Tenants Charter – Mr Pickles, have you gone completely mad?

by Mark Alexander

11:16 AM, 1st October 2013
About 7 years ago

Tenants Charter – Mr Pickles, have you gone completely mad?

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Tenants Charter – Mr Pickles, have you gone completely mad?

Tenants Charter

Open Letter to Mr Eric Pickles – Communities Secretary – re Tenants Charter

Dear Mr Pickles

Have you gone completely mad?

I am reading in The Times Newspaper today that you are to announce a “Tenants Charter” which will allow tenants to demand two to five year tenancy agreements.

Do you realise that most buy to let mortgage borrowers would be in default of their mortgage contracts if they were to offer tenancy agreements with fixed terms longer than 6 or 12 months?

Do you realise that most modern leases (e.g leasehold flats) contain conditions on subletting not exceeding 12 months in term?

There is a very good reason why mortgage lenders have these conditions in their mortgages. It is because it is so difficult to obtain possession when a tenant reneges on a contract. Bad payers are regularly getting away with up to 5 months of rent free living. Theoretically a landlord can apply to obtain possession by serving two weeks notice once a tenant is two or months in arrears on rent. However, after that 10 weeks has expired it can take several months to get a Court date. Even when a possession order has been granted it then takes several more weeks before bailiffs can be appointed to enforce the order. If you want landlords and mortgage lenders to provide greater security of tenure to tenants then you are going to have to sort out the possession rules for landlords first.

Section 21 of the housing act transformed the UK Private Rented Sector which was in rapid decline until the 1988 act was introduced. Forcing landlords to offer long term tenancy agreements will force the PRS back into the dark ages and reduce incentive for further investment into the sector.

Does Government not recognise the need for a healthy PRS?

Does government not realise that a huge sector of the working population rely on the housing flexibility the PRS provides in terms of job mobility?

Do you have any idea of how your speech today could destabilise the Private Rented Sector?

I totally understand that good tenants, particularly young families with children of school age, need a fair deal and it cuts both ways in that most landlords want good tenants to stay long term. It makes economic sense for landlords to have quality long term tenants,

So why have you not even considered promoting the Deed of Assurance?

Perhaps you are unaware of the effectiveness and simplicity?

A Deed of Assurance is a document in which a landlord promises to pay an agreed level of compensation to a tenant if possession is obtained within a given time period. 

A Deed of Assurance is a relatively simple legal agreement which sits alongside an Assured Shorthold Tenancy Agreement “AST”. It is a separate agreement between landlord and tenant which does not affect the landlords rights to serve notice or to obtain possession, therefore it does not affect the rights of a mortgage lender either. However, it does offer tenants peace of mind.

From a tenants point of view, a Deed of Assurance provides far more flexibility than a long term tenancy because they are only tied in for 6 months and can then move on if they need to. What a Deed of Assurance offers in addition to an AST is peace of mind.

The compensation amount offered by the landlord is negotiable but obviously the idea is to agree something which is meaningful to both parties. For example, I offer to pay anything between £1,000 and £5,000 compensation if I obtain possession within the agreed period, providing the tenancy conditions have been observed impeccably by the tenant of course. If tenants fail to pay rent on time or breaches other contractual terms within the tenancy agreement their right to claim compensation for being evicted during the Deed of Assurance is forfeited. I have been offering a Deed of Assurance to my tenants for a few years now and I am delighted to report that my relationships with new tenants have never been better.

I do not expect a reply from you Mr Pickles but I do hope you will consider the implications of acting on the advice of the people who have been influencing you up to this point.

Yours sincerely

 

Mark Alexander


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Comments

11:51 AM, 1st October 2013
About 7 years ago

This is one **MODERATED**, why o why does Cameron spoil the cabinet with this type of incompetent tosspot? In any case, where we are, the lease prohibits AST`s of over 12 months, so what happens then. Having said all that, on a different theme, this **MODERATED** professes **RELIGIOUS REFERENCES REMOVED BY MODERATOR** at every turn, so as an atheist I cheer every time he opens his stupid mouth, it just speeds up the inevitable implosion of **MODERATED** in this country.

Conrad Vink

12:05 PM, 1st October 2013
About 7 years ago

"Does Government not recognise the need for a healthy PRS?"

I suggest you ask a few tenants how "healthy" they think the UK PRS is.

It is not reasonable to expect millions of renters to organise their lives around their landlord's mortgage. If longer tenancies are brought in by government, landlords who cannot meet the terms of their mortgages will be forced to sell. Welcome to the real world.

There are now 6 tenants for every landlord in the PRS and the proportion of the population living in the PRS is growing all the time. This trend means that sooner or later democracy is going to start delivering rental laws and regulations that resemble those in countries where renting privately is the norm. The Wild West days of the AST are coming to an end.

