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

Jay James

21:27 PM, 2nd October 2013, About 11 years ago

Reply to the comment left by "Mark Alexander" at "02/10/2013 - 20:59":

Home owner, no mortgage.
I've been an ll in the past.
I'm currently planning on deciding my long term future a couple years after I graduate.
Thus I want to learn what I can by then, so that I do not go into it in ignorance or try to figure it all out in weeks.

Lucy McKenna

22:11 PM, 2nd October 2013, About 11 years ago

I would have thought one of the best places to be a good landlord would be in London. There are good rents to be achieved there for the right property, hence there should be no hardship for landlords in presenting the property and keeping tenants happy.

23:12 PM, 2nd October 2013, About 11 years ago

Reply to the comment left by "LucyM " at "02/10/2013 - 22:11":

Lucy, the trouble with the London market is the cost or buying a decent property. Increasingly the only way to pick something up at a reasonable price is via auctions. Without a decent deposit margins are getting increasingly thinner and thinner in London, and will definitely look vunerable once rates start to rise.

Lucy McKenna

7:44 AM, 3rd October 2013, About 11 years ago

Reply to the comment left by "James Tallis" at "02/10/2013 - 23:12":

Good point James. Had quite forgotten the time when mortgage rates were high and profit margins were low in London even with small mortgages. Then the gain was in the high appreciation of the property. At the moment LL are getting it both ways, so hope they are taking advantage of this and getting their properties in good shape.

Romain Garcin

9:56 AM, 3rd October 2013, About 11 years ago

Reading articles around, it seems that, as I suspected, the proposal is mostly based on a template tenancy agreement: Ie. to use the current legal framework to draft an agreement creating a long-ish fixed term tenancy with safeguards for both parties.

That is, something that anyone could have done, or could do.

Mark Alexander - Founder of Property118

10:10 AM, 3rd October 2013, About 11 years ago

Reply to the comment left by "Romain " at "03/10/2013 - 09:56":

Quite right, and what's to bet it will be the "Stable Rental Contract" designed by Shelter - see >>> http://www.property118.com/shelter-agrees-to-focus-on-solutions-as-well-as-problems/32411/

Shelter know full well it is unworkable in the vast majority of real life scenarios and clearly paid lip service to the Deed of Assurance alternative for a while but then went back to pushing their own invention. It's all political propaganda.

If Shelter are so concerned, as they should be as a Housing Charity, why do they only campaign for the things they think of? Should they not back all good ideas whether they came up with them or not?
.
.

Steven Burnell

21:01 PM, 3rd October 2013, About 11 years ago

Reply to the comment left by "Jack Madethisup" at "02/10/2013 - 14:44":

On another forum (http://www.propertytribes.com/landlords-pickle-thanks-eric-pickles-tenants-charter-t-9178.html) John Corey writes:

"Back when I owned property in Oregon, I remember an eviction I dealt with directly. Rent due on the 1st, notice about it being late on the 3rd. Failure to pay within 2 days and I get to file with the court. Court date set for the 10th. Count agrees and tenant has to be out by the 14th. The Sheriff will visit the property and assist under criminal threat with the move to the curb."

So perhaps we should welcome a quid pro quo of long tenancy for eviction enforced in a fortnight here in the UK?

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