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

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

11:16 AM, 1st October 2013, About 11 years ago 67

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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

Mark Alexander - Founder of Property118

13:52 PM, 1st October 2013, About 11 years ago

Reply to the comment left by "Lucy McKenna" at "01/10/2013 - 13:24":

Hi Lucy

Political lobbying isn't what I do, as per my Twitter handle iAmAlandlord and I'm also an internet blogger. I will leave the lobbying to the Landlord Association I support.

Yes I am angry but I have no desire whatsoever to to spend my days in London educating political twits who have no grasp of reality.

I'm happy to confine my rants to the web and anybody who chooses to read them, share them and debate with me in an environment where I am most comfortable, i.e. in front of my PC in my PJ's.
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Mark Alexander - Founder of Property118

13:58 PM, 1st October 2013, About 11 years ago

Reply to the comment left by "Conrad Vink" at "01/10/2013 - 13:33":

Conrad

To a very great extent I follow your logic. However, the choices available to government are carrot or stick. The more they shake the stick, the more the good landlords like me consider whether this is the right business to be in. When we exit the business, and as the government stick discourages further investment, the rogues thrive.

I am convinced the answer is for the government to improve the incentive to build supply. Most people only agree to live in damp houses or beds in sheds when they have no real choice. Those of us who can afford holidays don't put up with such conditions because we have choices which only exist because supply and demand are matched. Tenants need more choices and regulation isn't going to drive that, however, investment and incentives will.
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Conrad Vink

14:08 PM, 1st October 2013, About 11 years ago

Reply to the comment left by "Mark Alexander" at "01/10/2013 - 13:58":

Mark,

I don't think your logic works: Rental laws based on 6 month ASTs draw responsible long-term landlords into the sector, while rental laws based on 3 or 5 year tenancies will leave only rogue chancers?

It just doesn't make sense, and it's not the experience of countries where longer tenancies are the norm either.

Richard Adams

14:09 PM, 1st October 2013, About 11 years ago

Conrad. Yes there are a few unscrupulous landlords around but believe me most of us are like Mark with heart in the right place.

Early on in the thread/post Mark mentioned that gaining possession when tenants fail to honour their tenancy agreements like not paying the rent needs to be changed. Rotten landlords are pilloried but nobody ever hears or complains about the many basically dishonest tenants there are about. I bet that in Germany which you quote it is easy to get bad tenants out?

So if Pickles's idea of longer tenancies ever comes to pass at least couple it with making it easy to chuck rotten tenants out.

Conrad Vink

14:31 PM, 1st October 2013, About 11 years ago

Reply to the comment left by "Richard Adams" at "01/10/2013 - 14:09":

Yes, it would make perfect sense to couple longer tenancies with making it easier to evict rogue tenants. They give good tenants a bad name and encourage the general perception of the private rented sector as being a hive of scum and villainy.

It doesn't need to be this way, the private rented sector should be a well-functioning market in which providers and consumers of housing deal with one another respectfully and meet all of their commitments. Short term tenancies encourage bad behaviour on both sides.

Mark Alexander - Founder of Property118

14:33 PM, 1st October 2013, About 11 years ago

Reply to the comment left by "Conrad Vink" at "01/10/2013 - 14:08":

Conrad

I think you are missing the point I am trying to make.

I would dearly love to have long term tenants, as would most good landlords. However, to be told that I must give people security of tenure with only minimal protection against bad payers I'm afraid I'd have to say "I'm out" and so will most landlords.

Would you really want to commit to living in the same place for 5 years though?

If you were a tenant of mine you could move out any time after 6 months, subject only to giving me a months notice. On the flip side, I would have to pay you compensation to leave if you were a good tenant.

I was a tenant once and I'd have jumped at the opportunity to have a Deed of Assurance but I would have been very reluctant to sign up for a 5 year tenancy. If good tenants ask good landlords for a Deed of Assurance the idea might just catch on. In the meantime, there is a housing shortage to deal with and the only way to solve it is to create massive incentive for massive investment.

Forget regulation, it will be like herding cats and will only serve to drive out the good landlords who will end up paying for it and passing on the costs to good tenants.

The authorities need to combine forces and take out the criminal elements. They know who they are and if they can get their heads together and do away with their stupid data sharing protocols they will actually get somewhere. I have been saying this now for some time and i know the powers that be have been listening. It's only a matter of a few months now before the hit squads move in. Remember, you heard it here first.
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Conrad Vink

14:42 PM, 1st October 2013, About 11 years ago

Reply to the comment left by "Mark Alexander" at "01/10/2013 - 14:33":

I think 3 or 5 year tenancies would need to have a clause allowing them to be terminated early upon payment of compensation. As you say, not everybody will want to commit to living in the same place for that long. However, most tenants want more than six months' security.

Another possibility would be asymmetric tenancies in which tenants could give notice during the fixed period but landlords could not so long as the tenant was meeting their obligations.

Romain Garcin

14:44 PM, 1st October 2013, About 11 years ago

Reply to the comment left by "Mark Alexander" at "01/10/2013 - 14:33":

I don't think that 5 tenancies would or should necessarily imply that tenants would be tied for the full 5 years.
Certainly that's not how it works in other countries.

Mark Alexander - Founder of Property118

14:46 PM, 1st October 2013, About 11 years ago

Reply to the comment left by "Conrad Vink" at "01/10/2013 - 14:31":

It's very sad that society in general shares your perception Conrad because the reality is actually very different. Most tenants are very good, I have granted over 1,000 tenancies and only needed to seek a possession orders on three occasions in nearly 25 years. Either I am lucky or I am smart and I could say the same about my tenants.

I accept there are a few bad landlords and a few bad tenants in every area but I really do believe that for the most part the landlord/tenant relationships function very well. However, 4 million happy tenants doesn't give the Press and Shelter much to write about does it? Sadly, bad news sells newspapers and everybody loves to hate a villain. It's a shame that landlords have taken the limelight away from bankers, estate agents, car salesmen and the double glazing industry. I wonder which sector of society will be next?
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Mark Alexander - Founder of Property118

14:50 PM, 1st October 2013, About 11 years ago

Reply to the comment left by "Conrad Vink" at "01/10/2013 - 14:42":

Conrad - you said; "Another possibility would be asymmetric tenancies in which tenants could give notice during the fixed period but landlords could not so long as the tenant was meeting their obligations."

Well if my mortgage lender would allow me to sign up to that and subject to the eviction laws being sorted out you'd have my vote on that suggestion. It's where the Deed of Assurance is heading as a logical step closer to the preferred destination of the majority.
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