Tag Archives: Selective Licensing

Leading landlord slams council’s plea not to put up rents Landlord News, Latest Articles, Lettings & Management, Property Investment News, Property News

A new selecting licensing scheme is to go to the government for approval – but councillors don’t want landlords to add the licensing fee to a tenant’s rent.

That’s the call from Nottingham City Council which says it ‘does not believe landlords will need to increase tenants’ rent to cover the cost of a licence application’.

Councillors say the licence should be factored into a landlord’s business plan and any previous rent rises should cover the fee.

The scheme is set to begin in August 2023 which would, the council says, give landlords time to plan.

Tenants are aware that they will be paying

However, one of the city’s biggest landlords says that tenants are aware that they will be paying the cost of the new licence.

Mick Roberts, who is one the city’s largest landlords, told Property118: “All smart tenants know that their rent pays for everything.

“And if landlords are already charging 70% of the market rent to look after long-term tenants, which just about pays for the current outgoings, do the council think he is going carry on charging that cheap rent?

“Even after the council gives that property/tenant an £800+ charge?”

Landlords have to prove their properties meet required standards

Nottingham’s new selective licensing scheme will mean that landlords must prove their properties meet required standards, the council says.

Coun Toby Neal, the council’s portfolio holder for housing and human resources, said: “People renting privately have a right to expect a decent standard of accommodation.

“Many of the 45,000 plus privately rented properties in the city are well-managed but, as part of the first scheme we still find properties that are to a very poor standard.

“Homes with damp and mould, homes with no smoke alarms or hot water or heating; so there is more work to be done.”

‘We can’t see landlords putting rents up’

Mr Roberts said: “Toby Neale has never housed anyone in his life and says ‘We can’t see landlords putting rents up’.

“Many of us landlords are 100% putting rents up to pay for this.

“Nottingham Council has created an outgoing on a house that was spick span and had money spent on it.

“That outgoing needs paying for, never mind the laborious unnecessary admin involved.”

He added: “Mr Neal says there are some bad houses – well go get them then, don’t hurt the 80% that have zero problems.

“The council is wrecking low-earning tenants’ lives.”

Made improvements to less than 2% of properties

Mr Roberts continued: “The new licensing scheme starts in August 2023 and, to date, they have managed to make improvements to less than 2% of properties during their current licensing scheme.

“That means that 98% of tenants who will have seen their rents increased will have received nothing in return.

“In fact, money that could have been spent on improvements will have been spent on licensing fees.

“In my opinion, the proposed licensing scheme is a politically motivated attack from a council that cannot be trusted and are either too stupid to realise or simply not bothered about the facts that their unnecessary licensing scheme is going to push up the cost of renting a house in Nottingham higher than it needs to be.”

Mr Roberts says that he won’t put up rents

However, Mr Roberts also says that he won’t put up rents – if he can pay all the licensing fees in one go without spending hundreds of hours filling in paperwork.

He says that the total fee would be £57,000 and he tells the council: “Ring me tomorrow, I’ll pay your £57,000 and I PROMISE to give zero tenants a rent increase if that is ALL I have to do.

“No paperwork. No form filling in. No inspections. No hundreds of hours sending you documents and forms.”

He added: “This is for your sake, not mine.

“Some of you councillors are aware I wish to sell many of my houses but can’t because licensing has stopped tenants from moving.

“And most of my tenants are aware they are paying far too cheap a rent which doesn’t pay for 2023’s outgoings – which is why all other landlords’ rents have gone up.”


City’s selective licensing scheme condemned as ‘a waste of time’ Buy to Let News, Landlord News, Latest Articles, Lettings & Management, Property News

A city council that introduced a selective licensing scheme in April has been deluged with 31,000 applications from landlords – but has only issued 104 licenses so far.

This has prompted the National Residential Landlords Association (NRLA) to condemn the scheme as a ‘waste of time’.

And, the NRLA has calculated, it will take council officers 148 years to process applications from landlords at the same rate.

Crucial tool in addressing sub-standard housing

The scheme in Liverpool was hailed by the city council as being a crucial tool in addressing sub-standard housing across the city.

The move saw all privately rented homes across Liverpool’s 16 wards needing a licence.

Now the NRLA says that the figures presented to the Liverpool Landlord Forum raise ‘serious questions’ about the extent to which the scheme is needed to address the city’s poor-quality housing.

According to Freedom of Information data previously obtained by the NRLA, between 2018/19 and 2020/21, out of 103 civil penalties issued to private landlords in the city, 89 of them were for offences related to the previous selective licensing scheme.

No penalties were issued for failing to comply with a property improvement notice, a banning order or a notice that a property was overcrowded.

The NRLA found that just two penalties were issued for breaches of management regulations in shared housing.

Civil penalty strategy has served only to tackle administrative issues

Now the NRLA says that the council’s civil penalty strategy has served only to tackle administrative issues such as the failure to hold a licence – rather than improving property conditions themselves.

Ben Beadle, the organisation’s chief executive said: “If Liverpool Council really believes licensing is so key to ensuring properties are safe, it begs the question why it takes so long to process applications for them.

“At a time when the condition of housing is under such scrutiny, the council is spending too much time administering a licencing scheme and not enough time taking enforcement action to tackle poor quality housing.”

He added: “Rather than penalising good landlords with a blanket policy, the council should use the range of data already available to them to find and root out the minority of landlords who fail to provide safe housing.”


Council slammed after moaning about its 8,000-strong homeless list Buy to Let News, Landlord News, Latest Articles, Lettings & Management, Property Investment News, Property News

A frustrated landlord has hit out after a council revealed that the housing crisis in their city is so bad that 8,000 households are waiting for a home – but they won’t engage with local landlords to help resolve the issue.

Speaking to Nottinghamshire Live, the council’s portfolio holder for housing, Toby Neal, said that Nottingham is facing ‘very specific challenges’.

He said there are 8,000 households on the housing waiting list and most of them are families. But the council only manages to house between 1,400 and 1,600 households every year.

