Private rented sector facts…… The press don’t want you to know

The English Housing Survey was released this month and provides some very interesting and contradictory facts, if you are to believe recent press reports.

The National Housing survey is a detailed insight into the UKs housing circumstances and includes property condition as well as energy efficiency.

1 in 5 households in the UK live in Private rented accommodation, compared to 64% owner occupier and only 17% living in social rented accommodation.

Profile of a private renter

The average age of a private renting tenant is 40yrs old and 60% are male, single households make up 25% while couples with children occupy 22% of the sector. Surprisingly on 11% live in shared accommodation or HMOs.

6% of those surveyed were living in overcrowded accommodation.

65% are in full time employment with 12% in part time work, with the average weekly income of £583, 83% identified as white with 74% stating Britsh or Irish.

50% of private renters were issued with a fixed term 12 month tenancy and on average stayed in the same property for 4.1years

Satisfaction guaranteed

Contrary to many press reports the survey states that a staggering 84% of private renters were either satisfied or very satisfied with their accommodation, however those in private rented properties spend the highest % of their household income on their housing cost, with Londoners spending on average 42% of their monthly income with the rest of the UK spending 33%.
Compared to social tenants who only spent on average 28% and homeowners with a mortgage as little as 17%.

Of those surveyed, only 20% of private renters were in receipt of Housing Benefit or Universal credit Housing Element.

Surprisingly only 76% of private renters said they paid a deposit at the start of their tenancy, with only 73% confirming their deposit was protected, worryingly 20% didn’t know if their deposit was protected.

Only 11% of private rented had savings over £16,000 with 63% having no savings and only 58% of private renters believed they would eventually buy their own property.

Disrepairs

In 2017-18 disrepair was worse in private rented accommodation with 25% of homes failing to meet the Decent Homes Standard compared with only 13% of social housing and according to the Housing Health and Safety Rating System (HHSRS) 14% of private rented homes had a category 1 hazards compared to only 6% in social housing. Despite this 73% of private tenants were satisfied with repairs.

Tenant wont leave? Ancient law may help landlords claim double rent

It has happened to the best of us, our tenant gives notice then at the last moment changes their mind and they will be staying.

This can cause a landlord and any would be (signed up tenants) a nightmare

Although landlord will have the legal right to possession, he will have to get a court order first which could take months (by which time the tenant will probably be long gone

An answer may lie in section 18 of the Distress for Rent Act 1737.

To quote the act

“whereas great inconveniences have happened and may happen to landlords whose tenants have power to determine their leases, by giving notice to quit the premises by them holden, and yet refusing to deliver up the possession when the landlord hath agreed with another tenant for the same”

The act goes on to provide that if a tenant gives notice and then fails to leave, a landlord can charge double rent “ and such double rent or sum shall continue to be paid during all the time such tenant or tenants shall continue in possession as aforesaid“. 

However note the following:

The tenant must have served a proper valid notice to quit, which has been accepted by the landlord

The double rent can  only be charged on a daily basis for the period of time the tenant overstays

It cannot be used if the tenant just fails to return the keys

It cannot be used if the tenant just stays on after the end of the fixed term (in which case in most cases a new periodic tenancy will arise)

Arguably the money can be deducted from the tenants deposit in the normal way, but few judges or adjudicators are aware of this law, so it may be hard to enforce (although landlords could just print out the extract from the statute).

I would be very interested to know if any landlords have actually used this rule, and if so, whether (if it was challenged)  they were able to uphold the claim at court or arbitration.

Private rented sector France v UK

I am not called The Property Geek for nothing, those who know me know I have an obsession with the rental industry and as a Francophile I thought I would write about how the UK and France differ when it comes to renting privately.

Both Countries rental systems can be complex with a minefield of legislation and governance, France is very pro-tenants rights and extremely animal friendly, as with everything research is key, below is a brief outline of what to expect when renting in France.

Anyone can become a landlord in the UK whether by accident or a planned business, at present there is no requirement for a landlord to be registered in anyway.

In France all professional landlords must be registered with the ‘Chambre de Commerce’ and are referred to as an LMP (loueur en meublé professionnel).

When renting in France it is important to understand there are two types of rental property, furnished and unfurnished, you may not think this poses too much of a problem, however the legal system is very different for each. Furnished has recently been given a clear legal definition and tenants of unfurnished property have more rights than those in furnished properties.

As a landlord furnished and unfurnished properties are assessed differently for tax purposes so mixed portfolios can prove to be an unwanted stress, also income from each rented furnished property must be in excess of €23,000pa.

In 2015 the law was changed in France to implement rent caps (rent-controlled area (zone tendue)) in many regions across the Country restricting how much rent can be increased by.

Another important point to raise is that by law, the landlord cannot prohibit the tenant from having pets of any kind.

Deposit

Deposits in France are required to be equal to 1 months rent, however they do not need to be protected in anyway.

When a tenant vacates their deposit must be returned to them within two months of them leaving the property if there are disputes, or one month if there are no issues. If a landlord doesn’t return the deposit after this time, the tenant can submit a complaint to the Commission Department of Conciliation (CDC).

