NLA Blog

Richard Blanco, NLA Representative for East London, gives his impression of selective licensing in the region.

Selective Licensing is a hot topic in East London.  Across London, we have seen a few examples of local authorities using this discretionary power and we thought we had escaped the worst.

The London Borough of Newham had piloted a selective licensing scheme in a few streets of the borough comprising Little Ilford from 2009.  They reported considerable improvements around dumping and anti social behaviour, crime and prostitution and an overall improved street scene – plus improvements to housing standards.

Little did we know they had plans to expand the scheme to become borough-wide.

At an NLA meeting in Stratford in November last year, a number of landlords challenged  the Mayor of Newham about choosing the whole of the borough for selective licensing when the legislation was intended to be applied to a select neighbourhood.  Sir Robin Wales replied that Newham was a selective part of London.  This is an imaginative interpretation of the legislation and some landlords in the borough are considering a legal challenge.  We all await the outcome with considerable anxiety and I have started buying in neighbouring Waltham Forest instead.  But I may not have escaped as there is a considerable likelihood of contagion to other boroughs.

Some of my colleagues across the regions have argued that selective licensing targeted at a particular problem locality can be beneficial.  But were these powers really intended to become a back door route to blanket landlord licensing?

I don’t think they were.

And many landlords in Newham like me, who provide good quality homes for local residents, resent the bureaucracy, intrusion and expense that we are to be burdened with, so that the local authority can root out bad practice.

Back in 2009, the Rugg Review of the private rented sector proposed a light touch licensing scheme, where landlords could be given a registration number that could be revoked if they failed to meet legal requirements.  The idea was we would pay a small fee to register online and it would be administered centrally.  If there is a strong public demand for landlords to be licensed, at least I can see the logic behind such an approach.

Selective licensing used in this blanket approach, on the other hand, leaves landlords paying a license fee of £150 per property.  And there is the question of administration:

- How can a borough like Newham possibly visit all 40,000 rented properties? 

- Shouldn’t resources be targeted at finding the rogues and robustly applying existing enforcement powers?

It seems to me using existing selective licensing powers for blanket licensing of landlords is an abuse of the current legislation which distracts focus from the real, pressing questions:

- Should landlords be licensed at all?

- Are local authorities using it as a distraction from their failure to root out bad landlords with their enforcement powers?

- What good does it actually do?

My gut feeling is the demand for licensing is driven by the commonly accepted stereotype that we are all in it for the money and don’t give a damn about our tenants.  Unfortunately, some local authority environmental health staff who spend most of their time dealing with bad landlords start to believe that we’re all the same.

I don’t want to be licensed.  I want to work to shift this stereotype and help other landlords be an effective part of the housing solution in the UK.

Is it not better to compel landlords to learn and change than to simply be counted and regulated?   Blanket licensing is not good policy, it is dogma.

London Evening Standard (West End Final A)
09 May 2012

We don’t often feel the need to share media coverage on this blog, but this article in the Evening Standard business section was simply too good not to flag.

Commenting on allegations that unscrupulous landlords in London have been illegally evicting tenants to make way for the high rents possible during the Olympics, the NLA was only too happy to bring out the big-guns to defend responsible, law abiding landlords.

Enter – Chuck Norris.

We’re often asked for advice on how to rid the sector of rogue landlords, with the support  of our new spokesman, I think we may have found a new and unexpected solution.

(For those unable to access the e-edition above, the story also features on the Standard’s website here: http://www.thisislondon.co.uk/business/cityspy/city-spy-take-care-as-you-chuck-out-your-tenants-7728404.html)

The Queen announces the Government’s legislative programme for the coming year

Whether you love or loathe the pomp and pageantry of the UK system of Government, it’s hard to deny that it makes a show out of an otherwise rather formulaic speech delivered word-for-word by an octogenarian.

Of course the Queen’s Speech, or State Opening of Parliament, is not just any old speech. This morning’s oratory explains what the Government in Westminster plans to use its time during the next parliamentary session to achieve  i.e. what bills will be brought forward.

This year only 15  bills were announced:

•             Banking Reform Bill

•             Children and Families Bill

•             Crime and Courts Bill

•             Croatia Accession Bill

•             Defamation Bill

•             Energy Bill

•             Electoral Registration and Administration Bill

•             Enterprise and Regulatory Reform Bill

•             European Union (Approval of Treaty Amendment Decision) Bill

•             Groceries Code Adjudicator Bill

•             House of Lords Reform Bill

•             Justice and Security Bill

•             Pensions Bill

•             Public Service Pensions Bill

•             Small Donations Bill

In addition to four draft bills, which are far less likely to reach the statute book this term:

•             Draft Care and Support Bill

•             Draft Communication Data Bill

•             Draft Local Audit Bill

•             Draft Water Bill

It’s quite apparent that there is no primary housing legislation planned, though none was expected, however there are a few points worth monitoring from a landlord’s perspective.

