Posts with tag: tenancies

Could tenancy deposit schemes become a thing of the past?

Published On: September 11, 2017 at 10:09 am

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This week saw a deposit protection service covert to deposit-free renting, with another urging users to abandon insurance-backed tenancy deposit schemes.

Managing Director of the Deposit Protection Scheme (DPS), Julian Foster, this week advised customers to move their deposits to a custodial scheme. This is where DPS holds deposit money on behalf of agents and landlords in order to reduce operational costs, something that will prove important ahead of the impending ban on agent fees.

Mr Foster claims that ‘custodial schemes provide landlords and tenants with complete peace of mind over the security of their money.’

Deposits

Another tenancy deposit protection service, TDS, has also moved to announce that they are forming a partnership with new deposit replacement insurance firm Zero Deposit. The TDS will then provide deposit resolution services to the business, which it has invested in and subsequently will have a seat on their board of directors.

North Eased-based deposit reform campaigner Ajay Jagota described this as a ‘deathbed conversion’ and a, ‘definite and decisive proof that the deposit establishment knows the game is up.’

Mr Jagota maintains a register of the total amount letting agents and landlords are convicted of stealing from insurance-based tenancy deposit schemes. Convictions this year are on course to exceed the £1m stolen during 2016.

Jagota, Managing Director of Deposit Replacement Insurance solution, Dlighted, said: ‘Taken together these bits of news are definitive and decisive proof that the deposit establishment knows the game is up.’

‘I welcome the DPS’ unspoken admission that insurance tenancy deposit schemes are unsustainable and indefensible. I can’t interpret their actions as anything other than them waving the white flag and preparing for the end the insurance model.’

Not only is this model an insurance policy that doesn’t actually insure anyone, we have seem time and time again how easy it is for for crooked agents and landlords to misappropriate and steal tenants deposits from this “insurance” scheme.’[1]

Could tenancy deposit schemes become a thing of the past?

Could tenancy deposit schemes become a thing of the past?

Conversion

Continuing, Mr Jagota noted: ‘I also welcome the TDS’ apparent deathbed conversion to deposit-free renting. However, their involvement makes me question quite how revolutionary this new venture is. At first glance many of the shortcomings of the traditional deposit protection scheme system remain in place, not least the retention of and reliance on an old-fashioned dispute resolution service.

As a landlord and letting agent one of the primary reasons I set out to do things differently was the simple fact that this process often takes many months to resolve. That delay leave landlords out of pocket and in some cases unable to carry out vital repairs, and as a result unable to rent out their properties.

I genuinely welcome the competition, but I can’t help having the suspicion that this is the equivalent of slapping a spoiler on an old banger and claiming it’s a supercar.’[2]

[1] http://www.propertyreporter.co.uk/landlords/is-the-game-up-for-tenancy-deposit-protection-schemes.html

 

Tenancy deposit thefts over £700,000 already in 2017

Published On: July 27, 2017 at 8:48 am

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Interesting new data has revealed that rogue letting agents were convicted of stealing nearly £700,000 worth of tenancy deposits during the opening half of 2017.

The average total for each theft totalled nearly an eye-watering £50,000, according to renting reformer, Ajay Jagota.

Deposit Thefts

Mr Jagota keeps a running total of the overall cash value of deposits that rogue letting agents have been found guilty of stealing. Jagota publishes these figures on a quarterly basis.

At the end of June 2017, overall thefts for 2017 amounted to £673, 273, with an average theft of £48,091 per conviction.

Now, subsequent convictions have taken this overall total close to £750,000.

15 rogue agents have been convicted of offences surrounding the theft of deposits during 2017, at nearly two per month.

Research from deposit-free renting solution Dlighted last year indicates that £1,018,100 worth of deposits were stolen during 2016. Worryingly, 2017’s figures are set to break past this figure.

Stealing

Ajay Jagota, founder of Dlighted, said: ‘Some are arguing that no reform of the deposit system is necessary. But in the current system agents have managed thefts of at least £700,000 in just six months.’

‘Within the next four years, almost £6billion will be held in tenancy deposit schemes, roughly £4billon of which will retained by letting agents and landlords. Not only is this money missing from the UK economy, it is far too easy for it to go missing altogether.’[1]

Tenancy deposit thefts over £700,000 already in 2017

Tenancy deposit thefts over £700,000 already in 2017

Offering a solution, Mr Jagota noted: ‘It’s simple – if renting is deposit free, it isn’t possible for people to steal deposits. Not only does deposit replacement insurance better protect property investor’s assets and offer them compensation for legal fees and lost rent – as well as making it easier to find and keep good tenants – it also prevents crime.’

