tenancy application fraud between 2022 and 2023.

The most common method involves manipulating payslips, either by inflating income or altering the source entirely.

Goodlord analysed over 300,000 applications from each year, showing an increase from 1.2 cases of fraud per 1,000 applications in 2022 to 2.9 cases per 1,000 in 2023.

Nishma Parekh, Goodlord’s head of referencing, stated, "Fraud can take many forms. Some tenants, desperate to secure a property, believe inflating their salary will help.

Given the current pressures on the housing market, it's understandable why we're seeing a rise in this type of fraud."

She added, "However, this approach is inadvisable as it could lead to being listed in the National Fraud Database, impacting future job prospects and other significant life events like securing loans."

The increase in digitalisation also brings new challenges, with criminals using increasingly sophisticated methods, including fake IDs and forged documents to rent a home.

To combat this growing threat, Goodlord advocates for robust referencing practices.

The firm advises landlords and agents to utilise technology such as Open Banking and AI-powered solutions to detect inconsistencies and prevent fraud attempts.

Investing in skilled referencing teams trained to identify red flags in tenant applications is also crucial.

This highlights the  "darker side" to tenant fraud, with criminals using false IDs to secure properties or applicants submitting forged documents.

As the tools for committing fraud become more sophisticated and personal information is increasingly digitised, it's vital that landlords and agents have access to cutting-edge technology designed to combat fraud, ensuring they can let their properties in good faith."

Collaborations with entities like HMRC, payroll providers, and the fraud database, along with Open Banking, enable experts to tackle tenant fraud, making it difficult for fraudsters to exploit the system.

It is more important than ever for landlords and agents to ensure comprehensive referencing is carried out and not to cut costs or corners with minimal checks in the haste to minimise voids and limit short term losses.

These short coming could adult lead to a very costly ending

Thursday 6 June 2024

Local network event celebrates 14 years

Hemel and St Albans Property Network Celebrates 14 Years of Success

Today marks a significant milestone for the Hemel and St Albans Property Network as it celebrates its 14th anniversary.

This fully independent property meet has been a cornerstone of the local property community, offering invaluable advice, guidance, and support to landlords and property professionals in the area.

The network, founded by Julie Ford and later supported by co-host Craig Shepheard, has earned a reputation for its welcoming and inclusive events.

Unlike traditional networking events, the Hemel and St Albans Property Network eschews formal speakers and sales pitches, in favour of old fashioned networking.

This unique approach ensures that attendees have ample time to engage in meaningful conversations, share experiences, and build lasting connections.

A format that in recent years has been replicated by many new event hosts in the circuit.

Julie  vision for the network was to create a safe environment where property professionals could collaborate and support one another without the pressure of formal presentations.

Their commitment to fostering a supportive community has been key to the network's longevity and success.

To cement this success they have recently been nominated for Property Community of the Year at the Blue Bricks Awards, with winners announced on 19th June at the formal awards ceremony.

As the Hemel and St Albans Property Network celebrates this remarkable achievement, Julie and Craig extend their gratitude to all supporters and attendees, especially their team of Ambassadors who have contributed to the network's vibrant and dynamic community.

Here's to many more years of collaboration and growth in the local property sector.

Saturday 1 June 2024

Mouldy homes- not always the landlord’s fault

With more and more tenants increasingly complaining of mould and damp in rental houses, we could be forgiven for believing the mainstream media that this decline in accommodation standards is due to tight landlord not wanting to improve the conditions their tenants are living in.

But Britain’s cold and damp climate, a result of its position on Europe’s Atlantic edge, naturally leads to rainforest-like conditions.

Despite this, the recent push to retrofit insulation in British homes, which are often criticised for being the coldest and draughtiest in Europe, may ironically worsen living standards.

A BBC investigation highlighted that poorly-fitted cavity wall insulation is causing harmful mould growth in homes.

However, the issue isn’t the insulation failing but rather it working too well.

About 25% of Britain’s housing stock predates 1919, built with traditional methods to manage moisture through airflow.

Air-permeable lime mortar and plaster allowed internal moisture to evaporate, while draughty single-pane windows prevented mould by circulating air. Heating these draughty homes was historically managed by burning large amounts of wood or coal.

Post-WWI, with a loss of skilled tradesmen, builders shifted to using gypsum-based plasters and cement mortar, which are impermeable to moisture.

This led to the introduction of air cavities and vents for circulation. Over time, traditional building skills waned, and older homes were renovated with impermeable materials.

Draughty windows were replaced, and chimneys were closed in favour of central heating, reducing airflow and causing damp issues, which led to ineffective solutions like damp-proof courses and chemical injections.

Now, rising energy costs and climate change concerns are driving another push for retrofitting insulation.

 Landlords, believing they were upgrading their rental homes, used government grants for spray foam insulation.

This blocked airflow, leading to moisture buildup, rotting roof structures, and making homes unmortgageable.

Similar problems are arising with foam cavity wall insulation and other retrofits, resulting in wasted taxpayer money and increasingly unliveable homes.

Despite good intentions, the insulation campaign is becoming a scandal, as solutions suited for dry continental climates cause major issues in Britain’s moist environment.

