Posts with tag: landlord law

Landlords Using Section 21 Instead of Section 8, Survey Shows

Published On: February 6, 2019 at 9:59 am

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Categories: Landlord News

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Landlords are using Section 21 notices, instead of Section 8, due to a lack of confidence in the court system, according to a new survey by eviction firm Landlord Action.

A Government consultation into which major reforms to make to private tenancies has now ended, and the industry awaits the result. Critics are calling for Section 21 notices to be banned, arguing that they tilt the balance of power towards landlords.

However, the Landlord Action study has revealed some interesting facts when it comes to the reasons that landlords may leave the sector, for fear that they have no power over their own properties.

Of the landlords that responded to the survey, 73% said that they have had to serve a Section 21 notice, with more than half (56%) using it because their tenant was in rent arrears. There were no other common specified reasons for landlords to use it, with 22% of respondents simply stating ‘other’.

Paul Shamplina, the Founder of Landlord Action, believes that many of these unspecified reasons, along with rent arrears, could be pursued under Section 8, but landlords are forced to rely on Section 21, even when there is a breach of tenancy, as they have very little faith in the court system.

He says: “Not only is using Section 8 already more time-consuming, tenants can delay the process further for landlords by counter-claiming. In addition, discretionary grounds of Section 8, such as anti-social behaviour, can be extremely difficult for landlords to prove, meaning it has a lower success rate. It’s clear from the survey that landlords need to be able to get their properties back as soon as possible, and are willing to forfeit arrears by using Section 21.”

Landlords Using Section 21 Instead of Section 8, Survey Shows

Other specified reasons for using a Section 21 notice included tenants requesting their landlord obtain a possession order (10%), landlords needing to refurbish the property (5%) or sell it (4.5%). Just 2% wanted to move back in themselves, while only 0.6% said that it was because the tenant had complained about disrepair (a so-called revenge eviction).

Interestingly, 43% of landlords said that their tenants vacated the property when served with a Section 21 notice, but 42% had to go to court to obtain possession.

The Government has put forward a consultation on a proposed specialist housing court. It believes that this would provide greater access to justice for both landlords and tenants, and give landlords confidence to offer longer, more secure tenancies, by making it easier for responsible investors to regain possession of their properties, should they need to.

However, as part of this, Shamplina predicts that the use of Section 21 would be heavily diluted, and is concerned that, without major reform to the Section 8 notice, some landlords will exit the market.

He explains his standpoint: “Section 21 gives landlords and mortgage providers the reassurance and flexibility to recover their asset, if they need to. To abolish it, or even dilute its current use, as has been suggested, will require significant reform to Section 8, which offers reassurances to landlords that, if they had to use the Section 8 route under grounds for rent arrears, moving back into the property or selling it, there would not be significant delays in the court process.  With this, we are likely to see a further cut to supply of rental properties, as landlords will consider buy-to-let too great a risk.”

In addition, the recent announcement that the tenant fees ban will come into force from 1st June 2019 could also affect the use of Section 21, Shamplina believes.

After this date, if a landlord (or letting agent) makes a charge that relates to a banned fee, they must return this within 28 days, or it will render a Section 21 ineffective.

Will the Fees Ban Help Letting Agents Stay on the High Street?

Published On: February 5, 2019 at 10:33 am

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Categories: Lettings News,Tenant Fees Ban

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The upcoming ban on lettings fees charged to tenants, which is due to come into force on 1st June 2019, could help traditional letting agents to stay on the high street, according to proptech provider PayProp.

Although the ban will affect the revenue that agents can generate, it could reduce competition from companies who have been subsidising rock-bottom management fees with earnings from tenant fees, the firm believes.

This will remove a major differentiator for these agencies, putting all companies on a more equal footing with regard to the total fees that they charge.

Level playing field

In recent months, there has been a trend of agency branches closing, as businesses look to cut costs and consolidate. According to figures from the Local Data Company, 211 agency branch offices closed in the first half of 2018.

However, this needn’t be the fate that befalls high street letting agents, insists Neil Cobbold, the Chief Operating Officer of PayProp UK.

He says: “The ban on fees – while representing a clear bump in the road for letting agencies – could indirectly help businesses to stand firm on the high street.

“With many agencies expected to increase management fees as a consequence of the ban, those charging the lowest fees will have to raise their prices, reducing the gap between the top and bottom end of the market.”

Cobbold believes: “With a more level playing field in terms of management fees, high street letting agents providing first-class property management will be able to thrive.”