Right to Buy scheme doesn’t allow the council to build

Coun Neal points out that the big challenge is money because the Right to Buy scheme doesn’t allow the council to build replacements.

He also highlights that Nottingham doesn’t have any areas to build homes on.

But local landlord Mick Roberts, who is Nottingham’s biggest private provider of homes for tenants on low incomes and benefits, told Property118.com: “He blames everything else, yet never says private landlords can help us with the homeless.

“That’s because he knows we won’t help because of his and Nottingham council’s actions.

“And the more he ignores us, the more we carry on without them and we won’t help their tenants.”

‘NOT ONCE has Toby Neale called me’

Mr Roberts added: “NOT ONCE has Toby Neale called me, emailed me or engaged with me, to see what we can do to help him and the homeless tenants out.

“Instead, they plough on with Selective Licensing as he ‘knows’ there are a few bad houses he’s out to get.”

Mr Roberts says the big issue for landlords in the city is the council’s Selective Licensing scheme which means many fellow landlords will not engage with the council.

He said: “Yet Toby Neale still ignores this. It is bonkers.

“He will move on in a year or two and absolve himself of all the homeless, while I, the tenants and other landlords will still be here to pick up the pieces and increased rents to pay for the licensing and administration.”

‘Councillor Toby Neale knows ZERO about housing’

Mr Roberts continued: “It makes you laugh; this Councillor Toby Neale knows ZERO about housing people, yet he was made the councillor for housing approximately eight months ago.

“After the last Councillor Linda Woodings for four years brought no good to the private tenants of Nottingham, except a rise in the cost of Selective Licensing mid-way through the scheme – because they found out they weren’t getting enough money in from poor tenants’ rent increases.”


Rent to Rent Tips, Advice and Case Study Advice, Buy to Let News, Landlord News, Landlords Stories, Latest Articles, Legal, Letting, Lettings & Management, Property Investment News, Property Investment Strategies, Property News, Property Sourcing, The GOOD Landlords Campaign

We first published this article back in 2013. It has been resurrected because the information provided within it is just as relevant today as it was back then and the Rent to Rent strategy continues to be a hot topic of discussion at many of the UK’s property networking Events.

We produced this guide to share answers to some of the most frequently asked questions relating to this subject, specifically in relation to contracts.

When can tenants be offered a license as opposed to an AST?

The benefits of providing a license is that it is much easier to evict tenants. There is no requirement for a minimum 6 month term, no requirement to give them two months notice and no requirement to obtain a Court order and instruct bailiffs to regain possession if a tenant refuses to move out after the notice period. Furthermore, tenants deposits do not need to be protected in a tenancy deposit scheme if a property/room is let on license or a lodgers agreement, which is a form of license. No wonder Rent to Renters want to offer licenses instead of AST then!

However, licenses can only be used under the following circumstances:-

1) The room/property is being rented as holiday accommodation. You may need to prove that the occupier of the room or property has another residence though, e.g. a place where they are registered on the voters roll.

2) You are a live in landlord. If you live in the property yourself you can take in lodgers

3) If you provide a service such as a hostel or a B&B. For example, if you provide cleaning services including changing the bedding once a week or breakfasts in the morning.

What if none of the above apply?

If none of the above apply then the basis of the tenants occupation of the property is an AST whatever your contract says. This is because legislation in the housing and 1988 (and subsequent updates) and the landlord and tenant act 1985 over-rule whatever your contract says.

What is the right contract to have between the property owner and the Rent to Renter?

First, you need to understand what is the wrong type of contract and why.

Company Let Agreement (AKA corporate letting agreement)

Company Let Agreement (AKA corporate letting agreement)These allow a company to use the premises to provide accommodation for their employees. If you are using a company let agreement and subletting a property or a room within it to a person who is not your employee then you will be in breach of the agreement. Many Rent to Rent companies are using these agreements in ignorance of this fact. They do so because deposits do not need to be protected with a tenancy deposit scheme.

AST (Assured Shorthold Tenancy Agreement)

AST (Assured Shorthold Tenancy Agreement)AST’s do not generally allow subletting, therefore, any subletting without the owners permission is a breach of contract. Furthermore, the property owner could obtain possession of the property after just 6 months, even sooner if you are in breach of contract. If you have sublet the property and your tenants are still occupying the property after the owner has obtained possession you could be held liable and subjected to claims for massive financial compensation.

The correct agreement between a property owner and a Rent to Renter is a commercial lease

The correct agreement between a property owner and a Rent to Renter is a commercial lease.

Don’t use just any old off the peg commercial lease , you need one which is professionally drafted specifically for Rent to Rent which includes clear, fair and reasonable provisions for subletting a residential property. Do bear in mind that the property owner is highly likely to seek professional advice about the contract between you. The owner will generally be advised not to lease the property for more than 5 years and to ensure the lease is contracted out of the landlords and tenant act 1954 to ensure that it is his choice alone whether to offer to extend the arrangement by granting a new lease at the end of the contracted period. The owner of the property will also be advised to ensure that you become responsible for the maximum number of residents, maintenance, basis of occupancy/subletting, licensing and statutory requirements and maximum number of occupants. Therefore, it is important to be able to offer a well drafted document covering all of these points at the earliest possible opportunity. This will give the property owner and his professional advisers confidence in you being a professional operator.

Successful Rent to Rent Case Study

Let me give you a great example of a lady I spoke to about her success story.

She came across a situation whereby an elderly guest house owner had fallen ill and moved into a granny annexe at her childrens home. The Guest House was on the Lincolnshire Coast and the children were based in the Home Counties. The Guest House had been in the family for for two generations and the family are reluctant to sell it. Based on profits, the family were advised by a professional commercial agent that the market rental value for the property was £1,000 pcm. The decision of the family was to let the property for 5 years prior to making a decision on whether to sell it OR for one of her grandchildren to run it OR to continue to rent it as a going concern. As the property was already registered as a guest house it already met all of the requirements to be a HMO. There were no selective licensing or Article 4 barriers to contend with in the area.

