Why not increasing rent annually is bad for business and bad for your tenant

Increasing rent annually is generally considered common practice for landlords, as it helps them keep up with inflation and maintain the profitability of their rental properties. 

Here Property Expert Julie Ford explores the reasons why it can be seen as bad business sense for landlords not to increase the rent annually:

 

1. Inflation: Over time, the cost of living typically rises due to inflation. If landlords do not increase the rent annually, they may find themselves falling behind in covering the increased costs of property maintenance, property taxes, and other expenses. This could result in reduced profitability or financial strain.

 

2. Market Value: Rental rates in the real estate market are influenced by supply and demand dynamics. By not increasing the rent annually, landlords might miss out on potential revenue if market rents are rising faster than their current rental rates. They risk underpricing their property and not maximising its value.

 

3. Fairness to Tenants: Applying modest and reasonable rent increases annually is often considered fairer to tenants than sporadic or significant increases at irregular intervals. It allows tenants to plan their finances accordingly and avoids potential financial shocks that could result from sudden large rent hikes.

It also stops tenants who may need to move on from being financially stuck where rent hasn’t been increased for years and now they can’t afford market value rents as they have been budgeting to the lower rent for years.

 

4. Maintenance and Upgrades: Regular rent increases can provide landlords with the necessary funds to perform maintenance, repairs, and upgrades to their rental properties. Neglecting these essential tasks due to stagnant rental income could lead to a decline in the property's value or tenant dissatisfaction.

 

However, it's important to note that local rental market conditions, tenant relationships, and other factors can influence a landlord's decision to increase rent annually. Each situation may require careful consideration and balancing the financial interests of the landlord with the need for a fair and sustainable rental arrangement.

 

Staff training is a waste of money

 “If I pay to training them, I’ve lost that money if they leave”

Is a very common reason agency owners give to not investing in their staffs knowledge and ongoing training

 

“But what is they don’t leave?”

I answer… you are left with uneducated staff lacking knowledge and ability, providing a very poor level of service.  Is that the ideal business model?

 

 It is more important than ever for letting agent owners to keep their staff fully trained especially with the pending enactment of the Renters Reform Bill which will be the biggest change to private sector legislation is 30 years.

Agencies cannot afford to be behind with this legislation.

 

Expertise and Knowledge: 

Training ensures that staff members have a deep understanding of the industry, including legal requirements, market trends, and best practices. This knowledge equips them to provide accurate and up-to-date information to landlords and tenants, resulting in better service quality.

 

Compliance with Regulations: 

The rental market is currently subject to 169 Laws and 402 regulations, such as tenancy laws, safety standards, and data protection rules. Proper training helps staff stay informed about these regulations, reducing the risk of non-compliance and potential legal issues, hefty fines and in some cases prison.

 

Improved Customer Service: 

Well-trained staff can provide excellent customer service, addressing queries, concerns, and issues effectively. They are better equipped to handle difficult situations, negotiate contracts, and maintain positive relationships with landlords and tenants, fostering trust and satisfaction.

 

Enhanced Efficiency and Productivity:

 Training enhances staff members' skills and office moral, enabling them to perform tasks more efficiently. This can include utilising property management software, conducting effective property inspections, or managing tenancy agreements. Increased productivity leads to smoother operations and overall business success, which organically increases business revenue.

 

Adaptability to Industry Changes: 

The rental market is dynamic, with evolving trends, technologies, and customer preferences. Ongoing training keeps staff updated on industry developments, allowing them to adapt to changing circumstances and provide innovative solutions to meet clients' needs. This helps keep your agency ahead of the competition by foreseeing trends to legislative changes and taking a proactive rather than reactive approach  

 

Professional Image and Reputation: 

Well-trained staff reflect professionalism and competence, which enhances the image and reputation of the letting agency. Satisfied customers are more likely to recommend the agency to others, resulting in positive word-of-mouth marketing and potential business growth.