This is in contrast to the UK where a deposit must be protect with one of the 3 approved schemes and within a set period of time, also deposits must be returned within 10 days of the tenant vacating, or in part if there is a dispute

Minimum Rental period

The minimum rental period for an unfurnished property in France is 3 years, compared to a furnished property which is 1 year, however holiday lets and some short term rentals can only be provided by furnished properties.

As we know in the UK the minimum rental period is 6 months on a standard Assured shorthold tenancy (AST) regardless of the level of furnishing.

Pre-tenancy checks

In the UK we rigorously check our tenants history from previous rental behaviour to credit history to inside leg measurement, not forgetting the Right to Rent check.

France does not have a credit history system because they do not use finance in the same way we do, for example we can chose a myriad of finance options from credit cards, loans and hire purchase, in France those option are still available but all finance payments go directly through a persons bank account and is therefore linked direct to the bank account activity, if a person misses a repayment on an item or their rent, their bank account is frozen until the issue is resolved, as I’m sure you can imaging, people rarely miss their payments.

When renting in France applicants need only provide the following documents

• An identity document: id card, passport, driver's licence, visa information, etc.
• A proof of professional activity: work contract, employer's reference, a student card; a business statement ( if tenant runs own business)
• A proof of financial support: last three months’ pay slips, whether the source of funding is salary, pension or any other benefit; previous tax returns; proof of having a student scholarship.
• References of previous renting Only if tenant has rented in France before otherwise it is not needed:

Safety Documents

In the UK the landlord has to provide the following documents to the tenant.

·         Valid Gas cert ( if gas in property)

·         Energy performance cert (EPC)

·         How to rent guide

·         Deposit protection information.

In France the landlord is still required to provide an EPC, in addition to this he must also provide a risk or safety report of the property.

Tenant insurance

By law, a landlord can request a tenant take out home insurance to cover the risks of mainly water damage, fire, explosion and in some cases, theft of contents.

If required, the tenant must provide proof of such insurance when first renting the property, and every year thereafter at the request of the landlord. The lack of insurance can be grounds for the landlord to cancel the lease (if a lease clause is provided) or buy insurance for the tenant and demand repayment of the fee. Otherwise, a tenant is free to choose the insurance company of their choice.

The tenancy agreement

Since 2015 all tenancy agreements across France have been regulated and must indicate which charges are to be paid by the landlord and which by the tenant. Typically include city taxes, utilities and, particularly for apartments, charges for the maintenance of communal areas.

Subletting

It is legal to sublet in France, provided the tenant has official written approval from the landlord and the sublease does not exceed the amount paid by the main tenant.

Tenancy renewal

In the UK if no one ends the fixed term tenancy then it is automatically renewed to form a statutory periodic which rolls on month by month.

In France this is the same however the automatic renewal forms another 1 year fixed contract, not a rolling monthly one.

Giving notice

For tenants in furnished properties they are required to give 1 months notice.

For tenants in unfurnished properties they are required to give 3 months notice ( one month if renting in Paris)

Tenants can give notice at any time, and the notice period starts from the day the landlord receives your official letter.

Notice must be given in writing either by registered letter (recommender), delivered by a bailiff (hussier), or delivered by hand with acknowledgement of receipt and annotated. Emails and verbal notices are not valid.

Landlords must give six months’ notice before the end of the rental period of an unfurnished property, or three months’ notice for a furnished property.

There is no provision of a no fault notice in France, so no Section 21, a landlord must have reason for ending the tenancy, such as rent arrears or breach of tenancy

Property maintenance & access to the property

Once the keys have been handed over, the landlord does not have the right to enter the property without the tenant’s consent, and may be charged with trespass or harassment for doing so. The landlord does not have the right to check up on the tenant, for example, annual property inspections, unless this has been agreed in the rental contract. They do have the right to enter the property to undertake essential works and routine maintenance (although not improvements to the property), and the tenant must allow this.

In France that tenants have responsibilities to carry out minor repairs and routine maintenance; these can include garden maintenance, fixing basic interior damage, attending to minor plumbing, gas and electrical issues, cleaning chimneys and more. Major repairs, however, are the responsibility of the owner.

Many aspects of renting in France whether as a tenant or a landlord seem to be simpler than here in the UK, but wherever you chose to live or own your property knowledge is key.

Are we bored of boards

Another council has been given the go ahead to ban To Let boards in part of a city - with government backing.

The Ministry of Housing, Communities and Local Government has told Lincoln council that it can ban the display of boards on certain streets, predominantly those in strong student accommodation areas.

The application for the ban came after the council considered the results of several consultations in what it describes as “problem areas” within the city.

Some residents allegedly claimed the boards were an unnecessary eyesore.

However, the figures involved are not large: a total of 134 consultation responses were received by the council, with 85 of those calling for a total ban on the boards.

The government has now given the directive to remove the deemed consent for using letting boards in certain areas of the city.

The council’s planning manager Kieron Manning says: “In recent years, the council has witnessed a significant increase in the number of complaints about the proliferation of To Let boards in certain parts of the city.

