Tag Archives: Landlord Action

Referencing Services for Landlords Latest Articles, Lettings & Management

Referencing services for landlords come in several varieties and with numerous options and price structures.

You can get anything from a credit check for a fiver through to full referencing which guarantees rent on the due date if your prospective tenants and guarantors are considered to be a good risk.

The larger referencing companies have been around for several decades and are used by literally thousands of letting agents across the UK. They have, therefore, also developed huge databases over the years of bad payers, anti social tenants and tenants who have caused wilful damage to landlords properties.

If you are offered referencing for under £10, chances are that you will get what you pay for which at best could be described as an indicative report only. A company which previously provided lifestyle referencing free of charge now only offer this service when combined with a £4.99 credit check for example.

The advice from Property118 is to pay slightly extra and buy the real thing. If you are heavily reliant on your rental income and could not afford the legal costs associated with evicting a bad tenant we also recommend you to purchase rent guarantee insurance. The entire package is generally available for less than £100 a year. Do check the small print on RGI policies though as your claim might not be valid unless you follow time sensitive claims processes.

As of next month (August 2013), a new service will be launched into the market for complete peace of mind. It is a rent collection product with a difference; in that rent is paid to the landlord on the due date whether it has been collected or not. The company offering the product is new to the market but the scheme is underwritten by FCC Paragon, established in 1996 and regarded by many in the PRS as one of the UK’s most established referencing companies. The legal services for possession are outsourced to Landlord Action. Rent continues to be paid on the due date until such time as possession is recovered, all at the expense of the underwriters. This scheme will be competitively priced at just 5% of rental income when it is launched towards the end of August 2013. It’s an ideal half way house in terms of pricing between self management and full property management, however, the major benefit is the certainty of cashflow. For more details see LettingAgentsOnline.co.uk

Rent2Rent contracts – if you’re going to do it do it right …. Buy to Let News, Cautionary Tales, Landlord Action, Landlord Law, Landlord News, Latest Articles, Legal, Lettings & Management, Property Investment News, Property Investment Strategies, Property News, Property Sourcing

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Rent2Rent companies are using the wrong letting contracts

Whilst I have never been a fan of the Rent2Rent strategy I have to accept that a lot of investors are using Rent2Rent including Housing Associations, Councils and FTSE 250 companies as well as privateers. As it is the mission of Property118 to share best practice, helping these private investors to get their paperwork right fits within our remit, regardless of any other misgivings I might have personally have about the scheme.

What is Rent2Rent?

The way the scheme generally works is that a contract is entered into whereby a property owner rents or signs up to a management contract for his/her property with an investor/manager which includes permission to sublet in return for promises of guaranteed rent, maintenance, management etc. A profit element is built into the deal by investor/manager in the form of a below market rent.

Rent2Rent problems

An example of how things can go horribly wrong is explained in this thread. A property owner was asked to sign an assured shorthold tenancy agreement. To cut a long story short there was a dispute over deposit protection which went to court and the property owner won, even though she had not protected the deposit. She could have claimed substantial damages against the Rent2Rent company but in this instance chose not to. Big lesson learned for the property owner and also the Rent2Renter too!

What are the correct agreements to use for Rent2Rent?

I have consulted with Tessa Shepperson at Landlord Law regarding which type of tenancy agreement should be used. The conclusion was that neither AST’s nor corporate letting agreement are appropriate agreements for the owner and the Rent2Rent company to be using. What is required is a commercial lease drawn up by a corporate property lawyer. Tessa doesn’t get involved with corporate property law so I called in the help of Justin Selig, a qualified and practising corporate property solicitor with The Law department and Landlord Action.

Justin has agreed that subject to demand he will create a legal document template which Rent2Rent companies can download from Property118 for £97 including VAT. The document will be copyright protected so it can only be used by the person who pays for it and any company in which that person owns more than 26% of the shares. It can, however, be used as many times as that person needs to do so. Therefore there is not a requirement to pay £97 each time the document template is used.

If enough people order the agreements they will be available for download by 31st July 2013. If by 22nd July 2013 there are not enough orders it will be deemed that there is insufficient demand, the project will be scrapped and everybody who has paid will receive a FULL refund.