(1)    Crime and Courts Bill:  

The main purpose of this bill is “to protect the public by enhancing the national response to serious, organised and complex crime” However, it is also intended to “help deliver a swifter, more open and effective court and tribunal system”.

No doubt the Government’s intention is to focus on improving the efficiency of handling criminal cases and the trailed reforms of the way in which magistrates sit. But there could be implications for landlords, and opportunities for the NLA to push for improvements to the way the Courts handle housing cases.

(2)    Enterprise and regulatory Reform Bill:

This bill is intended to “create the right conditions for economic recovery by strengthening the business environment, reducing regulatory burdens and improving business and consumer confidence.”

There should be little elaboration needed in this respect. This could represent a real opportunity to ensure that regulation within the PRS is appropriate and proportionate to the risks involved and does not create unnecessary burdens or barrier to investment.

(3)    Electoral Registration and Administration Bill:

This one requires a little imagination, or at least memory of past mistakes. It is intended to “reduce electoral fraud by speeding up the introduction of individual Electoral Registration and to modernise our electoral registration system, making it convenient for people to register to vote.”  Which is all very well, however previous attempts have also sought to impose a duty on landlords to register new tenants when they enter a property and update their records when they leave. Potentially setting a dangerous precedent in terms of the role played by residential landlords.

(4)    Draft Local Audit Bill:

Finally, a draft bill to “abolish the Audit Commission and set out the new regulatory framework for the audit of local public bodies.”

In an age of increasing localism, this could have real implications for the PRS. Currently there appears to be very little oversight of how local authorities regulate their local housing market – this is proving dangerous and destabilising. This bill, should it ever become a reality, could be an opportunity for landlords to influence the way that they can be held to account.

All in all this Queen’s speech may not be epic list of new legislation which characterised so many recent parliamentary programmes, but as you can see there should be plenty to keep us all busy for a while.

Like so many landlords, Fiona Macaskill founded her property business later in life. She now owns 40 houses in the Bristol area.

Fiona Macaskill was named the NLA’s Green Property Woman of the Year in 2010 and the NLA’s South West Property Woman of the Year for three years running. As a five-time world record holder in paragliding, and the fastest female paraglider pilot in the world, you wouldn’t naturally expect this former DT teacher to move into property. Here, Fiona talks about how she made a success of her new business…

“At the end of the 1990s I took a year out from my job as a teacher of design technology and focused on paragliding – a huge passion of mine – but I broke my pelvis while attempting a paragliding world record. While I was recovering, I inherited £100,000 which I used as a deposit on four properties with a view to letting them to students. This became my lettings business, UWE Houses, and my new career began!

“I have always loved ‘making things better’. I enjoy buying dilapidated houses and completely refurbishing them to a very high standard. The environment in which we live is very important to me – my properties are homes, not just houses and I like to go the second mile.  We provide eco-appliances, 14 of our properties have solar UV panels installed, and we even maintain herb gardens and fruit trees at the properties. Bills are included in my tenants rent, but they are given the chance to recoup some of their money at the end of the year if they use less energy. We work with them to get their monthly meter readings online and I send them a monthly statement so they track their progress against their target.

“As a result of winning the NLA’s Green Property Woman of the Year and the South West awards, we are recognised as ‘top of class’ within our area of student lets within the north east of Bristol. We tend to attract tenants who are interested in ‘eco’ issues and those who are not when they come to us often then take more interest in environmental issues.

“UWE Houses is a now a family business with 40 properties, and we have managed small growth in a difficult market. Raising money for further expansion has become extremely difficult; you would have thought that with Bank base rate being so low it would be easy to borrow but the criteria has become increasingly stringent.

“As a ‘property woman’, I have very high expectations and standards: I attempt to provide top quality housing with top quality service. With four daughters and six grandchildren, and as a former teacher, I cannot help but take an interest in my tenants and their well-being, but this can benefit my business as much as their tenancy. As a human being I need a challenge, and my lettings business provides this, as well as allowing me time I would not otherwise have had to pursue my other passions of flying paragliders and aeroplanes!

“I would absolutely recommend that anyone thinking about entering the NLA Property Women Awards should do it. It makes you think about your own business in a different way, and you need to communicate it so that it can be easily understood. It is an opportunity to learn and develop your business – whether or not you win!”

If you know (or are) a woman working in property with a similarly inspiring story to tell, make sure their efforts are rewarded by entering the NLA Property Women Awards 2012. Click here to view the categories and find out more. Entries close on 25th June 2012 and the ceremony will take place on 31st October 2012.