The rent to renter I spoke to had interesting plans for the property. She had spoken to the local authorities about the requirement for temporary accommodation for victims of domestic violence and homelessness as a result of mortgage repossessions and other forms of eviction. Her son would reside in the property as caretaker and would also serve breakfast and offer a basic cleaning service including a weekly change of bed linen. Under the circumstances, all rooms could be let on licenses. The profits on this activity amounted to more than £5,000 per month and within a week all 16 rooms were full.

Rent to Rent  Commercial Lease Contract

To have a suitable contract professionally drafted and ready to present to a property owner and his professional advisers typically costs around £3,000. In the case study presented above the lady purchased our Rent to Rent Commercial Lease template for just £97. The document template was professionally drafted by Justin Selig who is a qualified solicitor specialising in property and contract law.  The Rent to Rent Commercial Lease Template has been one of the most popular premium downloads on this website.  The lady in our case study required a few amendments to the standard template due to the sub-letting arrangements in the template being drafted to assume AST’s would be used, however, that was easily sorted by her own solicitor who charged her just £300 to make the necessary amendments. In all she saved over £2,500 in legal fees and now makes over £5,000 pcm from her first Rent to Rent deal. Needless to say, she is now on the lookout for similar opportunities!

Order the "Rent to Rent" lease contract template.

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Milton Keynes abandon Selective Licensing Buy to Let News, Landlord News, Latest Articles, NLA - National Landlords Association

Milton Keynes City Council has abandoned plans to introduce a proposed city-wide Selective Licensing scheme under pressure from the National Landlords Association NLA.

The NLA have been leading the fight against selective licensing through its local landlord members, meeting with local authorities and action groups as well as launching a social media campaign. Milton Keynes Council concluded last week that the introduction of a city-wide licensing scheme would not solve the issues of poor housing standards, anti-social behavior and low housing demand in the area.

In a further piece of good news for landlords, the council also cut the license fee on all Houses in Multiple Occupation (HMO) by over half, from £800 to £300.

Richard Lambert, CEO of the NLA said, “this is fantastic news for landlords in Milton Keynes and we thank all those involved in reaching this conclusion.”

“Selective licensing is a powerful tool at the disposal of local authorities, but it should only be used when appropriate. The clear message from Milton Keynes is that they intend to take a more proactive stance and focus on the existing powers they have available to combat poor standards in the area, an approach the NLA has long argued is more effective.”

“It’s important that the NLA represents the views of its members who saw this as the wrong move. Nevertheless, we’re committed to working with Milton Keynes City Council to improve property standards in the area, to promote best practice and to encourage co-operation between the council, landlords and their tenants.”

“As such tenants can take advantage of the NLA Tenant Information Pack, while landlords can get the basic tools to succeed with their property business by signing up as an NLA Associate Landlord on our website.”Selective Licensing


Ipswich Council refunding landlord licensing fees after Westminster Court of Appeal sex shop case Landlord News, Latest Articles

The RLA has recently received an email from Ipswich Borough Council confirming it has started to refund Landlord Licensing fees after the Westminster Court of Appeal sex shop case.

The Court of Appeal found in favour of a European Services Directive which clamps down on purposes fees can be charged by local authorities for landlords licences.

The RLA reported that the Council confirmed it is “currently going through their records to refund landlords of any fees charged on a HMO additional licensing scheme and that once the information is gathered, the Council will contact those landlords and arrange payment.”

The Court of Appeal decision in the Westminster Sex Shop Fees case Hemming t/a Simply Pleasure Limited v Westminster City Council affected fee charging for regulation such as for HMO and selective landlord licensing. Local authorities should abide by European Services Directive rules (ESD) when setting fees.

The ESD rules include:

A Local authority can only take fees for HMO licensing or selective licensing for

  • The actual and direct administrative costs of investigating the background and suitability of the landlord applicant
  • The cost of monitoring the compliance by licensed landlords with the terms of their licences
  • Fees must be reasonable and proportionate and can only cover the actual cost of the application process plus monitoring
  • Local authorities cannot include the costs of enforcing the licensing scheme against unlicensed landlords in the licence fee.
  • Set up charges for the scheme cannot be recovered.
  • Overheads and general administrative costs cannot be recovered and the running and capital costs of the relevant council department cannot be charged as part of the fee.
  • The Council is not allowed to make a profit.

If a Local authority ignores the European Services directive it could be forced to refund overcharged fees and pay interest. Landlords are allowed up to six years to submit a claim for being overcharged.

The RLA has contacted several local authorities to discuss this issue with them, and has been actively challenging other local authorities where licensing schemes are being proposed, such as Northampton Borough Council.

The case details below as reported by the ICLR:

Regina (Hemming (t/a Simply Pleasure Ltd) and others) v Westminster City Council

CA: Lord Dyson MR, Black, Beatson LJJ: 24 May 2013

Since the coming into force of the Provision of Services Regulations 2009 a local authority was not permitted, when determining the reasonable licence fee for sex establishments, to reflect in the fee which it determined the cost of enforcing the licensing system against unlicensed operators.

The Court of Appeal so held, allowing in part the appeal of the defendant local authority, Westminster City Council, from the judgments of Keith J on 16 May 2012 [2012] EWHC 1260 (Admin); [2012] PTSR 1676 and on 12 June 2012 [2012] EWHC 1582 (Admin) when he had allowed the claim for judicial review by seven licensees of sex shops, Timothy Martin Hemming (t/a Simply Pleasure Ltd), James Alan Poulton (t/a Soho Original Book), Harmony Ltd, Gatisle Ltd (t/a Janus), Winart Publications Ltd, Darker Enterprises Ltd and Swish Publications Ltd, of the amount of the annually renewable licence fee to operate sex shops for 2011–2012 determined by the local authority on the basis that the fee had not been determined for that year even though the same annual fee had been demanded of, and paid by them, as in previous years from 2005–2006, and had allowed a claim for restitution. The Court of Appeal upheld the judge’s decision except as to the basis on which restitution was to be made. In September 2004 the authority’s relevant committee had approved an annual fee for sex establishments for 2005–2006 reflecting the costs of administering and enforcing the licensing system which each claimant had paid on demand up to and including 2011–2012 without further consideration being given by the committee.