‘The worst part is the almost £2million which landlords and letting agents have been convicted of stealing, is in my opinion and many of those in the industry,  nowhere near the true scale of money misappropriated from tenancy deposit accounts with an alarming number of operators apparently happy to use money from tenancy accounts for other business purposes.

Much of this money will be put back, but much of it won’t – and the fact money is missing will only ever be uncovered in the event of company collapse or criminal investigation. The legislation the government will be bringing forward to cap deposits is also the ideal opportunity to do something about this scandalous situation,’ he concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/tenancy-deposit-thefts-now-top-700000.html

 

Case of letting agent fraud described as ‘shocking and alarming’

Published On: July 19, 2017 at 1:22 pm

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A case of a rogue letting agent convicted of £200,000 worth of fraud involving deposits has been described as ‘stunning and alarming.’

Mr Timothy Shinners of Bolton failed to put any of the deposits he received from tenants into a tenancy deposit scheme over a six-year period. Instead, he spent the money himself.

Shockingly, the case went to private prosecution after the police failed to investigate.

Deposits

A director at Platinum Properties in Bolton, Mr Shinner took at least £76,352 of company money. He was last week sentenced to three years behind bars and banned as acting as a director for the company for at least eight years.

The jury at Bolton Crown Court found Mr Shinner guilty of:

  • Failing to comply with statutory requirements surrounding the registering of tenancy deposits in a Government approved scheme
  • Fraudulently adapting tenancy protection documents to cover-up irregularities

The court heard that Shinners knowingly received deposits and did not transfer them into one the three Government approved schemes.

These deposits totalled at least £200,000 and were only registered and protected following a cash injection from another company director. This was described as an ‘act of decency’ by the Judge.

Reports

This matter was reported to the police, only for them to decline to investigate.

A police statement said: ‘There are fewer police officers investigating reports of fraud at a time when the volume of fraud is increasing significantly,’ citing difficult decision that, ‘may not be satisfactory to the victim.’[1]

It added: ‘Due to the changing face of crime, we are not in a position to investigate each report of fraud.’

Case of letting agent fraud described as 'shocking and alarming'

Case of letting agent fraud described as ‘shocking and alarming’

‘Alarming’

Deposit reform campaigner Ajay Jagota, founder of deposit-free renting platform Dlighted, offered his response to the case:

‘This case is stunning and alarming. £200,000 of fraud involving deposits taking place over six years – and not even the police could stop it. Some people are trying to convince us that nothing needs to change in the tenancy deposit system. Cases like this are proof things do. How many more times does this need to happen before something is done?

My real concern is that it appears there are countless agents who under current schemes are allowed to keep these deposits and appear to use this money for their person or day-to-day business use because they think it’s a handy pot of cash lying around. This money legally belongs to the tenants and should not be left unregulated – not least when we are talking about overall deposits which will soon be close to £6 Billion. No wonder the police don’t have the resources to police it all.

What happens when the money supposedly held in a segregated account runs out? They evidence suggests that these companies close shop and go under. And where does that leave their landlords and tenants?

We keep a running total of the deposits crooked letting agents are convicted of stealing each year, and will be publishing figures for the second quarter of 2017 next week. But all the indications are that this year’s figure will exceed the £1m recorded last year. In a sector which many are desperate to raise standards these incidents which are far too frequent do little to demonstrate it is changing for the better.’[1]

[1] http://www.propertyreporter.co.uk/landlords/letting-agent-jailed-three-years-for-deposit-fraud.html

 

Could Manchester be the next city to ban ‘To Let’ boards?

Published On: February 28, 2017 at 1:44 pm

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Manchester Council is the latest council to consider a city-wide ban on letting agents ‘To Let’ boards.

The local authority argues that the sheer number of these boards in some locations, particularly those with high-numbers of students, create not only an eyesore but an opportunity for burglars. The boards, the Council says, gives an indication of when properties are vacant at certain points of the year.

In addition, the authority notes that many boards remain up on an almost-permanent basis, despite the law stating that they should be removed within 14 days of a new tenancy commencing.

Proposals

Councillors are due to set out proposals that will ask letting agents to remove signs, with the promise not to erect new ones. This arrangement is set to be voluntary at first, but could be subject to more formal regulation moving forwards.

In recent months, restrictions have been imposed on ‘To Let’ boards in York, Durham, Brighton and Hove, Belfast, Leicester, Liverpool, Nottingham and other regions.

Could Manchester be the next city to ban 'To Let' boards?

Could Manchester be the next city to ban ‘To Let’ boards?