Chafes Solicitors explain the to go about claiming possession

As a landlord, there are often times when you will unfortunately need to seek possession of your property. For example, if your tenants are in arrears or your property has been damaged through anti-social behaviour (the top two reasons for a landlord being forced to go down this route.)

If your tenants have signed an Assured Shorthold Tenancy (AST), there are two options open to you. So which is the right course of action?

Well, it all depends on your circumstances of course – why and when are you seeking to repossess your property?

As a landlord, you must serve notice on your tenants in order to claim possession and there are two ways for you to do so.

1. Section 21(S21) – known as an Accelerated Possession Procedure, or
2. Section 8 (S8) – known as a Standard Procedure

So what do you need to know about both routes?

S21

This route gives you the right to possession at, or after, the expiry of the tenancy period provided you serve a S21 notice to your tenants two months before you wish to claim possession. Remember, you are not automatically entitled to possession upon expiry of the tenancy unless you first issue the S21 notice.

This route means that there is no need for a court hearing so it is likely to be less hassle; providing you have correctly served the S21 notice (and the court papers are in order) the court must order that you can possess your property.

However, the court does not have the power to make a money judgment under this route. So this means it cannot order your tenant to repay any rent in arrears, for example, although it is possible to issue separate legal proceedings in respect of arrears.

S8

Use an S8 notice if the terms of the tenancy have been breached. You have the right to possession on 17 different grounds – commonly rent arrears – and the length of the notice will vary upon the grounds you have sought possession.

See section 8 grounds for repossession for more information.

S8 claims also allow for a money judgment to be obtained along with an order for possession, which the S21 route does not allow.

Bear in mind however that S8 proceedings can often be lengthy as they are likely to be defended by the tenant, so the nature of the breach of tenancy will be important. For example, if your tenants are in arrears you might want to consider likelihood of recovering this money in the long term.

Where both routes apply – such as when the tenancy is ending and there are also rent in arrears – it can be advisable to use the often simpler and quicker S21 route instead as faster possession will allow you to re-let your property sooner.

Regardless of your chosen route, remember that you must have served notice on the tenant before any court proceedings can be begin.

Claiming possession of property can be concerning and stressful for all involved. The NLA can provide advice and guidance for landlords through its Online Library (FREE for NLA members) and Telephone Advice Line (Exclusive for NLA members). Visit the NLA Online Library here.

This blog has been provided by Michael Devlin of Chafes Solicitors LLP.

Is the gap between LHA rates and market rents making London markets less viable?

The Mayor of Newham, Sir Robin Wales, has courted controversy today following revelations that the Borough has written to 1,179 organisations in search of ways to find ways to relieve housing pressure in the area.

In particular, an invitation to lease homes for 500 families from Brighter Futures – a housing association in Stoke 160 miles away – has sparked a  war of words involving the housing association’s chief executive, the Local Government Association and the Housing Minister .

Responding on the Today Programme this morning (24 April 2012) Grant Shapps described Newham’s approach as “unfair and wrong”. He also accused the Mayor of “playing politics as we’re in election season”.

Politics being politics it did not take long for stories of other, Conservative-led, boroughs taking similar steps to out-source their housing obligations to out-of-London locales. The City of Westminster’s Smart Housing Group (SHG) has apparently approached housing providers in Derby and Nottinghamshire (130 miles away) for much the same reason.

Unfortunately, as political parties go about point scoring against their respective local authorities the real issues at stake here all too often get buried in mountains of rhetoric.

These are real life examples of the shortage of supply relative to available housing in London. Housing demand in London far out strips the availability of homes, leaving households with few options when it comes to finding somewhere to live.

This shortage of supply is of course exacerbated by the restrictions we have witnessed on LHA.

A recent NLA survey showed, not only that more than two thirds of landlords active in this sector may be forced to exit, but that a significant proportion have seen tenants they would have liked to retain leave their properties.

If this were not bad enough, in the case of Newham there is the added complication that the Borough has proposed to introduce Selective Licensing in respect of every private-rented property  - which is arguably not a very selective approach. It is a real concern that this additional complication will deter potential investors from committing to the Borough at a time when increasing supply should be the collective goal.

Nobody could deny that there are genuine issues in the private-rented sector in Newham, but the majority are at root a consequence of insufficient supply offering limited choices to potential tenants.

Newham, and a number of other areas in London and the South East desperately need to increase supply, and the only people who seem interested in doing so are private landlords. There certainly seems to be no appetite for construction of new social housing.

People choose to live in London Boroughs such as Newham because they need proximity to work, they have a connection with the local community and value the other amenities present in the area. Transplanting these households will not improve their access to these things and is likely to perpetuate their LHA dependence.

