Is the Housing market glass half empty.. or does the cup runneth over

 Part 1.

We are in a housing crisis, the media tells us this on a daily basis, Shelter tell us this ( so it must be true, right)

But what is the real cause of the housing shortage, is it genuinely a lack of properties for people to live in

Government council tax base figures released in November 2021, recorded there are 238,306 homes in England that are classed as long-term empty homes. This means that they have been left vacant for more than six months.

According to recent Shelter figures More than 274,000 people are homeless in England in 2022

During the Autumn Budget, the chancellor, Rishi Sunak, announced that up to 180,000 new and affordable homes will be built annually.

Now I am NOT good at maths… but that would tell me that is we brought back into use the current empty homes, then the new and affordably homes build would only need to be 35,694, that’s only 19.8% of Rishis promise, now that has got to be good for the tax payer.

Now I am very aware that to bring empty homes back into use, is not an over night project and will still cost money, so lets look at some average costings:-

·         Building cost in England for a new build property are between £1,750 and £3,000 per m2

·         the floor area of the average new three-bedroom home in the UK is 88 sq m

·         So, the average cost of a New build 3 bed house at the lowest end would be £154,000

·         The average total cost of renovating an existing empty 3-bedroom house is around £76,900

Empty Housing (England) briefing paper was published 21 October 2020 to set out how empty homes could be brought back into the housing market…. But like all great Bills this one never made it across the line.

In contrast the Scots are, as usual way ahead of the property game with the release of the Scottish Empty Homes Partnership (SEHP). This provides tools for developers who wish to bring an empty property back to life, including a really helpful Empty Home Value tool

In the first year of reporting figures SEHP, saw number of empty homes reduced by 7.5% all of these properties where brought back into use either in the private or social sector.

Would the Governments money not be better spent paying towards refurbing empty homes, rather than flooding the market with new build properties that are actually affordable to the average Jo.

Lets look at rental prices

Office of National Statistics found for April 2022 states the average rent in the UK is now at £1,103, up 10.6% on the same time last year

Early estimates for April 2022 indicate that median monthly pay was £2,076.

Now to qualify for a rental property, most letting agents and landlords look for the tenant to have an income of 3 times the annual rent or around 36% percent of income to be spent on rent.

But with these figures the average tenant would be paying 41.5% of their gross income on rent, meaning a person or couple with the average annual wage of £31,887.88 can’t actually afford the average home.

So are we pricing tenants out of the housing market?................

Agents no longer the property professionals

 The law only operates Monday-Friday 

 I wrote an article back in December 2013 called “Landlords still ignoring the Law books in favour of DIY Lettings”

I love reading back over my historic articles to see what’s changed in the ever evolving world of private lettings, this article in particular stood out.

It would seem to me nothing has changed in 9 years or even it has got worse, and landlords are still taking it upon themselves to self-manage but failing to educate themselves on the basics and still not following the 101 rules of letting.

But can landlords be forgiven for doing it themselves when the letting agencies on offer, really are poor pickings

This aside, what has come as more of a shock to me in more recent years is the lack of knowledge and experience of letting agents.

Agents who have been in the industry for many years, are Nationally recognised firms yet, are still totally uneducated on the very fundamentals of the PRS and creating untold issues for their landlords.

Now most landlords probably don’t realise that even if they have an agent fully managing the property, if anything does wrong, ultimately it is the landlord who can be fined, penalised and even imprisoned.

So why are the property professionals getting it so wrong?

Could it be lack of understanding of the industry

Could it be a focus on income rather than level of service

Could it be agents don’t believe the law is anything to do with them

Could it be agency owners don’t want to invest in young staff

Or could it be an influx of “Get rich quick” boomers who believe being a letting agent is a piece of piss?

Whatever the reason, something has to stop.

Just yesterday I was contacted by a new landlord who had opted to use an agent because he knew he didn’t know enough about the law and didn’t want to get anything wrong………….. You know where this is going right?

The agent who works for a Nationally recognised lettings firm, who herself has 10 years experience and was an ARLA qualified agent, advised the landlord that the LAW was as follows:-

·   You cannot issue a 12 months tenancy to a tenant when they first move in, you can only give 6 months, after the first tenancy you can then issue 12 months.