A Manchester council spokesperson told the Manchester Evening News: ‘The high concentration of these signs in some areas of the city creates an unsightly blot on the landscape and can be a real eyesore for local residents.’[1]

‘In addition, the signs may help identify properties rented by students, seen by criminals as easy targets. Many of the signs remain in place all year round despite properties being tenanted and only serve as advertising for rental companies,’ they added.[1]

Chief Executive of ARLA David Cox, also told the paper: ‘It is important to remember that ‘To Let’ boards are still, even in an internet age, vital for advertising rental properties. The traditional way of finding a property through a ‘To Let’ sign is still very popular among tenants.’[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2017/2/to-let-boards-may-be-banned-across-one-of-uks-largest-cities

 

17% of UK rental properties could be unfit by 2018

Published On: February 15, 2017 at 10:15 am

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17% of properties on the private rental market could become unrentable by 2018, should Government plans for new legislation go ahead.

New research from Urban.co.uk suggests that the Energy Efficiency Regulations passed in 2015 could lead to a number of properties being unfit. This is a concern given the existing supply/demand imbalance.

Energy Efficiency Regulations

The 2015 Energy Efficiency Regulations set out minimum energy efficiency standards for England and Wales. The legislation makes it unlawful for landlords to offer a new tenancy agreement on properties with an Energy Performance Certificate (EPC) rating below E from the 1st April.

Urban’s Landlord Knowledge Survey Report questioned around 4,000 UK landlords on a number of issues relating to the UK market. It suggests that many current private landlords are unaware that a large chunk of homes available in the rental market are currently below the minimum energy efficiency standards proposed.

Adam Male, co-founder of Urban.co.uk, said: ‘One reason to explain the lack of industry knowledge could be due to the recent influx in new regulations, which have flooded the rental market. With landlords facing more changes than ever over the past couple of years, it is no surprise that many find it tricky to keep up-unfortunately that’s no defence should it all go disastrously wrong.’[1]

17% of UK rental properties could be unfit by 2018

17% of UK rental properties could be unfit by 2018

Planning

Planning and preparation will be needed in order to mitigate the impact of the new legislation. Landlords are being urged to act now to make sure their properties come up to at least an E standard.

Danny Luke, managing director at Quick Move Now, observed: ‘It is commendable that the government is keen to improve the quality of rental property, but for the proposed new legislation to be workable, a great deal of thought will need to go into how landlords can be supported to make the necessary changes. This is especially true in light of the government’s decision to stop funding Green Deal improvements.’[1]

‘If significant energy efficiency improvement work is likely to be required, landlords will need support if we want to ensure a vibrant and efficient private rental market in the coming years,’ Luke added.[1]

[1] www.landlordtoday.co.uk/breaking-news/2017/2/almost-17-of-homes-could-become-unrentable-by-2018

 

UK rental inflation down for seventh straight month

Published On: February 3, 2017 at 10:03 am

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The most recent figures from Homelet have revealed that UK rents increased by an average of only 0.7% in January, in comparison to the same period in 2016.

This decline means that British rental price inflation has dropped in all of the seven months. The peak of the market in June 2016 saw prices rise by an annual rate of 4.7%.

Future Falls

At the current rate of growth, UK rents could begin to fall in the coming months.

Across Britain as a whole, the average rent for a new tenancy starting in January was £888pcm, in comparison to £882 in January 2016.

The most prominent slowdown in rental price inflation was evident in regions that had previously seen the greatest increases. In Greater London, annual rental price inflation was just 0.4% in January, in comparison to a peak of 7.1% in January.

In the South East, annual rental price inflation has now moved into negative figures, with rents for new tenancies in January down by 0.6% in comparison to last year.

These falls in rental price inflation are likely to mean that rents are increasing at a slower pace than inflation in general. As rental price inflation is also lagging behind average pay growth, this is good news for tenants worried about affordability in the private rental sector.

UK rental inflation down for seventh straight month

UK rental inflation down for seventh straight month

Affordability Concerns

Martin Totty, Chief Executive Officer of HomeLet, noted: ‘Our data has been showing, for some time, that landlords do not feel able to raise rents on new tenancies at anything like the pace seen during 2015 and the first half of 2016. Now it is even possible that rents will begin falling which would be unprecedented in recent times.’[1]

‘Landlords and letting agents have clearly recognised concerns about the affordability of rising rents and are now being cautious about what they expect tenants to pay. However, with many landlords facing increasing costs in the months ahead, as the Government begins to cut back on mortgage interest tax relief, the sector faces a difficult balancing act,’ he continued.[1]

Concluding, Totty said: ‘It remains to be seen if landlords feeling the pressure of tougher tax and regulation will be able to recoup these higher costs, as many in the industry had assumed. We see no sign of landlords panicking, and there is little prospect of an end to the long-term imbalance between supply and demand for residential property; still, with economic uncertainty adding to the unpredictability of the short-term outlook, landlords and tenants alike will be monitoring the marketplace very closely.’[1]

[1] http://www.propertyreporter.co.uk/landlords/uk-rent-inflation-falls-for-seventh-month-in-a-row.html