All local authorities should be working with landlords and tenants to help support tenancies involving housing benefits which can be more challenging to sustain.  They also need to support tenants to find  professional landlords, identify appropriate local accommodation within the scope of the available LHA rates and so far as possible sustain existing tenancies.

General Jack D. Ripper (wonderfully portrayed by Sterling Hayden in the Kubrick classic ‘Dr Strangelove) once said:

“today, war is too important to be left to politicians.”  

I’m starting to wonder if the same may be true of housing.

Steve Bartlett, NLA Representative for Dorset, explains his change of heart about Article Four Directions

Article 4 Directions mean that anyone renting a property with 3 or more unrelated people will require planning permission if the property does not have established rights to do so. Many local authorities are using this ‘planning tool’ as a mechanism for creating what they call a more ‘balanced’ community. In reality these local authorities are preventing tenants the freedom to choose where they wish to live, and for landlords, to prevent them from renting out properties to certain groups of people.

So called ‘studentification’ (an area that has become saturated with high numbers of students) is often quoted as a reason for introducing the Article 4 Direction, whereby a often small but vociferous minority of local residents have complained to the local authority about the anti social behaviour frequently associated with student populations. Where councils have introduced this measure, it is not only students and landlords who are affected but other groups of individuals who traditionally choose shared housing, e.g. young professionals, migrant workers, workers on low wages and benefit recipients.

I fully understand and sympathise with home owners who have seen their residential areas slowly turned into an extension of the university campus, but this is a product of allowing universities to be built and then grow without providing sufficient housing and infrastructure. In most cases, the horse has already bolted and Article 4 cannot return former residential areas to their previous status because the right to operate residential properties as Houses in Multiple Occupation (HMO) has been established through use.

It is probably fair to say that the majority of the general public support Article 4 legislation, and I confess that my initial reaction was the same, however, as my knowledge has increased and the issues have emerged I am now vehemently opposed to it because of how I believe local authorities can and are using the legislation to  ‘shape’ it’s view of society, as opposed to how the society will shape itself through the ‘natural order’ of things. For example, where areas of towns have a high number of HMOs, Article 4 will be used to prevent additional HMOs from being established.  I believe this will happen not only in areas where there are high numbers of students but additionally, and specifically where the groups of people mentioned earlier wish to live. I have heard councillors and even my local MP state the desire to create a ‘more balanced’ society in certain areas of the town and this is my main concern.

Just what constitutes a ‘more balanced’ community? More Welsh people, more Scottish people, more migrants, more married people, more gay people, more older people, more children, more rich people, more poor people, more working people, more unemployed people etc. etc. (get the message?) And what right has a local authority to decide what this should look like?

What I believe local authorities mean by a more ‘balanced’ community is to get rid of those elements of the communities that that they dislike or are perceived to be problematical.  I have heard this termed as ‘social engineering’ and I guess this is exactly what it is and the target of such prejudice includes the poor, the vulnerable, migrants and yes students who live in shared accommodation. We should not forget that all of these individuals have the some rights as anyone else!

It is my belief that in the main, communities structure and balance themselves naturally based on all sorts of factors and these communities change constantly over time. For example, former residential areas near universities now have thriving vibrant communities which bristle with life and where businesses (including being a landlord) now thrive in areas which were previously in decline. Yes there are problems, although they are often overstated, but these can be addressed by cooperation by stakeholders within the community and by the council using existing powers when required.  We should not allow Local Authorities to use Article 4 legislation to denude our basic freedoms of choice or to ‘socially engineer’ our communities.

Juliet Ashton, NLA Property Woman of the Year 2010

Do you know a woman working in property who goes beyond the call of duty to help out her tenants and provide them with good homes?

Then why not nominate them for the NLA Property Women Awards 2012 – celebrating the most dedicated women in the private-rented sector.

The awards will recognise female landlords right across the UK – with 11 regional awards along with six principal awards.  They will include the NLA Green Property Woman Award, for those making significant energy efficiency and environmental improvements to their properties, NLA Young Property Woman Award, recognising the achievements of young women under 30.  Other categories include NLA Letting Agent Property Woman Award, NLA Local Authority Property Woman, and new for 2012, the NLA Third Sector Property Woman Award, for those operating within the ‘third sector’ such as charities or housing associations.

The NLA Property Woman of the Year 2012 – the overall winner – will be selected from the regional and principal categories.

Juliet Ashton was named NLA Property Woman of the Year in 2010 and says being a landlord can sometimes be challenging:

“I feel very strongly as a landlord that I am in a privileged position to be able to do something practical to help in our society. We can’t help everyone of course, but if we all helped someone it would be amazing.”