·         You do not have to protect a deposit if the tenancy is for less than 6 months

And my personal favorite

We only issue ASTs, there is no other type of tenancy available so everyone goes on an AST and all deposits have to be protected no matter what 

When the landlord asked for clarification on this I was, lost for words, I gave the landlord the CORRECT information and then called the agent myself, and still she was adamant that she was and I quote “fully on top on the law thank you”                  Well sorry sister…. No you ain’t

Sadly this is not an isolated incident, with the majority of agents not knowing the difference between a S21 and S8 or even knowing that once these expire court is the next step.

My own personal experience when I was reading through the AST of the property I was about to rent and came across the following clauses

All checkouts conducted on Saturday will incur a £380 charge

When I questioned this, and reminded them of the Tenant Fee Ban act 2019, I was amused by the response

“The Tenant Fee Ban act doesn’t apply on Saturdays”

Well it’s always good to be advised that the law is only available Monday to Friday and maybe even 9-5

I’m sure the police will be relieved for the weekends off…

But I jest….The Lack of basic knowledge seems to be common throughout the industry and with many landlords knowing what they don’t know and entrusting agents to do the right thing, why on earth should landlords use agents? As it seems it is just the blind leading the blind.

We know the regulation of property agents ( RoPA) is coming and I truly hope that comes sooner rather than later because it is nothing better than the wild west out there for landlords at the moment, it is a shame that agents do not take a pride in their professional and aspire to be the best and deliver a great service.

Targets and commissions trump knowledge and expertise, makes me ashamed to be part of this industry at times

 

Did you know mediation could save you money and avoid court

 

I read a very interesting article in The Law Society Gazette, which focused on mediation and the results of the Ministry of Justice (MoJ) recent call for evidence.

The thing that stuck out like a sore thumb to me was ‘high proportion’ of respondents who were not aware of a dispute resolution processes and cited a lack of publicly available information on this.

I have to agree, in my chosen area of mediation, Landlord and tenant, it does still surprise me how many landlords and tenants do not know that mediation is even available in this specific field and how greatly that service can resolve issues such as rent arrears without the cost of going to court.

The other interesting point was that Mediation was viewed by many as a token step along the inevitable road to court, I would be interested to know who the actually respondents to this question were, the reason for this is mediation is designed to prevent the need for court and the only people I know that would want to prevent that is solicitors, because with an early resolution, their payday is much less.

Now I do see many solicitors train to be mediators and do the job well, however, I do still hear stories from people who have had a solicitor mediate, that the session itself was biased and the solicitor was still looking for a party to win.

Is mediation about winning?

I believe it is, but I see the outcome as Win Win, both the landlord and the tenant get an outcome that they are happy with and 9 times out of 10 it avoids court.

If you ask anyone that has gone through the tireless stages of court proceedings, they will tell you they wish they would have reached a settlement using another method

Is it really neutral?

Again I would say yes a majority of the time, I certainly find mediators with no legal background make better mediators than those who do, why? Because the law teaches us to see right and wrong and focuses our mind on having a good guy and a bad guy.

Mediation is not about the law, it is about what is best for the 2 people in the room at that moment.

Yes of course the mediator has to make sure that what is being agreed is legal and not criminal, but at the same time it doesn’t have to follow the letter of the law.

For example, legally the landlord can pursue a tenant to court to recover all rent owed, at mediation, the landlord has the option to reduce the arrears in order to get a swift move out or offer a financial incentive to the tenant. These options are available in court

I do think mediation has a huge part to play in the private rented sector and I do believe it gets better outcomes than the court process alone.

Personally I would like to see more eviction specialist companies understand the value of mediation for their clients and that an early resolution, although may not be a financially rewarding the eviction company, may actually see them increase business flow as they do provide the value of alternative dispute resolution.

As a mediator working within the private rented sector I have helped hundreds of landlords and tenants resolve rent arrears, avoid costly and lengthy evictions and help both parties move on from what can be an emotionally draining situation

visit my website for more information    https://www.gothardrowe.com/dispute-resolution

https://www.lawgazette.co.uk/news/mediation-seen-as-form-of-capitulation-moj-poll-finds/5112056.article

Its good to talk... Can mediation work using email alone?

As a mediator I am always asked why mediation cannot be conducted via email.

I understand there are some positives to conducting mediation via email, such as

• ·    easier scheduling;
• ·        parties from other states, or even countries, can participate without travel or time zone constraints;
• ·        parties can take time to draft an appropriate and more reasoned response; and
• ·        parties can easily find information from prior “conversations.”