UPDATE – 23rd July 2013

Sufficient orders have been confirmed and paid for and Justin Selig will have the contracts prepared and ready for us to deliver by the end of this month (July 2013)

UPDATE – 29th July 2013

“Rent to Rent” Lease contract templates are now available for immediate download using the embedded order form below.

Tenancy Agreements between Rent2Rent company and tenants

These will typically be standard AST’s, but there are many kinds. Licences may also be applicable if the tenant has another home. A great article to read about tenancy agreements is this one written by Tessa Shepperson.

VAT on Rent2Rent

Some Rent2Rent investors have set their arrangements up under management contracts and fallen foul of VAT. I have spoken to my accountants and had it confirmed that a commercial lease will get around this problem as the owner of a residential property can not elect to tax for VAT purposes. Therefore, the head lessee (the Rent2Rent investor) doesn’t need to charge VAT to tenants either on this basis.

Landlords Revenge Latest Articles, Tenant Eviction, UK Property Forum for Buy to Let Landlords

A landlord who came out and told BBC’s The One Show of her troublesome tenant has now had further problems.

Broadcast on 2nd May, the landlord Mrs Trivedy was featured on the show in an item about rent-arrears and the difficulties landlords are having with tenants on benefit who are not passing on the rent.

Mrs Trivedy was shown getting the help of Landlord Action when her social tenants stopped passing on their housing benefit yet refused to vacate the property, leaving her £4400 in rental arrears. After the case was broadcast on the BBC, the tenants moved on which may have been a good result.

But the tenants left with much of the landlord’s furniture. And they have wrecked the home. Mrs Trivedy says “Wear and tear in a rental property is inevitable but what I was faced with, even given the tenants previous behaviour, was completely unnecessary. Not only is there damage to every room, they have stolen two sofas, a wardrobe, a chest of draws, a fridge-freezer, curtain poles as well as numerous smaller items. What remains was a complete mess and totally unliveable.”

The Condition of Schedule following the tenants’ departure describes the property as in poor condition with damage, missing items and a lack of cleanliness reported in every room, in addition to the garden being littered with dog mess. Mrs Trivedy says she has made a statement to the police in regards to the missing items but was advised that it was unlikely to be taken much further as there are varying degrees of theft and it is her word against the tenants.

Mrs Trivedy says “I am obviously thrilled to have regained possession following the notice served by Landlord Action which has avoided further rent arrears and additional court fees, but I still face being thousands of pounds out of pocket. I will have to make-over the entire property and replace furniture in order to let it again. I think the tenants should be made to pay.”

Paul Shamplina, Founder of Landlord Action says this is not an uncommon scenario. Tenants can feel aggrieved after being asked to leave. But he adds, “In this case it seems the TV exposure may have made these people more upset”. Even though the house in Bracknell was shown on screen, the tenant was interviewed and the landlord is very shocked at their behaviour.

Shamplina also advised that in these cases landlords have to be careful not to throw good money after bad. The potential outcome of further action has to be weighed up against the costs and time involved. Firstly, is it possible to track down the tenants to recover the rent arrears and if so what is their financial position? Secondly, when you regain possession, what state is the property in and how much will it cost to put right? An inventory is paramount to proving this.”

Landlord Action has a busy rent recovery department for landlords who will act on behalf of Sandra Trivedy in helping her locate her ex tenants for a fixed fee. However Mr Shamplina says “in a case such as this, we must take a view as to whether the landlord really wants to spend money and enforce a money judgement if the tenants do not have a job or any assets. Obtaining a CCJ and trying to get a court order for monthly payments off such tenants is likely to take years to clear. Many landlords wish to do so out of principle but we advise landlords to weigh up their options before going down this route.”

Contact Landlord Action

Specialists in tenant eviction and debt collection. Regulated by The Law Society.

Rising numbers of amateur and accidental landlords Latest Articles

The number of amateur and accidental landlords has undoubtedly risen over the last few years as those struggling to sell their properties have instead opted to test the rental market.