BEATSON LJ said that section 2 of the Local Government (Miscellaneous Provisions) Act 1982 required operators of sex establishments in areas of local authorities, which had resolved that Schedule 3 to the Act applied to their area, to have a licence. Paragraph 19 of Schedule 3 enabled a local authority to determine and charge a reasonable fee for the licence. It had been possible for the licence fee to reflect the cost to an authority of managing the licensing regime by enforcing it and prosecuting unlicensed operators as well as the cost of investigating and processing an individual application and monitoring compliance by licence-holders with the requirements of the licence: R v Birmingham City Council, Ex p Quietlynn Ltd (1985) 83 LGR 461, 517. Article 13(2) of Parliament and Council Directive 2006/123/EC of 12 December 2006 on services in the internal market (which had effect from December 2009 by the 2009 Regulations) and regulation 18(4) of the 2009 Regulations provided that charges for schemes requiring a person to obtain the authorisation of a competent body to have access to or to exercise a service activity could not exceed the cost of authorisation procedures and formalities. The defendant’s contention was that the judge’s failure to give the 2006 Directive and the 2009 Regulations a purposive construction meant that he disregarded the fact that the Directive was concerned with removing barriers to entry to a market and not preventing a licensing authority from requiring fees to cover the costs of enforcement activity hitherto accepted in national law, and where that activity was ultimately to the benefit of those holding licences; that enforcement benefited those with licences by protecting them from competition by unlicensed traders; and that absence of or much more limited enforcement would inhibit entry by legitimate traders. His Lordship derived assistance from two cases concerning other European Community provisions about fees and charges in understanding the general approach of the Court of Justice of the European Union, Germany GmbH and Arcor AG & Co KG v Germany (Joined Cases C-392/04 and C-422/04) [2006] ECR I-8559 and In re Shopping Centres Licensing: European Commission v Spain (Case C-400/08) [2011] 2 CMLR 1294. The indication from them was that the court had tended to prevent member states imposing costs on businesses which went beyond the costs of the authorisation, registration or inspection process, because such costs constituted illegitimate barriers to the exercise of fundamental freedoms or were inconsistent with principles of Community law. His Lordship rejected the other arguments of the local authority; they did not justify a departure from the clear wording of the Directive and the Regulations, or show that the construction adopted by the judge was inimical to the purposes of the Directive.

BLACK LJ and LORD DYSON MR agreed.Landlord Licensing


Boiler Theft – Copper and Carpets Too! Latest Articles

I had a call about one of my properties in the Middlesbrough area that has gone downhill quite a way since I bought it 10 years ago.

It was one of John Paul’s merry crew at Castledene who told me that the place has had its back door kicked in, all copper piping, cable, boiler and even the almost new carpets pinched. It has been void for 2 months despite the offer to the local Homeless Unit and other caring organisations.

Evidently there are no homeless people in Middlesbrough who would like what is effectively a free (LHA rate only) 3 bed house, newly decorated and carpeted, with a modern gas central heating system and UPVC windows and doors. I am even throwing in cable TV and broadband free for 6 months and £100 to help with removal expenses!

So the loss adjuster has been in and sucked air through his teeth and we are in the process of getting estimates to make good. It hits the 90 day vacant limit of my insurers next week (The NLA members scheme at Alan Boswell) and I am told that none of the insurers they use for vacant property will accept it while a claim is in progress, so I am not going to have theft, accidental or malicious damage cover as of then.

Crime Prevention officers helpfully suggest that we don’t reinstate pipes, cables or boiler until, immediately before occupation. Not realistic as it’s hard enough to let as it is!

I have bleated to the council asking what is being done about this result of their selective licensing elsewhere in Middlesbrough driving the less desirable to my area. No useful reply as yet despite the mayor being Ray “Robocop” Mallon the former controversially tough “Zero Tolerance” copper.

http://en.wikipedia.org/wiki/Ray_Mallon

Questions:

1. How to get insurance worthy of the name until I have a tenant
2. How to get the place (and one in the next street) tenanted
3. (Nobody expects the Spanish Inquisition) Best security measures to prevent a repeat. There is an alarm system there, which I am looking into having reinstated, assuming it isn’t working, and I plan to arrange curtains, blinds and lights on timers.

Many thanks

Jerryburglary


SEAL – South East Alliance of Landlords Landlord News, Latest Articles

SEAL - South East Alliance of Landlords

Members of the South East Alliance of Landlords (SEAL) are putting together a bedsit task force to go Street to Street in Southend in a war on neighbours from hell.

Judith Codarin, secretary of SEAL said: “We will choose sections of streets that are troublesome. We will find anyone who lives there and listen to issues. We will try to find landlords who aren’t members, talk to them and try to get them to join.”

SEAL was formed to coordinate a response to Southend-on-Sea Borough Council’s plans to introduce Selective Licensing. It represents owners of almost 6,200 properties with hopes to represent 95 per cent of the local rental sector within three years.

SEAL – South East Alliance of Landlords

SEAL members can be easily identified by a sticker in a front window of their properties.

All but one of the 65 complaints received to date, varying from maintenance issues to more complex Freehold problems, have been resolved by SEAL, the last received to be dealt with within the next few days.

Self-regulation in this way is hoped to free up Southend Council to concentrate on non-members, but with only four Council officers to police over 6,000 other rental properties tenants home-owners are still suffering from a few bad landlords and nightmare neighbours.

Chairman Martin Ransom hopes to set up a new arm capable of helping landlords bring low-quality housing up to standard and said: “We have brought in a new member of the board with experience in this area. He has worked with a specific landlord, with whom the council has had historical issues. He has worked with him to get him up to standard.”

As quoted on their own website “By becoming a member of SEAL, you are demonstrating that you are willing to agree to a higher standard of management. It is vital that SEAL membership is widespread throughout the Borough of Southend as the larger our membership base, the more we can demonstrate to the Council our effectiveness. It is important also that membership continues to grow, as if SEAL fails, the Council retains the power to reconsider Selective Licensing.”