From a personal prospective and my professional experience in mediations, mediating via email is problematic.
Of course, I use email for communicating to clients at the same time in terms of scheduling, the initial forms, and letters, and sending drafts of agreements.

To actually have substantive discussions though, mediation via email has not proven productive.

WHY….

A lack of nuance and intent.

Reading words on a screen without the context of the tone of voice or facial expression can be very off-putting.

Some phrases can seem harsh and can convey a dismissive or angry tone that the person did not intend.

We are all guilty of reading a text or email in the frame of mind we are in, rather than in the frame on mind the sender is sending it in.

On the other hand, a person might be more prone to email something provocative that they would never say in person.

Even if the mediator is willing to try to intervene and help the discussion, by the time the mediator enters the conversation, the email chain could have gone on for hours — and without any attempt at a mutual understanding, the damage that could derail the mediation has already been done. 

Partial or non-responses are given

In an email, it’s easy to respond only to those comments/requests you want to and ignore what you do not want to answer. I have read email chains where the parties seem to be having completely different discussions.

An email can begin with a party raising three points but the response only references point 2. The reply then ignores the response to point 2 and brings up point 4, and so on and so on...

The responses are not in real-time.

While there is a benefit to being able to ponder a statement and then craft a response, delay adds to the frustration of the other party.

This can make a difficult issue even more difficult to resolve, especially if follow-up emails are sent demanding a response

I also believe that in any form of mediation, an immediate reaction from the heart can be quite powerful and may not be substantially conveyed in an email that has been reviewed and edited for perfection.   

In the long run, it costs you more in fees.

It takes billable time for your mediator to go through the email chains and try to piece together what, if anything, has been resolved. Invariably, there will be a point that is missed or a response that is not clear when the mediator summarises the numerous emails.

That can then start the whole process over again.
If there are issues that come up in between meetings, I am more in favour of scheduling a phone call. Then, when necessary, I can intervene and be sure that everyone understands one another and the agreements that are being made.

Acknowledgement Clare Piro Attorney and Mediator

Preparing to fail - the landlords new mantra

With 168 acts and 400+ regulation now Governing the private rented sector, it can be very easy to miss dotting a few 'i's' or failing to cross a few 'T's', but the fall out from this can have a huge impact on landlord both personally and financially, with some breaches of basic tenancy law bringing a criminal conviction or hefty fines.

My advice to anyone renting a property whether an agent or landlord is - Prepare to fail.

Now i am not saying get it wrong and hope for the worst, I am saying prepare with the worst case scenario already planned out.

I find 99% of landlords fail at the first hurdle when they want to evict a tenant because they didn't issue pre-tenancy documents correctly or failed to protect a deposit 

Always make sure you have done PDA - no - not Public Displays of Affection but Pre-During-After tenancy compliance.

Pre-tenancy is just as legally important as during a tenancy and after the tenant has left

Holding Deposit:- Not a legal requirement, but if you take one to secure the property it MUST:

• Be no more than 1 weeks rent
• Held for no more than 14 days without either returning / applying to balance or getting written extension to the 14 days
• You MUST also provide a receipt, written use of the HD and a draft copy of the AST

Or you Breach the Tenant Fee Ban Act and could risk some hefty fines

Before the AST is signed you MUST provide

• EPC- min rating E
• Up to date Gas cert (CP12)
• How to Rent guide ( latest version)
• EICR 5 yr elect test
• Carry out Right to Rent checks

After AST has started

• Protect deposit within 30 days of it being paid NOT of the tenancy starting 
• Provide  prescribed information within 30 days of it being paid NOT of the tenancy starting.

Not a legal requirement

• Security Deposit - a social norm not a legal requirement, BUT if you do take one it must be a max of 5x weeks rent

•Inventory- very good practice but not legal requirement 

During tenancy:

• • Not enter the property without the tenants express permission 
• • Attend to Maintenon in a timely fashion
• • Keep a open dialogue with tenants, don’t just wait for an issue
• • Regular property inspections

At end of tenancy

• Tenant doesn’t have to give notice to end a fixed term is they are leaving on the date it naturally ends
• • periodic tenancy they must give 1 months notice 
• • you can only do viewings if tenant allows- nope doesn’t matter what your AST says
• • check out- not a legal requirement but if you did a n inventory then a C/O is a must if you want a chance at claiming on deposit

Rent arrears

• Contact the tenant when they are 1 day late...Ask if they are ok?  This immediate and softer initial approach gets a much better outcome 

Remember agents may cost you 5%-20% but you are paying for years of knowledge, experience and a detailed understanding of the 168 acts and 400+ regulation

They don’t just let and forget

Self manage when you have the time and experience

Or you could find you are a criminal over night

Water water everywhere - but who foots the bill?

