Tag Archives: rent arrears

Universal Credit is not a debacle Parliament told by IDS! Landlord News, Latest Articles, NLA - National Landlords Association

Mr Iain Duncan Smith the Work and Pensions Secretary, admitted to Parliament yesterday that the Universal credit system was not yet ready for couples who make a claim.

This was after a storm on Sky News using NLA figures showing that the number of landlords letting to people on benefits has crashed from 46% to just 22% in the last three years.  52% of landlords say they would not consider letting to someone on benefits and 70% of those who do have experienced rent arrears in the past 12 months averaging £3,000 each.

Universal credit has been widely criticised in all the pilot areas it has been rolled out in by landlords. In every area it lead to a significant increase in rent arrears largely because tenants are now responsible for their own household budgets with housing benefits not being paid directly to landlords.

Mr Duncan Smith told Parliament that reforms were on track despite delays and writing off more than £40m worth of software designed for the new Universal Credit with a further £90m of equipment that would be worthless in five years’ time.

MPs on the Commons work and pensions select committee were told that claims by couples had to be handled manually because the computer system could not cope as it was designed for single adults and had not been configured for couples or claimants with children.

Mr Howard Shiplee, the former London Olympics executive who was brought in this year to trouble shoot, told the MPs that problems arose if a single claimant met a new partner and moved in with him or her. He said “As the potential for claimants to change circumstances, for things to change … the more complicated it becomes.

“Therefore the next stage is to work on couples. That will be a complicated issue. Couples come together, they divide, they have children, things happen.”

“This sort of software is not something you get on the back of a cigarette packet. It’s complicated.”

Mr Duncan Smith claimed the scheme’s assets were worth £152m and Universal credit could ultimately boost the economy by up to £38bn over ten years by moving claimants off benefits.

It was confirmed last week that the 2017 target for the full introduction of Universal Credit will be missed with 700,000 claimants facing a longer wait.Universal-Credit


Good debt recovery agent? Latest Articles, UK Property Forum for Buy to Let Landlords

Debt-Recovery

Good debt recovery agent?

I have recently had an absconding tenant who owes me £5,000 in rent arrears.

I have used debt recovery agents previously for different tenants but with very limited success. One even tried to avoid passing on the debt they successfully collected, fortunately I caught them out and got my dues!

I’m not prepared to employ a substandard or disreputable agent in this case, especially given the amount of money owed and the degree to which I treated this particular tenant fairly.

Therefore please could anyone recommend a company who can carry out both tracing and debt recovery with whom they have had a positive experience?

Many thanks

Genghis Perriman


My tenant is trashing my house!! Advice, Buy to Let News, Guest Articles, Guest Columns, Landlord Action, Landlord News, Latest Articles, Property News, UK Property Forum for Buy to Let Landlords

At Landlord Action we just don’t evict tenants for rent arrears or ending the tenancy because the landlord wants the property back.  We also get instructed by landlords that are worried about the condition of their property and how the tenants are treating (or mistreating) it.  If instances such as this are left to continue, they can end up costing landlords a fortune to put right, negating any gains they have made through rental income for a substantial length of time.

In a recent case we were instructed to gain possession of, the landlord was desperate to get his property back.  There were no arrears, but the tenant had severely neglected the property. She had rented the property on the proviso that she would be living there however, soon after getting the keys, she left to go to Africa leaving her teenage sons in the property on their own. When the landlord found this out during a routine inspection of the property, he quite rightly called social services. My tenant is trashing my house

However, this wasn’t the landlord’s only problem. Teenage boys under one roof would be bad enough, but teenage boys without supervision…a nightmare! Upon visiting the property the landlord found it to be knee deep in rubbish which had resulted in a mouse infestation. British gas had also issued a warrant and changed the locks to the front door to remove the meter and change it to a pre-paid meter as the bills had not been paid for several months. They had broken the landlord’s cooker and washing machine, along with other items, and the landlord was genuinely worried that the property was no longer safe to live in, as it posed a fire risk. At this point he took some shocking photos – see below.

When checking out the references again because he was suspicious, the landlord realised he had been conned. The tenant said she was employed by a charity but had falsified the letter of employment.  With all this evidence being put in a witness statement, we now have the task of having to convince the judge, on discretionary grounds, to grant a possession order at the hearing.

Unfortunately, the landlord gave the tenant a 2 year tenancy agreement with no break clause and it still has another 11 months to run.  The landlord is understandably worried that there will now also be rent arrears going forward as, of course, it could be another 4 months before he gets his property back.

1: Always make sure you have a break clause in your tenancy agreement so that you can end the agreement early and rely on a section 21 Notice, rather than discretionary grounds going to court.

2: Always have your tenancy checks carried out by a professional who is more likely to spot falsified information.

3: Always carry out regular property checks so that if something untoward is going in your property, you know about it sooner rather than later!

Contact Landlord Action

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


The National Audit Office criticise Universal Credit reforms Landlord News, Latest Articles

The National Audit Office has crticised Universal Credit welfare reforms as being badly managed, overambitious and poor value for money including £34 million written off on failed IT.