Adam Hosker

12:09 PM, 1st October 2013
About 7 years ago

Great, I get to write to my MP again. Always fun

Mick Roberts

12:34 PM, 1st October 2013
About 7 years ago

Brilliant job.

Mark Alexander

12:40 PM, 1st October 2013
About 7 years ago

Reply to the comment left by "Conrad Vink" at "01/10/2013 - 12:05":

Conrad

Do you not realise that Mr Pickles announcement will make this worse, not better?

The only way to solve the problems associated with demand are to raise supply and to do that it is necessary to create inventive for investment, NOT to remove the incentive.

Increasing the supply will also create choice. The best thing tenants could ever wish for is an over supply of property. That way, YOU get to set the prices and cherry pick where YOU want to live. At the moment it's the other way around, i.e. landlords set the prices and cherry pick tenants.

If landlords don't buy, builders will build less. If tenant demand continues to rise and investment falls then you will end up with 10 or more tenants chasing every property. What will that do to prices charged by landlords do you think?

Longer term tenancies will also create greater risk for the landlords who remain in the market. That risk will be offset in premiums charged, is that what you want? REALLY?

It's NOT rocket science, it's pure economics. Mr Pickles plans will backfire, mark my words.
.

Conrad Vink

12:58 PM, 1st October 2013
About 7 years ago

Reply to the comment left by "Mark Alexander" at "01/10/2013 - 12:40":

Mark, thanks for your reply.

Eric Pickles' statement is not really about supply. The amount of housing in the UK is limited by the planners, not by how much landlords are willing to invest. The best way to increase the UK housing supply is to reform the planning system, not to incentivise landlords to throw more money at the existing system which has proven itself incapable of delivering a sufficient quantity of good quality housing at a price that people can afford.

Other countries with a high proportion of the population living in private rentals manage to provide their citizens with an adequate supply of good quality rented housing in the context of 3 or 5 year tenancies as standard. If landlords in other countries can manage it, I'm sure UK landlords can too.

Mark Alexander

13:08 PM, 1st October 2013
About 7 years ago

Reply to the comment left by "Conrad Vink" at "01/10/2013 - 12:58":

Conrad

That pretty much brings us full circle back to my point about possession doesn't it?

What do you think of the Deed of Assurance?

Also, does it make sense that our Government allows private pensions to invest into off-plan Caribbean hotels which may never be built but will not allow the funds to be invested into providing secure long term residential accommodation in this country? I, like many others with funds in pension schemes would welcome the opportunity to invest into UK based specialist residential accommodation developed and operated by social landlords. Why can't our Government spot this opportunity?
.

Romain Garcin

13:15 PM, 1st October 2013
About 7 years ago

I think the point about possession in longer fixed term tenancies is valid, and would perhaps best be solved by making the s.8 route more efficient and tuning grounds for possessions.

IMHO, a Deed of Assurance does not address the main issue that Mr Pickles is trying to address, which is to give tenants longer security of tenure.
This is not the same as telling tenants that their expenses will be paid whenever their landlord decides to kick them out, which I think is pretty much what a Deed of Assurance does.

Lucy McKenna

13:24 PM, 1st October 2013
About 7 years ago

I liked the content of your letter to Eric Pickles after the first sentence - guess you were feeling a bit miffed when you wrote it! I had a very successful business for many years, not the letting business I hasten to add. I found the thing that got me what I wanted was invariably persuasion and flattery, I found it was never a good idea to antagonise people in high places it can cause them to dig their heels in and even to up the anti.
Most MP's will reply especially if asked to do so, perhaps a better ending would be a suggestion of a meeting to put your case to him, I am pretty sure he would listen. I would offer but I would be useless at the facts and it would definitely need someone fully conversant with them such as yourself.

Conrad Vink

13:33 PM, 1st October 2013
About 7 years ago

Mark, the Deed of Assurance sounds good, it reminds me of the case in (I think) Germany where notice can be issued before the end of the fixed period but compensation must be paid to the other party. The amount of compensation depends on the level of rent and how much of the fixed period remains and is defined in law.

The problem with the Deed of Assurance being voluntary is that responsible landlords like you who want happy and long-term tenants are few and far between. Too many landlords don't care that their tenants are living on a knife-edge. Insecure tenants are easier to mistreat, mistreated tenants lose respect for landlords and start to behave badly themselves, and standards in the PRS spiral steadily downwards.

I don't see how the culture of conflict and mistrust that has built up around private renting in the UK can change without legislating for better protection for tenants, and a part of that should be longer tenancies, ideally with early release by either party upon payment of compensation.

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