“No one congratulates you when you do a good job but you can be sure you will be criticised if you don’t. At the time I entered the awards I had had a difficult year one way or another and yet had managed to tackle every situation along the way and really felt I wanted to share some of my experiences to encourage others who were going through difficult times with their property.”

Since winning the award, Juliet’s business has gone from strength to strength:

“One of the first things I did was to name the business ‘Jabez Homes’.  I have added another property to my portfolio and also managed some properties for other people. The award gave me confidence to do more of what I was already doing and I have taken challenging tenants with mental health, drug and alcohol problems.”

“I see my tenants as extended family. Some are living in a foreign country and so I want to be an ambassador to them and do things well, to they feel someone is looking out for them.”

If you know any female making a difference in the PRS, why not nominate them for an award?  You can download nomination forms from our website at www.propertywomenawards.org.uk and entries close on the 25th June 2012.

NLA Representative Christine Fernandes gives a landlord's take on EPCs

Well…..probably not a lot –  most only bother with them as it is a requirement to be able to market your property to let.

Of course this is only my opinion, but I think that realistically this will be the view across the vast majority of Landlords.

Although, perhaps I am being pessimistic and not giving credit those that care. I am sure there are some landlords out there who see EPCs as more than just an obstacle to letting – but it is difficult to see their value at times.

New Legislation relating to EPC’s comes into force on 6th April 2012 . It advises  that to market a property for rent or sale the EPC must be displayed within 7 days of commencement.

This legislation, although very, commendable really doesn’t make much of a difference to me as a Landlord. I have EPCs for my properties, the fact that I now have to display them whilst I market the property is no great effort for me.

I can honestly say that not one tenant I have rented to has ever accepted my offer of providing them with an EPC. The point is further stressed when I show them a copy and you can clearly see they are not at all interested.

My disappointment is that Legislation should have scratched the surface a little bit deeper and looked at what should happen once an EPC is done.

EPC’s are held on a central register – this register should use to filter homes with lower rating EPC’s  -

This way we can identify where we can make an immediate impact. Given the poor reputation we landlords have, I would welcome the Government establishing teams to work with owners of property with poorer rating EPCs.

This would ensure that owners whether they be private landlords, owner occupiers or housing associations, in this predicament, are given support and advice about options available to them.

Ultimately, to achieve the longer-term targets of reduced emissions nearly all housing stock will have to have zero emission.

We all need to change our mind set and focus on the long-term goals. Teams, as I’ve suggested at a local level should be working with landlords, letting agents and their respective associations alike. Otherwise most of us will continue to pay little heed to EPCs or what they are supposed to represent.

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NLA members qualify for a 10 per cent discount from a NLA EPCs . To find out more about their range of professional assessments carried out by a nationwide network of fully qualified and accredited Domestic Energy Assessors please visit the NLA website.

Ludwieg Mies Van Der Rohe's 'Farnsworth House' might well have been turned down by many UK planners.

The Government is expected to publish the long awaited National Planning Policy Framework, better known as the NPPF, today. This publication follows an elaborate and very high profile consultation process and a number of delays. However, the date finally chosen seems both fitting and ironic.

Firstly, today is fitting, as 27 March is (quite) well-known in housing circles as the birthdate of Ludwig Mies van der Rohe, the modernist architect remembered fondly (and not so fondly) for trying to create buildings which represented their time in a functional way which reflected his interpretation of society. Take a look at the Seagram Building in New York and make up your own mind as to whether he succeeded.

If we are fortunate the NPPF has embraced at least part of this and stripped away the existing bureaucracy of planning regulation leaving just enough behind to allow communities to address their needs – in particular the desperate need in much of the country for more appropriate housing – and to preserve the existing aesthetic and culture of their locality.

The irony is perhaps more obvious to many landlords in England today (apologies to readers in Wales and Scotland but fortunately this bit doesn’t really apply to you). The NPPF’s measures to free us from Town Hall tyranny –  in respect of new development – coincide with moves by more than one in ten relevant local authorities to drastically restrict the way in which landlords may use existing housing stock to provide homes.

Article Four Directions, those pernicious local orders dictating what kind of household may occupy a residential property, are spreading through England like an ill-conceived fashion restricting access to low cost housing in areas where it is very much in need.

As the headlines today will no-doubt be dominated by a mixture of cheers and sneers (depending on your viewpoint) aimed at the relaxation of planning restrictions. Is it too much to ask that as well as providing the means for much needed new housing in today’s NPPF, the Government also allows those of us trying to help meet housing need be permitted to do so in response to the needs of local demand?

Probably, but it’s always worth asking the question.

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If you know of a new article four direction in your area, or believe that your local authority may be considering such a policy please add a comment to this post to let us know where. 