Mark Alexander, founder of Property118 and The GOOD Landlords Campaign commented “it is refreshing to see this kind of initiative and especially one so well supported. We have a long held opinion that Selective Licensing is not the answer to anti-social behavioural problems or criminal elements operating in the Private Rented Sector. We hope the group will take a look at the enforcement model being adopted by Lewisham Council and learn from that. The SEAL initiative could prove to be a superb method of routing out and reporting the worst offenders. Sadly a handful of criminals can spoil the reputation of an entire sector. Enforcement is required, NOT a stealth tax on good landlords which is ignored by the true villains.”


Thought provoking HMO and selective licensing question HMO's & Student Lets, Latest Articles, Question of the Week

The importance of my question is that, depending on the answer, it may be a way for landlords to bypass requirements for HMO licensing,  selective licensing and the problems associated with article 4 restrictions.

Yes it’s a simple question but with enormous consequences and to my knowledge the question has never previously been asked.

Just suppose a landlord rents a 5 bed three story town house to Mr X and gives him permission to take in up to 4 lodgers.

Does the property require an HMO licence?

Please bear in mind the landlord will never actually know how many lodgers the tenant has taken in and the number will change frequently.

To my knowledge there is no legislation to suggest that a tenant can’t also be a resident landlord.

I have checked the legislation and whilst I accept I might have missed something I can see nothing to answer this question.

Thought provoking HMO and selective licensing question

I raised this question on the HMO Facebook Group and so far I’ve not got a clear cut answer there despite several responses and comments

I look forward to reading your comments below.


Alternative to licensing/accreditation? Bad landlords, look away now! Latest Articles

Following on from the discussion entitled “Raising Standards or Raising Funds” it appears that the majority of readers agree that additional and selective licensing and property based accreditation schemes run by local authorities are not necessarily the best route forward. However, there does need to be a simple way of differentiating better quality landlords/properties for tenants in my opinion.

If the sector can self-regulate as much as possible, it would be certainly better than any government intervention.

So what about a simple graded quality rating for rental properties?

Much like the star rating system in hotels, it would be an idea that tenants would easily understand.

When it became an industry standard, rental prices would reflect the rating of the property.

What do you think should be included in such a star rating though?

Comment s/thoughts welcome from both landlords, tenants and letting agents.

Regards

Kirsty 5 star rated buy to let properties


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

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


Private Rented Sector Review – Conclusions and recommendations Landlord News, Latest Articles

The Private Rented Sector Review conclusions and recommendations published by the Communities and Local Government Committee:

Simplifying regulation

1.  We recommend that the Government conduct a wide-ranging review to consolidate legislation covering the private rented sector, with the aim of producing a much simpler and more straightforward set of regulations that landlords and tenants can easily understand. As part of this review, the Government should work with groups representing tenants, landlords and agents to bring forward a standard, plain language tenancy agreement on which all agreements should be based. There should be a requirement to include landlords’ contact details in tenancy agreements. (Paragraph 13)

2.  We recommend that the Government consult on the future of the housing health and safety rating system and the introduction of a simpler, more straightforward set of quality standards for housing in the sector. The Government should also ensure that planning and building regulations are consistent with standards for the quality and safety of private rented housing. (Paragraph 18)

Increasing awareness

3.  We recommend that, once the review of the legislative framework we have called for is completed, the Government, working with tenants’, landlords’ and agents’ groups, establish and help to fund a publicity campaign to promote awareness of tenants’ and landlords’ respective rights and responsibilities. Our recommendation for a wholesale review of the regulation in the sector provides the obvious platform on which to base a publicity campaign. (Paragraph 24)

4.  We recommend that the Government bring forward proposals for the introduction of easy-to-read key fact sheets for landlords and tenants, and consult on the information these sheets should contain. The sheets could include links to further information available online. As a minimum, the sheets should set out each party’s key rights and obligations, and give details of local organisations to whom they could go for further advice and information. This fact sheet should be included within the standard tenancy agreement we propose earlier in this chapter. (Paragraph 25)

Raising standards

5.  Some local authorities are doing excellent work to raise standards in the private rented sector, but there appears to be more scope for sharing this good practice, so that all councils are performing to a high standard. The Local Government Association should, as part of its sector-led improvement role, make sure that mechanisms are in place to ensure all councils learn from the good practice and take effective steps to improve standards of property and management in the private rented sector. (Paragraph 30)

6.  We are concerned about reports of reductions in staff who have responsibility for enforcement and tenancy relations and who have an important role in making approaches to raising standards successful. Given the financial constraints that councils face, it is important to identify approaches to raising standards that will not use up scarce resources. One approach is to ensure that enforcement arrangements pay for themselves and help to fund wider improvement activity. Therefore, where possible, the burden of payment should be placed upon those landlords who flout their responsibilities. (Paragraph 31)

7.  We recommend that the Government consult on proposals to empower councils to impose a penalty charge without recourse to court action where minor housing condition breaches are not remedied within a fixed period of time, though an aggrieved landlord would have the right of appeal to a court. (Paragraph 33)

8.  We recommend that, where landlords are convicted of letting property below legal standards, local authorities be given the power to recoup from a landlord an amount equivalent to that paid out to the tenant in housing benefit (or, in future, universal credit). We hope that such a measure will help to prevent unscrupulous landlords from profiting from public money. Local authorities should be able to retain the money recouped to fund their work to raise standards. To ensure a consistent approach, those tenants who have paid rent with their own resources should also have the right to reclaim this rent when their landlord has been convicted of letting a substandard property. (Paragraph 37)

Illegal eviction

9.  We do not agree that a statutory duty to have to take steps to tackle illegal eviction should be placed on local authorities, as it would be inconsistent with a localist approach. Nevertheless, it is again important that local authorities learn from each other and share best practice on tackling illegal eviction. The Local Government Association should ensure that lessons on illegal eviction are learnt and disseminated. (Paragraph 38)