The solution isn’t to demolish and rebuild a quarter of Britain’s housing, but to reinvest in traditional breathable building techniques, turning what is now a niche industry into a widespread practice.

Supporting breathable insulation materials like sheep’s wool would benefit both homes and British farmers.

Additionally, grants for solid fuel-burning stoves could make draughty homes warm and liveable without causing damp and mould.

Often, the simplest, time-tested methods prove to be the best, while well-meaning modern innovations can have unintended negative consequences.

Friday 24 May 2024

Artificial Intelligence Act Receives final approval

The European Union’s Artificial Intelligence Act has received final approval, making it the world’s first major regulation specifically targeting AI. The EU Council formally approved the Act on Tuesday, with the legislation expected to enter into force in mid-June and become effective in 2026. This development is significant for biometrics developers, providers, and users.

Companies that violate the Act may face fines from the EU Commission ranging from 7 million euros (US$7.5 million) to €35 million ($38 million) or between 1.5 and 7 percent of their annual global revenues. SMEs and start-ups will be subject to proportional administrative fines.

The Act's implementation timeline is detailed: General-purpose AI models (GPAI) must adopt obligations 12 months after the Act takes effect, while AI systems in regulated products will have 36 months, according to Reuters.

Since its draft publication in 2021, the AI Act has sparked intense debate. Human rights organizations have criticized it for inadequate protections, while business groups have argued it imposes heavy compliance burdens.

A provisional agreement on the Act was reached in December 2023 following a three-day marathon negotiation, which deviated from the European Parliament's June position advocating a full ban on real-time biometric surveillance. The technical details were finalized in early February 2024, and the Act was passed by the European Parliament in March. The legislation adopts a “risk-based” approach, categorizing AI systems by risk and imposing stricter rules on those deemed harmful to society.

AI applications with unacceptable risk are banned, including those using real-time remote biometric identification, such as facial recognition in public spaces. Exceptions exist for law enforcement in specific cases like kidnappings and terrorism. Other prohibited applications include biometric categorization based on sensitive characteristics, emotion recognition in workplaces and schools, social scoring, predictive policing, and applications that manipulate human behavior. The law also forbids the untargeted scraping of facial images from the web or CCTV footage for creating facial recognition databases.

The legislation introduces transparency requirements, including clear labeling for deepfakes.

To ensure effective implementation, the AI Act establishes new institutions. The AI Office, attached to the European Commission, will coordinate the Act's implementation among Member States and keep classification rules and procedures updated with technological developments. Other bodies include the European Artificial Intelligence Board, the Advisory Forum, and the Scientific Panel of Independent Experts.

Additionally, the law envisions AI regulatory sandboxes for testing AI systems in real-world conditions.

Wednesday 22 May 2024

What will a Labour Win mean for Rental Reform?

If Labour wins the general election on 4th July 2024, their approach to the Renters Reform Bill and the private rented sector (PRS) is expected to be more comprehensive and tenant-focused.

Here are some key elements of Labour’s proposed policies for the PRS:

1-       Rent Caps

Labour has expressed a desire to implement rent controls to address affordability issues. This could include capping annual rent increases to prevent excessive hikes and ensure rents are in line with local incomes and housing market conditions.

2-       Abolishing Section 21 "No-Fault" Evictions

Labour supports the abolition of Section 21 "no-fault" evictions, which would prevent landlords from evicting tenants without a specific reason. This aligns with the current proposals in the Renters Reform Bill and is aimed at providing greater security and stability for renters.

3-       Ending Discriminatory Practices

Labour is committed to ending discrimination in the rental market, including practices that unfairly exclude certain groups of tenants. This could involve stricter regulations against discriminatory ads and policies and better enforcement of existing anti-discrimination laws.

4-       Longer Tenancies

Labour advocates for longer and more secure tenancies, which would provide tenants with greater stability and peace of mind. This could involve default tenancy agreements lasting three years or more, giving tenants more confidence and security in their housing situation.

5-       Renters’ Charter

Labour has proposed a Renters’ Charter that would set out the rights and responsibilities of tenants and landlords, aiming to create a fairer and more balanced rental market. This charter would provide clear guidelines on issues such as repairs, rent increases, and tenant evictions.

6-        Housing Benefit Reform

Labour aims to reform the housing benefit system to ensure it adequately covers the cost of rent. This includes aligning housing benefit rates with actual rental prices in local markets, reducing the risk of homelessness and housing insecurity among benefit recipients.

7-       Support for Tenants’ Unions

Labour supports the establishment and growth of tenants’ unions, which can advocate for renters’ rights, provide support and advice, and help tenants collectively bargain for better conditions.

8-       Energy Efficiency Improvements

Labour is likely to push for improvements in the energy efficiency of rental properties, helping to reduce tenants’ energy bills and contribute to environmental sustainability.

This could include mandatory energy efficiency standards and support for landlords to make necessary upgrades.

If Labour forms the next government, their approach to the Renters Reform Bill and the PRS will likely be more aggressive in implementing tenant protections and addressing affordability issues. With a focus on rent caps, longer tenancies, and stronger regulations, Labour's policies aim to create a fairer and more secure rental market for millions of renters across the country.