 With utility bills increasing for a variety of reasons, including more people now working from home due to the pandemic, it is not a surprise to know that more and more tenants are looking at ways to manage their money and decrease their bills.

One of the most common approaches for a tenant is to switch utility supplier as soon as they move into a new rental property.

Now, the misconception here by some landlords and agents alike, is that the tenant cannot switch supplier without the landlord written permission.

This is NOT correct......the tenant, as the bill payer has every legal right to chose whichever supplier they wish to suit their budget and the landlord cannot object... in some very rare circumstances they can, but these are not worth mentioning here.

In addition to this, tenants can also request a change of meter and 9/10 this too will not require the landlords written permission, this includes, Smart meters, prepayment meters and most importantly Water meters.

Now, the law does have some weight here when it comes to water meters, the Water Industry Act 1999 s11 states that a clause in a tenancy agreement cannot stop a tenant who pay their own water bills from choosing to have a water meter, however, most if not all water companies will not install a water meter for anyone who has a tenancy of less than 6 months.

But most importantly for landlords is the Flood and water management act 2010 S45, which is very clear that the LANDLORD has a legal obligation to advise the water company that the tenant is liable for the water bill during the tenancy.

If the landlord does not do this, even if the tenancy agreement states clearly that the tenant is liable, the water company do not have to acknowledge this and can/will hold the landlord liable for payment of any water bill while the tenant was in occupation, regardless of how long that tenant was in occupation.

An example of this was when i served my time at CAB, i had a landlord who had debt collectors after him for £24,000 this was a water bill that a tenant of several years, the AST was blatantly clear the tenant was liable for the water bill...... but the landlord nor his agent had taken the time to directly inform the water company, so the landlord was legally liable for the bill.

These days water companies make it extremely easy for landlords, with most having an easy section on their website where you can just fill in a few boxes to advise of the tenant liability, well worth taking a few moments to do this.

, 

Get outta my 'ouse

 With Covid having a huge detrimental effect on both landlords and tenants in the private rented sector, many landlords are finding themselves directly effected either by lost of employment or change in circumstances which are not of a direct effect of any tenant action.

In these situations many landlords are in desperate need to move back into their rental properties and need to evict their tenants through no fault of their own.

Surprisingly to me, there is a common assumption among inexperienced landlords on Social media platforms that they do not need to serve their tenants with formal notice in order to move back into their properties.

It is unclear where this misconception has come from, but it is a worryingly increasing trend, so to clarify the situation to those who are unsure please see below.

When you rent your property to a tenant on an assured shorthold tenancy agreement you are in the eyes of the law transferring possession of your property to the tenant.

This provides the tenant with 'Exclusive possession' this means the tenants has every legal right to exclude anyone from their home including the landlord and their agents.

There are only two legal ways in which a landlord can regain possession of their property.

1. By the tenant serving Notice to Quit or signing a Deed of surrender and vacating the property voluntarily 
2. By the landlord serving notice seeking possession, proceeding through the court system and having a bailiff exercise an eviction warrant  

If the rental property was previously the landlord home before the tenant move din then the landlord can serve a Section 8 notice using ground 1  which states Landlord wants property to be own home or the property was previously their own home, this is a 2 months notice pre-covid and currently 6 months, reducing to 4 months on 1st June 2021

However, The landlord can't use this ground to get the property back in order to sell it, and most importantly, before the tenant moved into the property, the landlord would need to serve on the tenant a notice ( a letter is fine) stating that this situation may arise, without this pre-ground 1 notice ground 1 cannot be used

If the tenant has not breached their tenancy in anyway and the landlord simply wants their property back to move into, then the formal Notice seeking possession will ned to be served, this will be a Section 21 notice on form 6a, currently that notice period is 6 months notice, this will reduce to 4 month son 1st June 2021 and reduce further to its pre-covid notice period of 2 months on 1st October 2021.

The other important thing to remember is that any notice seeking possession that a landlord issues to a tenant, either Section 21 or Section 8 is NOT an eviction notice and the tenant does not have to leave when it expires, the notice is simply that, a note to the tenant advising the tenant of the date after which the landlord can go to court.

So if you wish to move back into your home for an reason the tenant is still legally entitled to full notice and the full court process.