10.  We are concerned that the police are sometimes unaware of their responsibilities in dealing with reports of illegal eviction. We recommend that the Department for Communities and Local Government work with the Home Office on guidance that sets out clearly the role of the police in enforcement of the Prevention from Eviction Act 1977. (Paragraph 39)

Licensing and accreditation

11.  The idea of national licensing has some merit, and such a scheme could bring a number of benefits, particularly if introduced alongside an effective system of redress. It is clear, however, that the Government has not been convinced by these arguments, and we have some sympathy with the Minister’s assertion that a national scheme could be very rigid. Having tailored local schemes may bring its own costs, especially for landlords operating across several areas, but on balance we would prefer to see local authorities develop their own approaches to licensing or accreditation in accordance with local needs. The Government’s focus should be on giving local authorities greater flexibility and encouraging the use of existing powers. (Paragraph 43)

12.  We recommend that the Government bring forward proposals for a reformed approach to selective licensing, which gives councils greater freedom over when licensing schemes can be introduced and more flexibility over how they are implemented. Councils should ensure that the cost of a licence is not set so high as to discourage investment in the sector. (Paragraph 49)

13.  We recommend that the Government give local authorities a power to require landlords to be members of an accreditation scheme run either by the council itself or by a recognised landlords association. (Paragraph 53)

14.  It is important that local authorities have options and tools to raise standards in their areas. Three particular options are: (1) greater use of landlord licensing schemes; (2) compulsory accreditation; and (3) taking a proactive neighbourhood approach to raising standards. In each of these cases, given resource constraints, the schemes have to pay for themselves, and, as far as possible, place the burden of payment on the unscrupulous landlords, with financial deterrents for non-compliance. Councils should be given the powers to impose heavy penalties on those who do not register for licensing or compulsory accreditation after appropriate notification. Neighbourhood approaches could be funded by local authorities recouping costs from landlords whose properties fail to meet minimum standards. We further recommend that the Government initiate a review of the fines imposed by the courts for letting substandard properties, to ensure they act as a sufficient deterrent. (Paragraph 55)

Houses in multiple occupation (HMOs)

15.  We recommend that the Government conduct a review of the mandatory licensing of houses in multiple occupation. This review should consider, amongst other things, evidence of the effectiveness of mandatory licensing, how well it is enforced, and whether the definition of a prescribed HMO should be modified. (Paragraph 58)

16.  Where there are community concerns about high concentrations of houses in multiple occupation, councils should have the ability to control the spread of HMOs. Such issues should be a matter for local determination. We therefore consider it appropriate that councils continue to have the option to use Article 4 directions to remove permitted development rights allowing change of use to HMO. (Paragraph 63)

17.  Universities have a responsibility to ensure that student housing does not have a detrimental impact upon local communities. They should be working with local authorities and student groups to ensure that there is sufficient housing in appropriate areas and that students act as responsible householders and members of the community. (Paragraph 64)

Safety standards

18.  We recommend that the Government work with the electrical industry to develop an electrical safety certificate for private rented properties. To obtain such a certificate, properties should be required to have a full wiring check every five years and a visual wiring check on change of tenancy. Landlords should be aware of the legal requirement to provide safe installations and appliances. (Paragraph 66)

19.  We recommend that the Government introduce a requirement for all private rented properties to be fitted with a working smoke alarm and, wherever a relevant heating appliance is installed, an audible, wired-up EN 50291 compliant carbon monoxide alarm. (Paragraph 67)

Regulation of letting agents

20.  We recommend that, as part of its consultation on the redress scheme, the Government seek views on how best to publicise such a scheme and what penalties should be in place for those agents who do not comply. The Government should also explore how the redress scheme fits alongside existing arrangements for deposit protection. We further recommend that the redress scheme is accompanied by a robust code of practice that sets out clear standards with which agents are required to comply. (Paragraph 74)

21.  We recommend that the Government make letting and managing agents subject to the same regulation that currently governs sales agents. This includes giving the Office of Fair Trading the power to ban agents who act improperly, and making client money protection and professional indemnity insurance mandatory. (Paragraph 78)

22.  Any proposal to require sales agents to meet minimum professional standards before they begin trading should also be applied to letting and managing agents. In addition, if at any point a requirement for sales agents to be registered with an accredited industry body is to be introduced, this should be part of a wider framework also covering letting and managing agents. We recommend that the Government review these arrangements in two years’ time. (Paragraph 78)

Agents’ fees and charges

23.  We recommend that the code of practice accompanying the new redress scheme include a requirement that agents publish a full breakdown of fees which are to be charged to the tenant alongside any property listing or advertisement, be it on a website, in a window or in print. This breakdown should not be “small print”, but displayed in such a way as to be immediately obvious to the potential tenant. The code should also require agents to explain their fees and charges to tenants before showing them around any property. Furthermore, the code should forbid double charging, and there should be a requirement that landlords are informed of any fees being charged to tenants. If agents do not meet these requirements, the fees should be illegal. Finally, the professional bodies should make a commitment to full, up front transparency on fees and charges a requirement of membership. (Paragraph 83)

24.  We intend to gather further information on the impact in Scotland of the decision to make fees to tenants illegal, and to return to this issue in 2014. (Paragraph 86)

Longer tenancies

25.  The demographics within the private rented sector are changing. No longer can it be seen as a tenure mainly for those looking for short-term, flexible forms of housing. While some renters still require flexibility, there is also an increasing number, including families with children, looking for longer-term security. The market, therefore, needs to be flexible, and to offer people the type of housing they need. The flexibility of assured shorthold tenancies should be better exploited, and the option of using assured tenancies should also be considered where these meet the needs of landlords and tenants. That we are beginning to see some institutions and housing associations offering longer tenancies under the current law suggests that we do not need legislative changes to achieve them. Rather, we need to change the culture, and to find ways to overcome the barriers to longer tenancies being offered. (Paragraph 94)

26.  We recommend that the Government convene a working party from all parts of the industry, to examine proposals to speed up the process of evicting during a tenancy tenants who do not pay rent promptly or fail to meet other contractual obligations. The ability to secure eviction more quickly for non payment of rent will encourage landlords to make properties available on longer tenancies. The Government should also set out a quicker means for landlords to gain possession if they can provide proof that they intend to sell the property. (Paragraph 97)