The spending watchdog said “risks were taken with the universal credit to hit targets, IT systems had limited functionality and an unfamiliar project management approach was used”.

These IT issues have delayed the introduction of Universal Credit although Ian Duncan Smith has confirmed the problems are now fixed and will be delivered within budget and timescales.

The National Audit Office said “At this early stage of the Universal Credit programme the department has not achieved value for money.”

“The department has delayed rolling out Universal Credit to claimants, has had weak control of the programme, and has been unable to assess the value of the systems it spent over £300 million to develop.”

“These problems represent a significant setback to Universal Credit and raise wider concerns about the department’s ability to deal with weak programme management, over-optimistic timescales, and a lack of openness about progress.”

The report said there was still potential for universal credit to bring about “considerable benefits” if the department put “realistic plans and strong discipline in place”.

Issues Found were:

  • Officials were “unable to explain” the reasoning behind the timescales or their feasibility
  • There were no “adequate measures” of progress
  • Computer systems lack the function to identify potentially fraudulent claims, relying instead on manual checks
  • £34m investment in IT systems has been written off
  • The Department for Work and Pensions lacked IT expertise and senior leadership
  • Delays to the roll out will reduce the expected benefits of reform

Expenditure on IT systems has accounted for more than 70% of the £425m spent to date but the report could not confirm if the infrastructure in place will support a national roll out.

Universal Credit has been hotly debated by readers in Property118 and widely condemned as a bad idea, by not making housing benefits directly payable to Landlords and in the trial areas used so far has resulted in a substantial increases in rent arrears.NAO

 


Does my Buy to Let lending criteria make sense? Buy to Let News, Guest Articles, Guest Columns, Landlord News, Landlords Stories, Latest Articles, Mortgage News, Property Investment News, Property Market News, Property News, UK Property Forum for Buy to Let Landlords

While fully acknowledging that I am not a financial specialist I do know the residential property market. I have a proven track record of making money from letting property for 40 years. In my first book, which I released just a few months ago, I venture to give my opinion of the criteria I would apply if I were lending my money to a person who wanted to buy property to let. Does my Buy to Let lending criteria make sense

  • Does this person know the law and regulation related to the business, has he taken the trouble to become accredited through an education based scheme.
  • Has this person got sufficient funds, borrowed or otherwise, to bring the property up to the Decent Homes Standard, or higher if the market demands, and to meet all the legal requirements before the property is let
  • Has this person done the homework, is there a market for the property he is proposing to let in the area where he is proposing to buy.
  • Is there any regulation in place that the landlord is not aware of, Article 4 Directions, Selective Licensing, planning controls, lease restrictions etc
  • Will the property return a positive cash flow that will pay the loan, keep the property up to standard, pay Agency fees (if the property is going to be managed by an Agent), Pay on-going letting fees/marketing costs and leave a margin for rent arrears and the cost of removing a tenant if necessary
  • Does this person know how to legally remove an undesirable tenant and the length of time this might take and has he got the financial safety net to cover the loss of income during this period
  • Is this person a member of an organisation that will supply the correct documents and support to sustain the tenancy
  • Has this person got a system in place to ensure that he remains legally complaint at all times thus avoiding expensive litigation which may result in large fines, rent repayment orders for up to one years’ rent or up to 4 times the tenants deposit etc.
  • Has the person got Rent Guarantee Insurance, Public Liability Insurance, Landlord Property Insurance and (if the property is furnished) contents insurance
  • Does this person intend to manage the property himself or does he intend to employ a Letting Agent. If he does intend to employ a Letting Agent how will he choose a good Agent, who has Client Money Protection, and is he aware that he cannot devolve his legal responsibilities to that Agent
  • Has this person made provision to re-pay an interest only loan should the property value decrease

Are Banks aware of these important issues or are they making a risk assessment purely on FCA guidance and criteria without taking in to consideration the “real” risks of  investing in property to let?

Do you agree with me or am I missing the point?

Follow me on Twitter@landlordtweets

My book, where I warn about the storm clouds that are gathering for landlords is here >>>http://www.amazon.co.uk/dp/1484855337


Tenant Referencing Using Common Sense Advice, Latest Articles, Property Investment Strategies, The GOOD Landlords Campaign

Common sense tenant referencing was pretty much the only option available when I first became a landlord and started letting property in the late 1980’s. Tenant Referencing Using Common Sense

In this article I am going to explain what my family do to find the next perfect tenant, right from the day an existing tenant let’s us know that they want to move out. More often than not these days, tenants think they can serve notice with just a phone call, email, facebook or text message – more about that later. Continue reading Tenant Referencing Using Common Sense


DPS bond contested Latest Articles, UK Property Forum for Buy to Let Landlords

I am a new Landlord and the first tenant has left after she couldn’t pay her rent. Her partner left the house a month before and the new tenancy agreement was signed in her name only. DPS bond contested

Some damage had been caused to the property, gas meter changed without consent and was in rent arrears so the bond was requested back via our letting agents.

The tenant contested us having the bond stating that she had to leave because of a violent relationship.