Pay for quality

As average management costs are likely to rise following the fees ban, landlords will be on the lookout for the best service, and will be increasingly prepared to pay for quality.

“As costs rise and value for money becomes more important, a letting agency which is on top of crucial issues, such as payments, rent arrears and property maintenance, will become more indispensable than ever to landlords,” Cobbold explains.

Ready for change

Despite the June start date for the fees ban only recently being announced, the top-performing letting agents will have been prepared for this market shift for some time now.

Cobbold says: “Of course, agents need to cut costs accordingly to replace lost revenue, but that doesn’t mean they necessarily have to reconsider their high street presence.”

He adds: “The landscape of the rental sector will change considerably this year, but there remains a whole host of opportunities for savvy high street letting agents to remain profitable and grow their businesses.”

Redress Reform is a Positive Step, but Landlords need Time to Prepare

Published On: February 1, 2019 at 9:15 am

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Categories: Landlord News

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A rental platform is welcoming new plans for wide-ranging reform of the housing redress system, but warns that landlords need to be given plenty of time to prepare.

The call by RentalStep comes after the recent announcement by the Housing Secretary, James Brokenshire MP, which outlined various proposals to reform the housing redress system.

At the heart of the reform is the formation of a housing complaints resolution service, which would create a one-stop-shop for all complaints relating to every tenure of housing.

Furthermore, under the new rules, all private landlords would be required to join a redress scheme, with fines of £5,000 for those that fail to comply.

The proposed changes will be discussed, reworked and revised later this year by a redress reform working group, which will include existing redress schemes, as well as the Government.

Mike Georgeson, the Founder and Chief Executive of RentalStep, insists: “While the planned reforms are a positive move – protecting tenants and giving them a fair right to redress – it’s also vital that landlords are given enough time to adjust to yet more changes and new regulation.

“This is another measure for landlords to be aware of and another cost to bear, so they need to be given fair warning of when the reforms are coming into play and what exactly they will involve.”

He adds: “Landlords will have to pay to join a redress scheme and could also be fined in the event of non-compliance – the prospect of these extra expenses could be a cause of concern for many.”

As the costs of letting a property continue to rise, any way that landlords can reduce their monthly outgoings should be fully explored, Georgeson believes.

“With the ever-growing financial pressures on landlords, reducing costs where possible is a wise and pragmatic move,” he explains. “Cost-cutting is an especially important consideration at a time when Brexit uncertainty, the prospect of increased management fees, as a result of the incoming ban on tenant fees, and other new legislation is squeezing landlords more than ever.”

Landlords, make sure you stay on top of all new regulations, including redress reform.

Scotland should be the Model for Lettings across the UK, Agent Believes

Published On: February 1, 2019 at 9:00 am

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Categories: Lettings News

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Scotland should be used as a model for lettings across the rest of the UK, according to a letting agent based north of the border.

DJ Alexander Ltd, one of the largest family-run property management businesses in Scotland, believes that the Government’s upcoming ban on lettings fees is good for business, and will strengthen the relationships between landlords and tenants.

The firm insists that charging tenants administration fees is both unnecessary and bad for business.

DJ Alexander Ltd, headed up by brothers David and John Alexander, argues that the lettings experience in the Scottish private rental sector should be the model for the rest of the UK.

The regulations included in the Tenant Fees Bill in England and Wales have been in place in Scotland since 2012. Additionally, Section 21 eviction notices no longer exist north of the border, while the Scottish Government recently introduced much greater security for private tenants.

Scotland should be the Model for Lettings across the UK, Agent Believes

David Alexander, the Joint Managing Director of Apropos by DJ Alexander Ltd, says: “In many ways, Scotland has led the way in improving the rights of tenants, and changing the relationship between landlord and tenant. Too often, this relationship has been confrontational and divisive, with each side pitted against the other. Rather than resolve any disputes or problems, the attitudes and the regulations seem to be established to dispose of any complaint by a tenant, rather than address it.

“The Tenants Fees Bill simply rights a flawed piece of legislation that allowed unwarranted and unfair charges to develop under the camouflage of administration expenses, often with little or no explanation of what these were for or why they were being applied. With many letting agents operating a business model where such charges account for a quarter to a third of income, it is clear that they were not motivated to end these charges, reduce their levels, or to have them examined in too much detail.”

John Alexander believes that the ban on fees will result in higher charges for landlords, which will concern many investors.