Despite having no previous experience, many of these landlords have tried to cut corners by not instructing a reputable letting agent and attempting to self-manage their property. This is when most run into trouble. Continue reading Rising numbers of amateur and accidental landlords →

Rent arrears on the up again! Buy to Let News, Landlord Action, Landlord News, Latest Articles, Property News, Tenant Eviction

It is believed that last quarter (Q1, 2013) severe rent arrears, which constitutes those more than two months behind on rent, rose by 4,000 to 94,000, the fourth highest figure on record (figures from LSL property services).

The highest level ever was only recorded in the second half of last year. Continue reading Rent arrears on the up again! →

Be wary of sub-letting scams! Latest Articles, UK Property Forum for Buy to Let Landlords

I just wanted to share with landlords that sub-letting scams are on the rise!

It is my belief that these scams produce three lots of victims …. the landlord, the sub-let tenants, and the wider landlord community, who get wrongly blamed as well and lumped into the anti-landlord campaigns run by the likes of Shelter. Continue reading Be wary of sub-letting scams! →

The impact of bedroom tax and housing benefit reforms Landlord Action, Latest Articles

The impact of the bedroom tax and reforms to housing benefit – has this led to more impoverished renters?

One of the greatest concerns for tenants with the reforms is being able to manage their finances from a weekly to monthly basis and having to deal with taking one, in many cases reduced, payment in place of the various benefits and tax-credits previously available. Continue reading The impact of bedroom tax and housing benefit reforms →

Deposit Protection Providers call emergency meeting following Court of Appeal Ruling Buy to Let News, Landlord News, Latest Articles, Property News

Mark Alexander, editor and founder of Property118 tweeted the Deposit Protection Providers last night highlighting his fears on the ramifications of the Superstike vs Rodrigues Tenancy Deposit Protection Court of Appeal case. They are calling emergency meetings.

See the response below and read their interim press statement.

@iamalandlord Hi, here is our official statement with further updates to follow – http://t.co/Wq6zylFIdm

— TDS (@TenancyDeposits) June 17, 2013

Interim Press Statement from the Deposit Protection providers

Court of Appeal – Superstrike Ltd v Rodrigues

A joint statement from the Tenancy Deposit Scheme, MyDeposits and The Deposit Protection Service

We have read with interest the latest judgment from the Court of Appeal on deposit protection. Whilst landlords and lettings agents need to take their own legal advice, we will be considering the implications of this judgment for deposit protection and the service of Prescribed information. We will also need to consult the DCLG on this and we will be issuing a further joint statement when we have fully considered the matter.

Justin Selig from The Law Depatment and Landlord Action said:-

I, together with my colleagues at Landlord Action have looked into this in some detail today – we do agree with Mark – this is potentially very serious, but when looked at in detail – it does not make any sense at all.

Firstly, if you are a Landlord and your Tenant occupies your property under an Assured Shorthold Tenancy and you have taken a deposit from your Tenant, then this applies to you. If you have not taken a deposit, then you have nothing to worry about.

If you have taken a deposit at the beginning of the fixed term of the tenancy, and the tenant remains in the property beyond the expiry of the fixed term, then according to this case the periodic tenancy is deemed to be a “new” tenancy. According to the rules relating to deposit protection, a deposit for a new tenancy needs to be protected.

The Court of Appeal ruling states that a deposit is deemed to be received at each renewal – so in the case they were dealing with, the switch from fixed term to periodic meant that a new deposit was deemed to have been received – and because the time it was received was after April 2007 it therefore required protection for that particular tenancy.

I think the arguments as to whether or not this issue applies to deposits received pre or post April 2007 are irrelevant as all deposits being held today (regardless of when they have been received) must be protected by virtue of the Localism Act 2011.

The question is, therefore – where you are holding a protected deposit – do you need to re-protect it each time there is a renewal of a tenancy? At present, I think the answer to that question is, yes – but hopefully I will be proved wrong on this.

Therefore, anyone who is holding a deposit received at the beginning of a fixed term is required to re-protect that deposit when it moves to a periodic. There is a further problem which may hopefully highlight how this does not make sense. A periodic tenancy is deemed to be renewed at the expiry of each period. Therefore, if you follow the argument – this would mean that the deposit would need to be re-protected at the beginning of each period. Most periodic tenancies are monthly – so the deposit would need to be re-protected monthly.