Faiz Rashid, NLA Local Representative for Yorkshire, explains the importance of understanding the status of tenancy deposits.

Most landlords ask new tenants to pay a month’s deposit as security in case of any damage to the property or non-payment of rent by the tenant.

It’s the only real protection available to us should things go wrong later on.

However, what happens to that money at the end of the tenancy is also one of the most heavily challenged decisions a landlord has to make.

To deal with these disputes, the Government introduced mandatory tenancy deposit protection for most tenancies in England in Wales in April 2007. This wasn’t necessarily popular with all landlords then (or even now if truth be told) but it was intended to safeguard tenants’ deposits and provide a fairer system for settling disagreements about the return of any disputed at the end of a tenancy.

There are two types of government authorised schemes currently available:

-       Custodial; where the landlord or agent pays the deposit into the scheme, where it will be kept until the end of tenancy.

-       Insurance backed; where the landlord or agent holds onto the deposit but pays insurance premiums to the scheme. This means that the deposit is insured if there is any dispute, and the scheme will repay the tenant the agreed amount directly.

Personally, I use my|deposits for my tenancy deposits. This suits me because its flexible (I can use it around the clock), easy and straightforward. I can hold the deposit myself and am able to simply return it to the tenant at first opportunity at the end of the tenancy (providing all has gone well) which isn’t always so straightforward with the custodial scheme. But the custodial scheme has its merits too, especially if you don’t want the responsibility of holding onto potentially large sums of money for the duration of the tenancy.

Despite some teething problems, largely being addressed by new legislation from next month discussed in our earlier guest blog here, the three Government backed schemes have proved largely successful.

But there is still quite a lot of confusion about the status of deposits in general.

The key point which landlords often get wrong is that the deposit belongs to tenant. It never ceases to be the tenant’s money and should be returned unless the landlord can show that he or she has suffered a financial loss as a result of the tenant’s action or inaction.

This can be frustrating for landlords because as we all know it can be difficult to remain objective when carrying out an end of tenancy checkout – especially where there is obvious damage. This is why conducting a thorough and comprehensive inventory at the beginning of every tenancy is absolutely essential. Note down everything, take photographs, video if necessary and make sure that the tenant signs their agreement.

More landlords fall foul of the dispute resolution process because they cannot prove what condition a property was in before the tenancy began than for any other reason.

Should the need arise – where an agreement can’t be established over the amount of the deposit to be returned to the tenant – at the end of the tenancy all three schemes provide access to alternative dispute resolution (ADR) service gives landlord as well as tenants, the peace of mind.

Also – for all those landlords reading in Scotland, Tenancy deposit protection is coming soon! For information visit www.mydepositsscotland.co.uk for the latest news.

In 2012, with the London Olympics only months away, it would be reasonable to expect  an Olympic style Budget Statement to meet Herculean challenges.

It is hard to describe George Osborne’s address to Parliament in such terms – but there were some important points of which to take note.

Heavily trailed in advance of today’s statement, the Chancellor announced significant changes to personal allowances, a reduction in the highest rate of income tax and the introduction of a new marginal rate of Stamp Duty Land Tax (SDLT).

However, once again there was no recognition of the barriers to investment presented by the current system of property taxation.

The UK economy has suffered its most damaging recession for decades, the Government has (and continues) to cut public spending while encouraging private sector investment to take its place. In fact Mr Osborne described today’s statement as “unashamedly backing business”

The Chancellor has repeatedly declared his commitment to small businesses, and the desire to see small and medium size enterprises play a much greater role in economic recovery.  Despite this, small enterprises specialising in residential housing (AKA landlords) remain unable to release gains from the sale of their assets to invest in growing their business.

Today the Chancellor unveiled more tinkering at the edges of SDLT rules, in pursuit of the perfectly reasonable objective of reducing tax avoidance by rich individuals. This year Mr Osborne has introduced two new marginal rates for property purchases in excess of £2m – 7 per cent for purchases by individuals and a whopping 15 per cent for companies.

The Government is of course justified in wanting to stop wealthy individuals exploiting loopholes to avoid paying their dues, but the Treasury should take care not to ignore the impact that measures will have on legitimate companies which buy property to let by way of business for whom an additional 15 per cent at point of purchase will drastically influence investment decisions.

Meanwhile calls for a comprehensive review of Stamp Duty continue to fall on deaf ears. It is clear from the, now annual, incentives, payment-holidays and rate changes that the successive governments recognise that SDLT is broken yet their reluctance to go back to the drawing board remains.

HM Treasury needs to realise that SDLT is about more than just mansion taxes and the wealthy, it affects investment and business and is not fit for purpose.

This is a missed opportunity to stimulate more investment and encourage growth in the housing market.