He explains what happened in Scotland: “When these charges were ended in 2012, and they were never as substantial a part of the Scottish market as they have been in England and Wales, there were doom-mongers who predicted the end of the lettings market. But this did not happen; the market adapted, landlords were charged more, but the best agents and the best landlords adapted and realised that this was fairer for the tenant, and, in the long-term, created a better relationship between the two.

“Equally, the ending of the no faults ground for eviction notices and introducing much greater security of tenure for tenants was feared by some in the property market as a sign of them losing control. On the contrary, it gives agents, landlords and tenants the opportunity to develop a relationship built on trust, on fairness and on developing a long-term relationship to their mutual benefit.”

Do you agree that Scotland’s lettings model would work across the rest of the UK?

Improve the Current System, Rather than Introducing a Housing Court, Law Society Urges

Published On: January 31, 2019 at 11:00 am

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The Law Society has urged the Government to improve the current redress system in the private rental sector, rather than introducing a specialist housing court.

In a response to a Government consultation on the proposed new housing court, the Law Society stated that housing claims suffer from numerous procedural delays and system failures, but a separate court is not the solution to fixing them.

The organisation believes that it is wrong to radically change the system in favour of a “relatively small” number of private landlords demanding change.

Instead, the Law Society backed improvements to resourcing existing courts, and signposting parties to advice and information, to ensure that cases are dealt with in a timely and efficient manner.

Its response suggested that it was not clear what funds would be used to resource a specialist housing court, nor was it clear that a sufficient number of housing courts would be made available and accessible across England.

The Law Society said: “The case for a housing court has not been properly put and further evidence is needed as to why improvements within the current system will not suffice. Some private landlords do not understand the complexities of their case and are often reluctant to pay for legal advice. Such advice would ensure they understand the defences and counter-claims available to tenants, as well as the built-in safeguards within the legal process. However, without this knowledge, landlords often complain about perceived ‘delays’.”

The delays that exist around listings, orders, warrants and enforcements are “fundamentally due” to insufficient court staff, court closures and insufficient judicial time. The Law Society said that “extreme difficulties” remain in getting information from the court over the phone, and the Government would be better advised to look at how courts are coping with housing cases.

Extra support for court users should include a duty adviser for tenants, guidance for litigants in person (LiPs) and checklists for what they could expect at court, it added.

The increase in the number of LiPs has led to delays in the process, due to a lack of understanding and preparedness, with housing advice deserts created in some areas, where there are not enough solicitors.

In another response to the consultation, the Civil Justice Council (CJC) said that money would be better spent elsewhere, rather than on a court designed to provide a single path of redress for landlords and tenants.

If there was a need for judges to be more specialist, then the CJC believes that this could be resolved by a system of ticketing judges to deal with housing issues, as happens in family cases.

The Communities Secretary, James Brokenshire MP, has said that the housing court would help landlords and tenants access justice when they need it, and create a fairer housing market.

It was also announced recently that landlords will be required to become a part of a specialist redress scheme, or face fines of £5,000.

Government to Outline Details of New Electrical Safety Rules

Published On: January 31, 2019 at 9:00 am

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The Government is set to outline the details of its new electrical safety rules for the private rental sector.

Following a consultation on new electrical safety rules for private landlords, the Government has committed to introduce mandatory electrical safety checks in private rental homes every five years.

No date has been set for the implementation of the new electrical safety rules, however, the consultation response states that the standards “will be introduced as soon as Parliamentary time allows”.

The new electrical safety rules, which form part of the Government’s commitment to improve standards in the private rental sector, will require landlords to ensure that the inspectors that they hire to conduct checks have the necessary competence and qualifications to do so, with tough financial penalties for those that fail to comply.

The Government will publish new guidance, which details the minimum level of competence and qualifications required for those carrying out these inspections.

The Minister for Housing and Homelessness, Heather Wheeler MP, says: “Everyone has the right to feel safe and secure in their own home. While measures are already in place to crack down on the small minority of landlords who rent out unsafe properties, we need to do more to protect tenants.

“These new measures will reduce the risk of faulty electrical equipment, giving people peace of mind and helping to keep them safe in their homes.”

She continues: “It will also provide clear guidance to landlords on who they should be hiring to carry out these important electrical safety checks.

“The new guidance will provide clear accountability at each stage of the inspection process – of what is required and whose responsibility it is – but without placing excessive cost and time burdens on landlords.”

We will continue to keep landlords up to date with announcements on the new law.