 

Overall, investing in staff training demonstrates a commitment to excellence, legal compliance, and customer satisfaction. It empowers employees to deliver high-quality services, adapt to industry changes, and maintain a competitive edge in the market.

The Changing Landscape of Pets in Rental Properties in the UK

Introduction:

In the UK, the issue of pets in rental properties has long been a subject of debate between tenants and landlords. 

Historically, many landlords had strict “no pets” policies, making it challenging for pet owners to find suitable accommodation. However, there has been a noticeable shift in recent years, as attitudes towards pets in rental properties are evolving.

 In this article, we will explore the changing landscape of pets in rental properties in the UK, shedding light on the rights and responsibilities of both tenants and landlords.

 

The Shifting Perspective:

Previously, landlords often justified their “no pets” policies due to concerns about property damage, noise complaints, or potential allergies of future tenants. However, the increasing recognition of the positive impact pets can have on tenants’ mental health and overall well-being has led to a change in perspective. Many studies have shown that owning a pet can reduce stress, combat loneliness, and enhance emotional support. Recognising these benefits, landlords are now more open to accommodating pets in their rental properties.

 

Tenant Rights and Responsibilities:

Tenants in England currently have the right to request permission to keep pets in rental properties, unless there is a valid reason for the landlord to refuse. However, it is important for tenants to approach this matter responsibly. They should consider the suitability of the property for their specific pet and demonstrate their ability to care for and control the animal properly. Tenants should also be mindful of their responsibilities to ensure that their pets do not cause damage or become a nuisance to neighbours.

 

Landlord Considerations:

While the perspective on pets in rental properties is changing, landlords still have valid concerns about potential risks and damages. Landlords have the right to refuse permission if they have reasonable grounds, such as a property being unsuitable for pets or if the pet poses a risk to other tenants or the property itself, or there is a superior lease clause forbidding pets in the building.. However, blanket “no pets” policies are increasingly seen as unfair and may be subject to challenge. Some landlords have adopted alternative approaches, such as pet-specific rental agreements or requesting a higher rent be paid for a pet as it is illegal to request a deposit higher than 5weeks rent in most cases.

 

Supporting Responsible Pet Ownership:

To ensure a harmonious coexistence between tenants, landlords, and pets, it is essential to promote responsible pet ownership. This includes encouraging tenants to seek suitable housing for their pets, ensuring proper training and socialisatio, regular exercise, and providing appropriate care and veterinary attention. Landlords can also play a role by establishing clear guidelines for pet ownership within their rental agreements and maintaining open lines of communication with tenants regarding any concerns that may arise.

 

Conclusion:

With the impatiently awaited Renters Reform Bill finally making is debut to the Parliamentary process last week, it is clear the Government is aiming for a more including approach to renting for pet owners, but the much feared  blanket ban on landlords refusing pets altogether was not part of the Bill, instead the Government have taken a thankfully, common sense approach and set out a new clearer process for tenants who wish to have a pet and timelines for landlords to accept or refuse said pet.

Provisions have also been amended the Tenant Fees Act 2019 to allow landlords to ask a tenant to purchase the approximate insurance or pay the premium if the landlord covers this risk with an addition to his own insurance policy or takes out additional cover.

 The landscape of pets in rental properties in the UK is gradually evolving as the benefits of pet ownership become more widely recognised. Tenants now have the right to request permission to keep pets, while landlords are increasingly open to accommodating them. However, responsible pet ownership and mutual respect between tenants and landlords remain crucial for maintaining a healthy and positive environment for all. By striking a balance between tenants’ desires for pet companionship and landlords’ concerns for property preservation, a middle ground can be reached that benefits both parties and their furry friends.

Do you complete court forms for your landlords? You could be in contempt of court

For as long as I can remember, letting agents have undertaken issuing notices such as Section 21 and Section 8s and then continued to complete the court application form for their landlords.

Personally I have also shied away from the form filling, this is for 2 reasons

• 1    I don’t like form filling with the added headache of 3 lots of papers
• 2-      I knew legally I couldn’t do that work

A recent High Court ruling in Baxter v Doble & Anor highlights the need for caution among agents when choosing to undertake eviction work in the course of their daily property management work.