For more on the Budget 2012, visit the NLA Website

Eddie Hooker, CEO, my|deposits, looks at what the changes to the Localism Bill will mean for landlords

The Localism Bill changes are set to come into force on the 6 April and it will mean some small changes to the way landlords protect their tenant’s deposit.

The good news is that that the changes will give landlords more time to protect the deposit money, but if you don’t do so, the courts will have more powers to impose penalties.

These changes only affect tenancy deposit protection in England and Wales.

Extra time to protect deposits:

• Currently: Landlords have 14 days to protect the deposit after taking it from the tenant.
• From 6 April 2012: Landlords will have 30 days to protect the deposit after taking it from their tenant.

Landlords must not only remember to protect the deposit within the 30 days but also provide the tenant with the deposit protection certificate and the Information for Tenants leaflet.  We’ll provide this to you when the deposit is protected but it’s up to you to pass it on to the tenant.

my|deposits will still accept the late protection of deposits by landlords after the 30 day period.  But remember that the tenant can still seek compensation through the courts.  They can do this even if you protect it before going to court.  They can also make a claim after they have left the property.

What if the deposit is not protected?:

• Currently: Under the existing law, if the deposit is not protected, a court can order that the landlord pay the tenant three times the deposit as a penalty. The landlord is also unable to use a Section 21 notice to seek possession of the property.  There have been some cases where landlords have escaped penalty by protecting the deposit late.
• From April 2012: If the deposit is not protected within 30 days then the landlord is certain to face penalties if taken to court by the tenant.  Courts will order that the deposit be either protected immediately or returned in full to the tenant.  As a penalty, landlords could also be ordered to pay the tenant between one and three times the deposit amount, and it won’t be possible to use a Section 21 notice until the penalty is settled with the tenant.  Importantly, the tenant can still seek this compensation even if the deposit is protected late or if they have left the property.

Landlords using us to protect their deposits can rest assured they comply with the new law.  Just remember to protect all deposits within 30 days of receiving them and provide the tenant with their Deposit Protection Certificate and the Information for Tenants leaflet.

For more information on how to protect your tenant’s deposit, download our guide here.  Or to join my|deposits and start protecting deposits right now, visit our website www.mydeposits.co.uk

Deposit protection will be introduced in Scotland this year, and more information can be found at www.mydepositsscotland.co.uk

Steve Simpson, NLA Local Representative provides some insight into the BTL market

I am sure we all agree that the financial world we knew four or five years ago has changed – almost beyond recognition. However, despite the fact that bank base rates have been at a record low of 0.5% for over 3 years, finance remains difficult to obtain and relatively expensive. For landlords, both large and small, looking to expand or re-mortgage and successfully obtaining finance in the last few years has been tough; even with a successful business and a healthy deposit. When buy-to-let lending was at its peak in 2007, nearly 50,000 BTL mortgages per month were being sold. By 2009, lending dropped nearly 80% to less than 11,000 per month. But there is good news on the horizon. If you are like me and looking to increase your portfolio, as confidence slowly returns there are more lenders either entering or returning to the BTL market; especially to the smaller landlord. There are more products with a broader range of loan to values (LTV) ratios available and at better interest rates.

Bounce back: Buy-to-let is clawing its way back with monthly mortgages for new property purchases rising steadily - but it remains substantially below peak levels.

NLA Mortgages, which offers cashback for NLA members, show 24 lenders currently offering 355 BTL products. While this is slightly down on last month, it is more than double the low point in 2009. This is good news for landlords looking for finance.

What’s more, for the larger landlords, those set up as a Limited Company or those with HMOs, should watch out for some well-priced new products due to be released later this month from a lender new to the sector.

We are also seeing an increase in the ‘Silver Buy-to-Letters’. Cash remains king as far as starting or expanding your portfolio is concerned. While there are some 80% and even 85% LTV products around, the bulk of products require a landlord to place a deposit of at least a quarter of the purchase price. This has created a small but growing new landlord community: those people in their 40s and 50s, fed up with low interest rates on savings, are turning their assets into investments by purchasing property for rent. Lenders are keen to lend to this ‘silver generation’, as they have the all-important and readily available cash deposit.

With the Bank of England base rate still at an all-time low, property prices still depressed in most areas, more people turning away from traditional saving accounts causing more BTL products to enter the market. If you have the deposit, this is the time to re-finance or expand your portfolio. This confluence of events will not last forever so seek out the best product for your needs whilst you can. But remember, do not overstretch yourselves and if you are an NLA member, you can visit the online library for more information.

Good Landlording ….

Richard Price, NLA Director of Operations, joined forces with the Electrical Safety Council to raise awareness of electrical safety.

Last week we joined forces with the Electrical Safety Council (ESC) to help raise awareness about the dangers of electricity in privately rented homes.