“Any letting sign should be a temporary feature but, when signs are left up too long in areas containing high numbers of rental properties, they can begin to dominate the street scene.

“We became aware that some signs were staying almost all-year-round and this was beginning to have a negative effect on the look and feel of our streets, so we decided to take pro-active action to solve the problem.

“We are very pleased that government has listened and agreed to allow us to implement the ban. We don’t expect this to have a negative impact on the city’s rental market as searches are now mostly done online, and people who are interested in moving to these particular areas will be able to find homes to rent very easily on the internet.

“In addition, they can also visit and call letting agents direct for an up-to-date overview of properties available.”

The proposal for a total ban will now go to the council’s executive committee for final approval before implementation of the directive can begin on April 8

source: LettingAgentToday

1st April changes to private rented accommodation – is no joke

The UK is in the midst of a Housing Crisis with homelessness at an all time high, will new legislation set to come into force simply add to this problem.

On 1st April 2018 it mandatory for ALL properties rented out in the Private rented sector under assured tenancies, assured shorthold tenancies and Rent Act tenancies to have an Energy Performance rating of E or above.

The idea behind the legislation is to improve the overall CO2 emissions from buildings and to meet the legislative target of zero emissions by 2050

The Energy Performance rating is calculated when a qualified assessor produces an Energy Performance Certificate (EPC) following an inspection of the property.

Landlords will not be able to renew existing tenancies, whether a new tenancy agreement is signed or not, or grant new tenancies if the property has less than the minimum EPC rating of E

Landlords whose properties fall below the new E standard will have to carry out works to improve the energy performance of the property to bring it up to a rating of E before they can rent it out again or face civil penalties.

Renting out a non-compliant property will result in fines between £2,000-£4,000 these will be administered by local authorities.

There are 6,463 properties in Hemel Hempstead which fall into the E rating category and 1,776 which fall into F or below, it is not possible to estimate how many of these are in the private rented sector.

If you are a landlord and you want to learn more about this new legislation and how it will affect your rental property come along to our event on 13th March where we will be covering this topic in great detail with an award winning industry expert.

Contact Jules Ford at Hemel Landlord & Property Network for more details HLPN1@outlook.com 07904288188

To book tickets https://www.meetup.com/Hemel-Landlord-PropertyNetwork/events

*Source: English Housing survey

Improve your credit score by paying your rent

The Big Issue has teamed up with credit score agency Experian to launch The Rental Exchange, a unique credit scoring system designed specifically for renters.

Letting agents or housing providers send the renters payment information to The Renal Exchange who in turn use the payment history of on time rental payments to build a credit score

The service cost nothing for tenants, landlords or agents to sign up to and is also tailored for people who pay their rent via housing benefit, who would normally have great difficulty in building up a credit history

The Rental exchange is designed primarily for agents and housing associations to upload payment data, however many private renters do not use an agent or rent through local authority or housing association, The Rental Exchange has thought of that.

Running parallel to The Rental Exchange is Credit Ladder this provides private renters with the same benefit of building up credit history.

The tenant pays Credit Ladder their rent directly, Credit Ladder then pay the landlord the same day and the on time payment history is used to build up a credit score.

In addition to this, the service also allows the renter to build up an online ID which will help when applying for credit, opening a bank account and even arrange a better utilities tariff, or qualify to pay for gas/electricity via a non-prepay tariff

As a private tenant I have personally signed up to credit ladder and as a portfolio manager for a homeless charity I am also signing up all of our tenants to The Rental Exchange to help them build a credit history.

http://www.experian.co.uk/rental-exchange.html

https://www.creditladder.co.uk/

Is this the start of the end for letting agents??

A London letting agent too a number of its landlords to court for failing to pay the agent its renewal fee..

The landlords had all rented their properties through the agent for a number of years, keeping the same tenants in situ throughout, on the 7th year renewal of the tenancy, the agent again charged its 6.5% renewal fee, despite no longer working for the landlords...the agents had not negotiated with tenants regarding the renewal, they did not manage the property nor did they collect rent, yet still felt entitled to the £1,123 commission per property

The agents brought the case relying solely on their signed T&Cs specifically paragraph 8

 “Renewal commission becomes due in full whether a renewal agreement is signed or not when all or one of the original tenants remains in occupation.  Commission is due whether or not the renewal is negotiated by the agents.”

However, at the hearing at Willesden County Court, the judge dismissed the claim on the basis that although the fees, terms and conditions document was signed by the landlords, the fact that the agents would claim the renewal commission whether or not they did any work was not flagged up on the first page of the document where the fee was mentioned.

John Miller, of Miller Clayton, which acted on behalf of the landlords said: “In my opinion, it is unreasonable and unfair for agents to charge a renewal commission at a percentage near to the percentage charged on the initial letting after the fourth year of renewal, especially if they had not carried out any work towards completion of the renewal terms.

“Even if they did, only a reasonable administration fee should be charged.”

source: https://news.rla.org.uk/victory-landlords-agents-renewal-commission/