When we think of legal work, such as litigation, and the roles of solicitors we think of attending court and standing up in front of a judge, we don’t necessarily think that simply completed some forms could be a detrimental act.

So, lets break this down,

What is Litigation

Litigation is the process of an individual or a business taking legal action against one or more parties to resolve a dispute, Litigation is a reserved activity.

Various principles were outlined to help judges decide what does and does not amount to the conduct of litigation.

The court made its decision in accordance with those principles –  it was held that some of the activities carried out were consisted of the conduct of litigation. 

The list of such activities a include all of the following:

• Filing the claim form and particulars of claim.
• 
  
• Serving the reply and defence to counterclaim on the other party.
• 
  
• Payment of the court fee of £355 by cheque from the respondent’s account, having been put in funds in advance by the claimant.
• 
  
• Giving of instructions to an advocate.
• Drafting of witness statements.
• 
  
• Drafting of an application notice.
• 
  
• Drafting of a draft order for a strike-out application.
• 
  
• Drafting of the reply and defence to counterclaim.
• 
  
• Drafting of the case management summary for the CMC.

It has been held in other cases that serving a claim form and particulars of claim do amounted to the conduct of litigation.

Who can litigate

A person who is authorised ( eg: a registered and regulated solicitor)

So, to be clear serving section 8 or section 21 is NOT deemed to be conducting litigation, but if the agent then goes on to help the landlord complete the N5b or any other type of possession claim form including PCoL or completes it on landlords behalf, they will be, Under the Legal Services Act 2007, committing an offence to carry out a reserved activity without being an authorised person.

At paragraph 4, Schedule 2 to the 2007 Act ‘conduct of litigation’ is defined as

“Conduct of litigation

4 (1)The “conduct of litigation” means—

(a) the issuing of proceedings before any court in England and Wales,

(b) the commencement, prosecution and defence of such proceedings, and

(c) the performance of any ancillary functions in relation to such proceedings (such as entering appearances to actions).

Agents who chose to complete these claim forms leave themselves and their landlord open to having the possession claim struck out and at worse be found in contempt of court which carries a sentence of 2 years in prison.

It is not worth trying to complete these forms and agents are encouraged to form partnerships with local solicitors who will take on this work once the section 8 or section 21 has expired

Baxter v Doble & Anor (2023) https://www.bailii.org/ew/cases/EWHC/KB/2023/486.html

What is a tenancy?

When working in, or researching the rental sector we come across the word ‘tenancy’ all the time.

We all make the similar assumption that tenancy means the type of rights and/protection someone has in a property.

More often than not, we associate tenancy with Assured shorthold tenancies (AST)  in particular.

 

However, the fun fact here it that ALL types of let are in fact tenancies, it is then down to the circumstances surrounding the let that determines what level of protection from eviction and rights the occupant has.

 

The science bit:

Let’s start with the origin of the word tenure.

In Middle English it’s called tenure.

In Latin  *tenitura, from *tenitus,  tentus (from teneō) + -ura.

 

All of these meaning the same thing:-

the conditions under which land or buildings are held or occupied

 

So how many types of tenure are there?

·       Owner

·       Leasehold

·       Secure 

·       Protected

·       Assured

·       Assured shorthold

·       Basic occupier

·       Excluded occupier

 

Each of these tenancies rely on the law and case law to establish how they will be created.

 

Owner is simple to explain, the interest in land is owned outright by the person.

They have the title to the property, they pay the taxes and rates

 

Leaseholders are in fact tenants, they may only ever own the lease and not the building so live in the property as tenant to the freeholder/owner. The lease is for a set period of time normally 99 or 125 years. Unless the leaseholder makes arrangements to extend it, once the lease ends, ownership of the property returns to the freeholder.

 

Secure and protected provide the occupants the highest level of security without owning any part of the property or its lease.

