Benefit tenants to come out of the cold

The Government has confirmed the freeze on benefit payments which came into force in April 2016 will end next year.

The freeze on increasing benefit payments inline with inflation has been controversial from the beginning, this combined with the introduction of Universal Credit has been blamed with the increase of both  rent arrears and homelessness for many people on low incomes.

So will the freeze open the housing market up to people who have been trapped in poor quality accommodation because they have been unable to afford to move to improve their circumstances.

The change in benefit payments is set to increase the money claimants receive by 1.7% meaning the average single person with no dependants will be entitled to £322pm rather than the £317pm they currently revive as either Job Seekers Allowance (JSA) our Standard Element of Universal Credit (UC).

Housing benefit or Housing element rates are expected to rise by the rate of inflation which is predicted to be 2% and will see local housing allowance rates for a 1 bed property in Central London rise from £276.51p/w to £282.04p/w but with average monthly rental price for a 1 bed property currently at £1555pm even this increase will leave many people struggling to pay rent.

Overall since the benefit freeze was introduced the average family has lost £560pa year on year, driving many people into poverty and the increase in the use of food banks has risen steadily making this temporary assistance a normal part of life for many including those in employment.

Les Miserables…… the delegates are revolting

For the last decade there has been an increase in self titled Property Gurus selling their get rich quick training course to millions of naïve and money hungry property virgins.
The attraction of becoming a millionaire in just a few months without evening using your own money sounds just to good of an opportunity to pass up, so these wannabes happily part with £1000s of their hard earned money to be taught to the secrets ( even Coronal Sanders would be proud of)  of property investment

But the reality is starkly different, after attending the course many delegates find they have not found the key to instant wealth instead being told the secretes are behind another door which can only be unlocked by handing over more of their money to enter the VIP area.

But as the industry changes and the next big thing comes along, so these property gurus morph into experts of this new area of wealth, renaming and regurgitating already used material which allows them to continue to ply their trade again.
It would seem the only people becoming property millionaires are the classroom Gurus… but does this then bring forth the old adage Those who can’t…. teach

As with all aspects of society, there are good and bad in everything and we must not forget the hundreds of very good educators out their painstakingly assessing potential candidates to ensure their course is right for them, openly discussing the high risks and how to manage debt as well as preaching not to put all your eggs in one basket.

Of late there seems to be an awakening on the realism of these courses with social media providing the platform for more and more negative realisations that the £25k+  spent on courses to seek the precious elixir could have been the starting block of a lucrative property journey with sustained longevity.

An increased number of attendees are becoming disillusioned by the validity of these property magicians and their ability to really pass on the secret of making millions.

The mounting debt that some attendees accrue is staggering and can have a detrimental know in effect to family, friends, social life and mental health, sadly only this week someone took their own life over issues relating to property courses and mounting debt.

What is the answer? Should the property education industry be regulated, but where to start and who will police that.
Should educators take more responsibility for their attendees and that they are teaching.

Once the buzz of the course is over

Once the first HMO has been purchased and battled concluded with local councils and planning department, there is still no time for the property novice to rest on their Laurels as this is where the real property journey starts and the mine field that is the Private rented sector brings with it a tempestuous ever changing storm of legislation which can see even the most seasoned landlord fall foul if they do not keep themselves constantly up to date.

The rally cry from the deflated and exhausted investors is to now rush to social media to grasp at any scraps of help and advice when deposits have not been protected,  tenants fail to pay rent, refuse access and landlord now want to evict.
Sadly social media, although a free option which can provide expert advice if you catch the right person on the right day, is mainly swimming with other rookie landlords in the same boat throwing out lifebuoys of incorrect or outdated advice.

So is the next property revolution to see these Millionaire gurus turn their hand to training courses headed “How to be a good landlord”
Do these public speakers have the knowledge and expertise to successfully deliver in a 2 day course that housing experts have spent years continuously learning.

An uneducated landlord is a bankruptcy waiting to happen and with more legislation due to come into force in 2020 can the get rich quick generation afford to become the complacent.

Pet Hens Lapin it up

Landlords have long been fighting the want of tenants to have their pets live with them.

For the landlord it is an uncalculated risk of potential damage, for the tenant this represents a member of their family and the thought of renting a property and having to give up Rover or Tigre is unthinkable, to counter this landlords have consistently taken addition deposits to cover any pet damage and will usually have a full pet clean obligation written into the tenancy agreement.

Since the introduction of the Tenant Fee Ban Act Landlords can no longer take an additional damage deposit for tenants with pets, nor can they impose a set cost for a full pet clean at the end of the tenancy.

However landlords are never ones to sit on their laurels and if  the many industry reports are to be believed a number of landlords are countering this by increasing rent for tenants who have pets, in some cases by as much as £50 per pet per month, not great for the crazy cat ladies amongst us.

However, there could be some solace hidden in the depths of the Allotments Act 1950.

Section 12 of the Act abolishes the contractural restrictions on Hens and Rabbits, going on to state that any contriving clauses in the lease or tenancy will not be withstanding, making it lawful, without landlords permission to keep Hens and Rabbits in any part of the land or property, the Act doesn’t kindly consider the Hens and Rabbits welfare and states that the keeping god such animals such animals must not be in detriment to their health or cause a nuisance to others.

So… if your prospective tenant have a pet Rabbit or wishes to keep Hens, there is nothing that can be done.

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