27.  Some landlords are not able to offer longer tenancies because they are prevented from doing so by conditions in their mortgage. We are pleased that lenders are considering how such conditions can be removed, and that Nationwide Building Society is to begin allowing its borrowers to offer longer term contracts. We urge the Council of Mortgage Lenders to work with other lenders to ensure that they quickly follow suit. Lenders should only include restrictions on tenancy length in mortgage conditions if there is a clear and transparent reason. (Paragraph 100)

28.  We recommend that the Government include in the code of conduct for letting agents a requirement both to make tenants aware of the full range of tenancy options available, and, where appropriate, to broker discussions about tenancy length between landlords and tenants. (Paragraph 102)

‘Retaliatory eviction’

29.  There is a perception amongst some tenants that if they speak out it could result in their losing their home. Tenants should be able to make requests or complain without fear that doing so will lead the landlord to seek possession. We are not convinced, however, that a legislative approach is the best or even an effective solution. Changing the law to limit the issuing of section 21 notices might be counter-productive and stunt the market. Rather, if we move towards a culture where longer tenancies become the norm, tenants will have greater security and also more confidence to ask for improvements and maintenance and, when necessary, to complain about their landlord. Moreover, if local authorities take a more proactive approach to enforcement, they will be able to address problems as they occur rather than waiting for tenants to report them. (Paragraph 105)

Rents and affordability

30.  Problems with the affordability of rents are particularly acute in London and the South East. Although in other parts of the country average rents and yields are relatively stable, we are still concerned that some families are struggling to meet the costs of their rent. We do not, however, support rent control which would serve only to reduce investment in the sector at a time when it is most needed. We agree that the most effective way to make rents more affordable would be to increase supply, particularly in those areas where demand is highest. (Paragraph 110)

31.  There is no perfect way to set rent, but, where longer tenancies are being established, linking increases to inflation or average earnings, or voluntarily agreeing a fixed uplift each year merit consideration and could provide tenants and landlords with a degree of stability, though over time mechanisms may emerge as, for example, in the commercial property sector. Tenants’, landlords’ and agents’ groups should encourage their members to discuss these options at the outset of a tenancy. Existing arrangements for setting and increasing rent are often arbitrary and uneven, and reflect the immaturity of the market. (Paragraph 113)

Placement of homeless households in the private rented sector

32.  We welcome the Government’s use of secondary legislation to clarify when accommodation is unsuitable for homeless households. We expect councils to pay full regard to this order and to ensure that homeless households are only placed in suitable accommodation. Given that many of these households will be vulnerable, councils have a particular responsibility to ensure that the properties they are placed in are free from serious health and safety hazards. We recommend that, as a matter of good practice, local authorities should inspect properties before using them for the placement of homeless households. (Paragraph 117)

33.  All agree that, wherever possible, councils should be placing homeless households within their local area (unless there are particular circumstances that mean it is not in the households’ interests). It nevertheless appears inevitable that councils in areas with high rents, London in particular, will place homeless households outside the area, including in coastal towns. Before any placement, there should be a full discussion with the receiving authority and the prospective tenant and information about the household and its ongoing needs should be shared. The Government should consider making this a statutory duty. (Paragraph 121)

34.  We were pleased to hear of positive examples of work to support homeless households in the private rented sector, including the establishment of social letting agencies and the development of private rented sector access schemes. We encourage the Government to work with local government, the charity sector and industry bodies to ensure best practice is shared and lessons learned. (Paragraph 122)

Local housing allowance

35.  We recommend that the Government take immediate steps to allow councils to apply for a variation of broad rental market area boundaries where anomalies occur. (Paragraph 125)

36.  We recommend that the Government conduct a wide-ranging review of local housing allowance (LHA). This review should assess whether there is greater scope for local flexibility over the setting of LHA rates and the boundaries of broad rental market areas. Local authorities could be incentivised to reduce the housing benefit bill by being allowed to retain any savings for investment in affordable housing. (Paragraph 125)

Data quality

37.  We recommend that the Government establish a small task group of key organisations and academics to consider how data relating to the private rented sector can be improved and made more readily available. In addition, we encourage the National Audit Office to contribute to an effective evidence base about the sector and to draw upon our recommendations when developing studies on housing related topics. (Paragraph 128)

Tax

38.  We recommend that the Government, in reviewing the regulation covering the private rented sector, set out proposals for greater co-ordination between the tax authorities and those regulating the private rented sector. (Paragraph 131)

Increasing supply

39.  We welcome the introduction and expansion of the Build to Rent Fund. The Government should take steps to ensure that the fund makes a net addition to new housing, as well as speeding up the delivery of those homes already in the pipeline. (Paragraph 138)

40.  It remains to be seen how much impact the guarantee scheme for the private rented sector will have in delivering additional new homes. The policy may be well-intentioned in its aim to encourage organisations to have more confidence to invest in the sector, but the Government needs to measure results. We invite the Government in its response to our report to update us on the number of applications it has received for the private rented sector guarantee scheme, and to provide an estimate for the number of additional homes it expects the scheme to deliver. If there is any doubt that the scheme is going to deliver the homes required, we recommend that the Government rapidly explore other options for the use of the resources identified. (Paragraph 142)

41.  We welcome the establishment of the task force to promote and broker investment in build-to-let development, and are pleased that the task force is already in operation. It is important that this task force does not become another quango but quickly delivers on its objectives. We invite the Government, in its response, to set out the progress made by the task force in its first few months of operation. This update should quantify the amount of additional investment brokered, and the number of additional homes it would deliver. (Paragraph 144)

42.  Efforts to promote high-quality build-to-let development have commanded significant amounts of government attention and resources. One of the main arguments in favour of this approach is that it will lead to improved choice, quality and affordability across the whole of the private rented sector. It is too early to assess the impact, but a key part of the evaluation of these measures must be the impact they have on the sector as a whole. If, in a year’s time, there is no evidence of this broader effect, the Government must reconsider its strategy and look to other measures to boost supply across the sector as a whole. (Paragraph 148)

43.  There is an urgent need to boost supply across all tenures of housing. We recommend that the Government revisit the Committee’s report on the Financing of New Housing Supply, and set out proposals to implement those recommendations it initially rejected. (Paragraph 150)commons logo


Immigration Bill checks to be light touch for Landlords Landlord News, Latest Articles, Property News

Mark PriskThe Housing Minister Mark Prisk speaking to MPs on the Immigration Bill announced in the recent Queen’s speech confirmed the immigration status of tenants will only have to be checked under a light touch regime.