The Fate of the Renters Reform Bill and the Leasehold & Freehold Reform Bill

With a general election called for 4th July 2024, the long-awaited Renters Reform Bill and the Leasehold & Freehold Reform Bill face an uncertain future. Both bills, years in the making and the result of extensive campaigning and consultation, are now at risk of being stalled or scrapped entirely.

The parliamentary calendar adds to the urgency. Both the House of Lords and the House of Commons break for the Whitsun recess on 24th May, leaving only a narrow window for legislative action.

The impending recess and subsequent dissolution of Parliament for the election mean that any bills not passed will lapse.

The "wash-up" period, the final days of a parliamentary session before dissolution, offers a slim hope for the bills.

During this time, the government and opposition parties often negotiate to pass uncontroversial or broadly supported legislation quickly.

However, this process is typically reserved for less contentious measures.

Given the significant changes proposed by both the Renters Reform Bill and the Leasehold & Freehold Reform Bill, including abolishing Section 21 "no-fault" evictions and overhauling leasehold laws, it's uncertain whether they could be expedited through the wash-up without significant compromise.

The Renters Reform Bill, which aims to transform the rental market by enhancing tenant protections and ensuring fairer conditions, is at a critical juncture. Key provisions include the abolition of Section 21 evictions, the introduction of a new ombudsman for private landlords, and reforms to improve housing standards.

 If the bill is not passed before Parliament dissolves, it will have to be reintroduced in the new session, a process that could delay its implementation by months or even years, depending on the priorities of the next government.

 Similarly, the Leasehold & Freehold Reform Bill, designed to address the complexities and inequalities in leasehold arrangements, is under threat.

This bill seeks to make it easier and cheaper for leaseholders to buy their freeholds, extend their leases, and challenge unfair charges. As with the Renters Reform Bill, any delay could postpone much-needed reforms, leaving many homeowners in limbo.

The fate of both bills hinges on the outcome of the general election and the priorities of the incoming government.

If the current administration is re-elected, there is a strong chance the bills will be reintroduced, potentially with some amendments.

However, if there is a change in government, the new administration may have different legislative priorities, which could further delay or alter the proposed reforms.

The announcement of a general election on 4th July 2024 places the Renters Reform Bill and the Leasehold & Freehold Reform Bill in a precarious position. The upcoming Whitsun recess and the limited time available for the wash-up period make it unlikely that these complex and significant pieces of legislation will be passed before Parliament is dissolved. As stakeholders and campaigners anxiously await the election results, the future of these crucial reforms remains uncertain, highlighting the often precarious nature of legislative progress in the face of political change.

Tuesday 21 May 2024

Be Renters Reform Ready - Why letting agents will need to evolve fast

The Renters Reform Bill will soon be Law, it is not only the biggest shake-up of housing law in 30 years, it is also the biggest impact to letting agents' income streams in as many years.

This transformative piece of legislation seeks to overhaul the rental market, offering enhanced protections for tenants while posing significant financial adjustments for landlords and letting agents.

Central to the reform is the elimination of Section 21 “no-fault” evictions, a practice that has long been a source of anxiety for tenants.

For letting agents, however, this translates into a substantial disruption of their traditional revenue model.

The most significant financial impact on letting agents arises from the ending of fixed-term tenancies.

Historically, these agreements have been the norm, creating a cyclical pattern where tenancies are renewed.

Each renewal has typically involved a fee, which could be charged to, the landlord.

These fees have been a dependable source of income for letting agents, helping to sustain their business operations.

With the introduction of open-ended tenancies under the new reform, the necessity for renewals—and the accompanying fees—will be eliminated. This shift means letting agents will no longer benefit from a steady stream of renewal fee income. The financial implications are profound, forcing many agents to rethink their business strategies and find new ways to generate revenue.

For landlord, this is undoubtedly good news, the new system could lead to longer tenancies, reducing the frequency and costs associated with finding new tenants. With fewer vacancies and lower turnover rates, landlords might experience more consistent rental income and reduced expenditure on marketing and refurbishing properties between tenancies.

For letting agents, the path forward involves adaptation and innovation. The reliance on renewal fees has to be replaced by alternative revenue streams. Many agents might turn to offering enhanced property management services, such as comprehensive maintenance packages, advanced tenant screening, and more robust support for both tenants and landlords. By adding value in these areas, letting agents can justify service fees and maintain profitability.

Another potential strategy is for letting agents to develop new fee structures that reflect the ongoing nature of open-ended tenancies. This could include performance-based fees or service subscriptions that align with the long-term management of properties, thereby ensuring a steady income even without the traditional renewal fees.

Ultimately, the renters reform bill marks a significant turning point in the rental housing sector, challenging letting agents and landlords to innovate and adapt. The ending of fixed-term tenancies means no more renewal fees, ushering in an era of necessary evolution in the business practices of letting agents and landlords. As the market adjusts to these changes, the long-term effects of this historic legislation will become more apparent, shaping the future of renting for years to come.