Obviously this does not make sense, nor I am sure is this the intention of the legislation. So how does a Landlord protect himself?

The first thing I would do is to obtain written clarification from the deposit protection company you are using as to their take on the ruling, and comply with their recommendations. Secondly, as a minimum, and you have a fixed term tenancy about to go onto a periodic, you should at least protect your deposit again when it goes periodic. (Personally, I would actually return the deposit to the tenant – but I appreciate that this is not always practical.) Thirdly, and for belt and braces protection – where you are still holding the deposit, you may want to consider not allowing the tenancy to go onto periodic, but to re-issue the tenant with a new fixed term – and re-protecting the deposit for that fixed term.

I hope that the Landlord does decide to appeal this decision and take it to the Supreme Court as some further clarification is definitely needed.

The latest on the BOI Tracker rate scandal Latest Articles, UK Property Forum for Buy to Let Landlords

Bank of Ireland issued the following press release and wrote to 1,200 borrowers today:-

“In February this year Bank of Ireland UK wrote to 13,500 mortgage customers to advise that their base rate tracking differential would increase on 1^st May. This increase is permitted by a specific clause in these mortgage contracts, which allows an increase in the interest rate differential after the guarantee period (after 31 December 2006). This change reflects the significant increase in the cost of funding these mortgages since 2008 and the need for banks to maintain greater levels of capital.

In line with the Bank’s commitment to treat all customers fairly and as part of our ongoing management of customer complaints we have identified two groups of customers where we will not be applying the increase to their base rate tracker mortgage. We have written to these customers and the Financial Conduct Authority has been informed of our decision and is supportive of our approach in excluding these customers.

The first group specifically relates to 1,000 Flexible mortgage customers who were actively using the flexible facilities on their mortgage account. These customers received a specific administrative letter linked to their transactions that might have caused some customers to believe the differential was for the term of their mortgage. The Bank has decided that anyone who has received this administrative letter will not have the increase in differential applied.

The second group of c. 200 customers are those that switched their mortgage product to a base rate tracker mortgage. These customers received documentation detailing that the differential on their mortgage was variable, but the mortgage conditions they received did not detail the circumstances under which the differential could be changed. As a result we are also removing these customers from the pool.

Des Crowley, Chief Executive, Bank of Ireland UK, commented: “We have said from the outset that we will review all customer complaints individually and that we are committed to treating customers fairly throughout the process, it is on this basis that we have removed these customers.”

Bank of Ireland UK will waive all early repayment charges for those customers to whom the differential increase applies and who wish to refinance their mortgage elsewhere.”

What are your thoughts?

Please comment on our main thread – see THIS LINK

At the time of writing this post over 20,000 people have read our original forum thread over on Property118 and nearly 700 comments have been left.

Affected borrowers were outraged when we first released the news of the Bank of Irelands intentions and many others with tracker rate mortgages became fearful that if Bank of Ireland get away with this other mortgage lenders will follow suit.

Our article was picked by Google News very quickly and this sparked massive media interest. We are very grateful for the Press coverage, especially the BBC, The Times and several mortgage magazines who have worked very closely with us and used the Property118 forum to engage with affected borrowers to add a human element to their reports.

As the thread progressed Property118 contacted Landlord Action and Paul Shamplina put us in touch with his new business partner, Julstin Selig at The Law Department for advice advice on starting a Class Action.

Funds from The GOOD Landlords Campaign (administered by Property118) were used to underwrite Counsels opinion which amounted to over 40 pages of legal advice from one of London’s leading banking barristers at 11 Stone Buildings.

Contributions to the Class Action fighting fund of £100 + VAT per affected borrower now amount to nearly £10,000. This money has paid for legal advice to both residential and BTL borrowers who have signed up and a case has also been prepared by barristers for submission to the OFT, FOS and the FCA to demonstrate why the BOI’s actions are illegal and should be challenged in Court by regulators in the public interest. If the OFT can be persuaded to fund the case at litigation this will avoid the need to raise hundreds of thousands of pounds to fund costs and will also negate the risks of the Class Action being ordered to pay the BOI’s legal costs in the event of losing the case.