He said: “What we’re asking for is all landlords undertake that basic check to see people are who they are and they are entitled to be here.

“The intention is to make it light-touch. We’re working on the proposals at the moment and we don’t want to make it unduly onerous. The idea is to make sure someone takes a reasonable step to check someone’s identity and that would naturally be a passport.”

Landlords have been threatened with future heavy fines if they fail  in their responsibility to check their tenants have a right to reside in the UK.

When questioned over a National registration scheme for landlords Prisk said that this would not be likely, but selective licensing schemes could be more widely used. “If there’s a good argument demonstrated that a significant proportion of local authorities would welcome an extension, I would certainly be happy to look at the evidence.”

 


Terry Lucking of Belvoir Lettings Cambridge and Peterborough GOOD Landlords Campaign Sponsors

The GOOD Landlords CampaignTerry Lucking of Belvoir Lettings Cambridge and Peterborough

I have been trading in lettings since 1999 with our offices in Cambridge and Peterborough managing just over 1000 properties.

The offices have 16 trained and qualified staff, are ARLA licensed with fully audited and bonded client accounts.  We are members of Safe Agent, NALS and The Property Ombudsman.

I sit on various council housing steering groups representing the PRS (most recently housing strategy 2011-2014 – next expected to be consultation over selective licensing and article 4 directions). I developed the property accreditation standards for University Centre Peterborough and also the Chair of the Peterborough National Landlord Association (NLA) branch (voluntary role) introducing NLA accreditation for landlords in Peterborough February 2013.

Continue reading Terry Lucking of Belvoir Lettings Cambridge and Peterborough


HMO Licensing Fees – Oxford Council Humiliated Buy to Let News, HMO's & Student Lets, Landlord News, Latest Articles, Property Investment News, Property Market News, Property News

HMO Licensing FeesFurther to my rant about HMO Licensing Fees on 16th October one of my readers decided to submit a Freedom of Information request to Oxford Council based on the questions I raised and has forwarded the response to me.

As you may be aware, Oxford were one of the first Councils to implement both Article 4 planning and Selective Licensing. They now require all landlords to pay a fee to licence each property they own which is let to three or more tenants.

The response to the Freedom of Information Request from Oxford Council makes very interesting reading and I’ve copied it below for you. The questions are written in this colour, the Councils answers are written in this colour and my analysis (or should I say continued rant) is written in this colour – not that I’m seeing red or anything !!! Continue reading HMO Licensing Fees – Oxford Council Humiliated


Private Rented Sector Licencing Debate Landlord News, Latest Articles, Property News

Richard Cubitt, a reader of Property118 has submitted the following summary of Private Rented Sector Licencing. In an email to the Editor or Property118 Richard said “All of this information is all in the public domain but I think that the wider implications are worth bringing to general attention. Thin edge of the wedge!! The application form is something else. 11 pages of detailed information.” Continue reading Private Rented Sector Licencing Debate


Council hit-team takes on hardcore rogue landlords Buy to Let News, Cautionary Tales, Latest Articles, Lettings & Management

A council hit-team is readying to prosecute rogue landlords who have dodged signing up to a selective licensing scheme.

The team is tracking down a group of landlords in Sunderland who have ignored calls to license their buy to let and HMO properties in the city.

Investigators are planning to interview them under caution with a view of sending them to court if they still fail to join the scheme. Continue reading Council hit-team takes on hardcore rogue landlords


HMO licence fees up 650 percent Latest Articles

In the last year it has become very clear that many Local Authorities are looking very carefully at Private Sector Landlords and the various aspects of licensing.

Some Councils have considered Selective Licensing, a discretionary scheme that allows local authorities to introduce licensing for all privately rented properties, with a charge, in a given area. Others have examined Additional Licensing, which is basically extending Houses of Multiple Occupancy (HMO) licensing to smaller properties. Continue reading HMO licence fees up 650 percent


Here’s a radical idea – Stop Shooting Fish in a Barrel Buy to Let News, Guest Columns, Lettings & Management

I am writing this after reading an article with the opening line “A Labour MP says that every MP he knows “is desperate for help in dealing with rogue landlords”.”

Here is a radical idea – penalise local authorities who do not use their legal powers to enforce the law!

This is what happens to good landlords: Continue reading Here’s a radical idea – Stop Shooting Fish in a Barrel


Landlord Fined £4,000 after Tenant Flees Buy to Let Blaze Cautionary Tales, Latest Articles, Lettings & Management

A landlord was fined £4,000 for failing to carry out fire safety work at a rental property after a tenant had to flee to safety from a blaze.

Islington Council had already served Nadia Boujema an improvement notice ordering the fitting of fire detection equipment at the home near The Angel, North London. Continue reading Landlord Fined £4,000 after Tenant Flees Buy to Let Blaze


HMO Confusion Could Costs Landlords Fines of £50,000 HMO's & Student Lets, Latest Articles, Lettings & Management

Planning and licensing rules for shared houses could be an expensive trap for landlords as some councils take on new powers.

Property investors can face fines of up to £50,000 for making mistakes – and the rules vary depending on where the letting property is located.

Three sets of rules apply to small houses in multiple occupation (HMOs), which are homes shared by between three and five tenants.

The problem is not all the rules apply nationwide – and in some cities, they only apply to certain streets or neighbourhoods. Continue reading HMO Confusion Could Costs Landlords Fines of £50,000


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