They have offered us £200 out of a £600 bond which doesn’t even cover the rent arrears.

We have been told that if we take it to the adjudication panel we will not win and will loose the full £600.

Any advice would be much appreciated.

Thanks

Christopher


How long does it take for a tenant eviction? Advice, Guest Articles, Guest Columns, Landlord Action, Latest Articles, UK Property Forum for Buy to Let Landlords

This all depends on how obstinate your tenant is, at Landlord Action 61% of the time, when we serve a Section 8 Notice for rent arrears (14 day notice) or section 21 Notice (2 month’s notice) ending the tenancy, the tenants will vacate the property. 

If they ignore the notice served, then the landlord will have to apply to the court for a possession order.

It will take generally between 6-8 weeks for the judge to grant a possession order under section 8/section 21.

Tenants can ignore the possession order granted by the court, which is normally a 14 day order and sometimes tenants are told to stay put by the council and encourage the landlord to go to eviction. In these cases the landlord has to go to the final step 3 to apply for an eviction date with the bailiff, this can take between 5-10 weeks, depending on the court your at and how many bailiffs there are at that court working.

So generally from first serving the eviction notice, to going to court obtaining a possession order, then apply for an eviction date, it can take up to 5 months if undefended case.

EDITORS NOTE

Our sister website http://evicting-tenants.net/ is sponsored by Landlord Action and The Sheriffs Office and provides simple guides to the eviction process. For details please CLICK HERE


Is the section 21 notice now a risk? Latest Articles, UK Property Forum for Buy to Let Landlords

Under Section 21 of the Housing Act 1988, once an Assured Shorthold Tenancy (AST) agreement has come to an end, a landlord has the legal right to recover possession of their property should they wish. Is the section 21 notice now a risk?

A landlord wishing to re-gain possession of a property is required to serve a Section 21 Notice to tenants. They do not have to give any reason for ending the tenancy.

There are strict rules for landlords to follow when evicting tenants. Under an AST, they must ensure that the tenancy has run for at least six months and that the initial contract term has finished. Landlords have a duty to protect deposits in a suitable holding scheme and to serve the correct notices using Section 21. There are two types of Section 21 Notice and it is important the right one is issued. If the tenancy is still within the contracted fixed term, the S.21 (1)(b) Notice should be served. Where the fixed term has ended and the tenancy has become a periodic agreement, the S.21 (4)(a) Notice is used. Landlords must give at least two months notice before evicting tenants. If the tenant does not vacate within the timescale, a court possession order can be obtained. Following this, if occupants still won’t leave, the landlord can apply again to the court for bailiffs to assist in tenant eviction.

Before going to court it is imperative that protocols have been followed properly. The appropriate notices need to have been served correctly and in a timely manner. According to the Chairman of the London Association of District Judges, a high percentage of eviction notices are being dismissed out of court due to mistakes made in their issue.

Previously, properly served Section 21 Notices have usually proved effective. Wishing to avoid the issue of going to court, tenants nearly always left within the requisite two months. However, it has recently become popular for councils to refuse a Section 21 notice as evidence of tenant eviction. They prefer to wait until the case has been brought to court and a possession order granted before re-homing individuals. As this process can take several weeks or months, it gives councils additional time to relocate tenants. However, it can be financially devastating for landlords, especially if the tenant is not paying rent.

The new Universal Credit system is also causing concern for both landlords and tenants. Previously, benefits were paid to claimants in separate instalments and rent paid directly to landlords, but tenants will now receive one payment, including housing benefit, from which they will need to pay their rent. Only a small percentage of tenants fail to pass rent on to their landlords. However, the new system could potentially see more individuals struggling to manage their finances effectively and the risk of rent arrears will increase. In addition, there is apprehension over proposals to recover arrears by reducing payments to the claimant and paying a percentage directly to the landlord. This could place tenants in an even more vulnerable position and the landlords will only recoup lost rent over very long periods of time and risk further arrears in the future.

It seems inevitable that the long-term result will be more landlords withdrawing from the social-housing sector, with the gap between supply and demand only increasing.


AST’s – what’s best a Contract or a Deed? Latest Articles

I am working as part of a legal group to solve an issue for landlords which I hope to be able to talk about later this month.  AST's  - what's best a Contract or a Deed?

I’m learning a lot and loving it!

The issue of contract vs Deed came up in a meeting I had yesterday. Assured Shorthold Tenancy Agreements “AST’s” can be either. I was interested to learn the difference because to the layman they look very similar.

Did you know that you have 12 years to chase a debt created as a result of a Deed but only 6 years for a contract? That could be very useful in terms of rent arrears as 12 years is a very long time and even the worst of hopeless case tenants might have had a turnaround in their finances within that period.

The only downside of an AST being a Deed instead of a contract which I could see is that each signature need to be independently witnessed by unrelated people.

The other very useful thing I learned about Deeds is that unlike contracts, which can be challenged if there is no consideration (i.e. payment), a Deed can not. Therefore, that’s why a Deed of Assurance is a Deed and not a contract as tenants don’t pay for the assurance.

Clever stuff hey?


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