I issued the following statement to the Press yesterday “Clearly there is only so much legal advice that the funds raised to date can purchase so it is imperative for more affected borrowers to join the Class Action. The legal steps to date could be described as “Gorilla Warfare” against the Bank of Ireland and the submission to the OFT is effectively a call to bring in the Cavalry. Some affected borrowers have questioned why a Court Injunction has not been applied for to defer any rate rise until a legal case has been heard by the Courts. The reality of the situation is that a lot more funding would be necessary for such action. Hopefully this is the action the OFT will take but in the meantime it is vitally important that thousands more affected borrowers join in. Far too many affected borrowers seem to be hoping to take a free ride on the back of others’ commitment and I would urge those people to reconsider their position in order to accelerate progress.

If you are affected by the BOI Tracker Rate Differential change please sign up to the Class Action (see the link below).

http://www.property118.com/?p=39733

DO NOT allow Bank of Ireland to get away with this.

If you are not directly affected, but you are concerned about the potential ramifications and the possibility of other lenders following the lead of the Bank of Ireland please show your support by recommending and becoming a member of The GOOD Landlords Campaign

Landlord News on the BBC One Show at 7pm Tonight Buy to Let News, Landlord Action, Landlord News, Latest Articles, Property News

LANDLORD NEWS – private landlord speaks out on housing benefit nightmare tonight on BBC’s The One Show

A landlord from Bracknell, Berkshire, has spoken out about her nightmare ordeal after her housing benefit tenant failed to pass on the payments. This issue has been widely reported and discussed within the buy-to-let industry but now a landlord has come out publicly to talk about it. The non-payments left Mrs Trivedy and her self-employed partner in an extremely difficult financial position. As a result of the welfare reforms and implementation of Universal Credit thousands of ordinary landlords fear that they will see more of this kind of problem. It is expected to affect the whole country and BBC1 are covering the issue on The One Show tonight, Thursday 2nd May at 7pm. They will feature Mrs Trivedy and Landlord Action, the problem tenant specialists, who she went to for help.

After meeting her current partner, Mrs Trivedy decided to sell her four bedroom house in Bracknell from a previous relationship so that they could buy somewhere together. After failing to sell the property quickly enough, she took the decision to let it out, which for three and half years provided the perfect solution. When her previous tenants moved out and an acquaintance from her daughter’s school, with five children of her own, expressed an interest in the property, it seemed like the perfect solution. The prospective tenants explained that they had fallen on tough times but that the £1,200 housing benefit they were due to start receiving would cover the rent. They agreed to set up a direct debit straight to Mrs Trivedy’s account.

From the moment the family moved in (December 2011), the payments were not consistent and with the housing benefit being paid in arrears every two weeks, there was already a shortfall of £20 per month which the tenants were supposed to make up. Four months ago, the payments stopped altogether. On communication with the tenants, Mrs Trivedy was told to liaise with the local housing allowance office, to no avail. After attempting to speak to the tenants at the property to discuss the issues and try to work out a payment schedule, the tenants called the police to file a harassment case. Mrs Trivedy has since received abusive text messages from the tenants via her mobile phone. In desperation, Mrs Trivedy called on the help of Landlord Action who have since issued a Section 8 possession notice, the process of which was filmed by The One Show.

Mrs Trivedy says “The tenants are now approximately £4,400 in arrears and that sum is mounting all the time. As a result, we are struggling to pay the mortgage on the house. My partner is self-employed so income is irregular and despite taking as much overtime at work as I can, we are living off next to nothing just to get by. What’s more, the house is a complete wreck after the tenants brought dogs into the property which subsequently had puppies. It will cost us thousands to get it back to a liveable state.”

Paul Shamplina, Founder of Landlord Action, says “The majority of social tenants do pass on housing benefit, but the cuts made in the welfare reforms are going to put many under increased financial pressure. Our experience in dealing with cases such as this is that most tenants would prefer to have their payments made directly to the landlord so that they can budget more effectively. Not enough has been done to protect landlords. Over the last few years we have seen a rise in these problems and now with the new Universal Tax Credits monthly payments, our concern is that more and more landlords will see problems and many will turn their back on the social sector.”

More advice on evicting tenants HERE

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