Defunded by Part 4 of the Housing Act 1985

Secure and protected tenancies are normally issued by local authority and are much less common now

Eviction generally required the tenant to have breached the contract 

 

Assured / Assured shorthold

As defined by   s.1(1) Housing Act 1988

An assured tenancy is defined as a tenancy of a dwelling-house let as a separate dwelling to an individual, who is a single (sole) or joint tenant, where the tenant or at least one of the joint tenants occupies the house as their only or principal home

Assured and ASTs are in principle the same, except an AST allows the landlord to issue a no fault notice, known as s21

 

But to evict an assured tenant you will normally require them to ah w breached the contract 

 

Basic occupier /Excluded occupier

Most tenants are protected by either the:

·       Rent Act 1977 (regulated tenants)

·       Housing Act 1985 (secure tenants)

·       Housing Act 1988 (assured and assured shorthold tenants)

 

If a tenant does not come within the protection of one of these Acts or another statute giving security of tenure, they are either an occupier with basic protection or an excluded occupier.

Under the Protection from Eviction Act 1977 occupiers with basic protection cannot be evicted without a court order. A landlord must follow the correct procedure to evict an occupier with basic protection.

 

Excluded occupiers however do not have protection from eviction and are not subject to Protection from eviction act 1977

The most common example of his are

 

·       people sharing accommodation with a resident landlord

·       people renting holiday lets

 

So when embarking on renting a property, it is worth doing some research to ascertain what type of tenancy you will be embarking in and what legal requirements you have as a landlord but also what rights and protections your tenant may also have.

 

It’s my property, I don’t need a court order

With mortgage rates, the cost of living and the energy crisis 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 equity, the property no longer making ends meet 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 as their own home, leaving tenants facing the prospect of eviction through no fault of their own.

Surprisingly to me, there is a common presumption 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 read on.

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 landlords home directly before the tenant moved in 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 

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 or clause in the AST) 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 need to be served, this will be a Section 21 notice on form 6a giving 2months notice

If the tenant is in a fixed term AST, you can’t issue the S21 to end the tenancy sooner than it’s natural fixed term end.

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 them of the date after which the landlord can go to court.

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

 

 

A New Year means New Legislation for Landlords

On 23^rd January 2023 the Fire Safety (England) Regulations 2022 will come into force.

 

These new regulations will predominantly apply to high-rise buildings, specifically those over 11 metres and 18 metres or at least over seven storeys with communal areas. 

 

However, section 9 and 10 does relate to all buildings with two or more domestic premises and communal areas, which would lead us to assume that in addition to buildings with self-contained flats, these regulations will also apply to rooms let on individual tenancies in HMOs.

 

It is also assumed if there has been a conversion and the structure comprises two maisonettes with front doors on the street and no communal area, these regulations will not apply.

 

So what do you need to do if these regulations apply to your type of property

 

Section 9- Fire safety instructions to residents 

 

A responsible person must display fire safety instructions prominently in communal areas. The instructions must include the following:

 

·       how to evacuate a building,

how to report a fire to fire and rescue, and

·       any other instruction that tells residents what to do when a fire has occurred.

 

In addition, the responsible person must provide a copy of the instructions:

 

·       to all residents within the building within 12 months of the start of the regulations;

·       to a new resident as soon as reasonably practicable after they move in; and

·       to all residents every 12 months

 

The regulations also state that these instructions will be provided to the occupant when there is a change and annually.

 

Section 10- Fire doors

 

Requires the responsible person to provide information about the fire doors in the building, whether or not they are within the individual dwelling or the communal parts. That information must include that:

 

·       all fire doors are to be kept closed when not in use,

·       residents or their guests should not tamper with any self-closing devices, and

·       residents should immediately report any fault or damages to the fire doors to the responsible person.

 

This information must be given to all existing occupiers within 12 months of when the regulations come into force (23^rdJanuary 2023) and to all new occupiers as soon as reasonably practicable after that resident moves in. 

 

The information must be given annually as a refresher.

 

The full Act can be viewed Here: 

https://www.legislation.gov.uk/uksi/2022/547/contents/made