I joined the ESC at a London-based radio studio to do almost a dozen interviews with regional radio stations right across the UK to help increase awareness about electrical safety in the private-rented sector (PRS).

Each week, at least one person is killed and 1,000 people are seriously injured in electrical accidents in UK homes.  Electricity also causes thousands of house fires each week – many of which could be avoided.

Unfortunately for landlords, the PRS is over-represented when it comes to safety incidents involving electricity.  While 16% of the UK population rents privately, they account for 20% of people who suffer an electric shock.

Research by the ESC found that the problem lies in a misunderstanding between landlords and tenants over who is responsible for ensuring the property is safe of any electrical hazards.

By law, landlords must ensure all electrical wiring and installations in their properties are safe.  So make sure you follow our advice:

• The best way to be sure is to have it inspected (every five years) by a competent electrician.  This is a legal requirement if the property is an HMO.
• When a tenant is moving out and a new one is moving in, do a visual inspection of the property to see if anything has been altered.  Have anything that looks dangerous looked at by a qualified electrician.
• It’s also advisable to have Residual Current Device (RCD) protection installed in the property as well.  This will give added protection to tenants from any faulty electrical appliances.
• Any appliances you provide as part of the tenancy (such as plug-in heaters or kitchen appliances) must be safe.  An easy way to ensure safety is through Portable Appliance Testing (PAT).  The NLA holds regular PAT courses to teach landlords how to carry out safety checks themselves.  For more information click here.
• Any landlord found to be negligent over electrical safety can face stiff penalties of up to £5,000 on each count or imprisonment.
• It’s also important to show tenants how to isolate the electricity if there is a problem.  When they move into the property, ensure you show them where the fuse box is and what to do in an emergency.  If the property has solar panels ensure they know how to isolate supply from them as well.
• Give your tenants a list of what to do if there is a problem, including a telephone contact number so they can call an electrician.

The ESC has produced a simple guide for landlords outlining how to ensure the electrical safety of a property. They also have a smart phone app you can download on the site which guides you around the home in a step-by-step inspection.

Also, visit the NLA Online Library (FREE for NLA members) for more information on electrical safety, or better still, sign up to become NLA Accredited and learn about your wider responsibilities as a landlord.

If in doubt, call the NLA Advice Line (FREE for NLA members) who will be able to guide you further.

To join or to find out about the NLA Membership benefits click here

Marion Money - NLA Representative for Kent - shares a cautionary tale of the journey from dream-come-true to potential nightmare

The modernised flat with sound insulation fitted kitchen including dishwasher, and chrome power shower always attracts quick viewings when advertised in the main internet portals.

Sure enough the phone started ringing as soon as the listing was live and the first appointment made for that afternoon.

A very chic lady, too chic for the area arrived.   Angelina’s show of leg at the Oscars paled in comparison to the display by ‘Miss Prospective Tenant’. Panache must have been her second name.

‘I want to pay 6 months’ rent up front!’

Alarm bells ringing I asked:

‘why?’

‘Easier’

Came the prompt response. Elaborating:

‘I know its all paid and no more worries. I have my documents ready for you to see including my European Driving Licence  and I can take the flat right now.’

‘Not a problem for me to be paid monthly’

I explained. Adding:

‘My office is in the building next door and I am in this building weekly checking the call points on the fire alarm system.

If you’d like to come next door to my office I can start the Identity checks on the internet and take a copy of your License.’

Now more alarmed than I, she hastily concluded:

‘No, No! I have just realised that I have left the paperwork in the car I will make another appointment. ‘

I showed Miss (no-longer) Prospective Tenant out and her large minder-esque friend slipped into step behind her.

This was a practical lessons for someone who routinely preaches them, including a few points I’m only too happy to share.

• There are no such things as European Driving Licences. they can be bought on the internet for £5.00
• Upfront rent payments means the tenants want you to stay away. They do not want a Landlord to be suspicious of activity around the premises.
• Trust Your Instincts

My instinct was there would have been a regular trail of visitors to the flat, staying for short periods of time and my chic lady may have been earning her living (and rent) from immoral means.

These warning signs are not dissimilar from that other scourge of the private landlord.

Cannabis factories.

Criminal gangs target innocent Landlords and the more innocent you are the more likely you are to be taken in.

Cannabis factories are very expensive to recover from as the interior of the house will have been all-but destroyed to convert all available space into a greenhouse.

Usually  a smart, respectable couple will take the house – passing the tenant check with ease.

Six months rent will be paid up front, with the intention that the landlord will have no reason to visit the property again. Shortly after ‘workers’ will move in and convert the property into a factory.

They will tap into the main electrical grid, or the neighbours supply, or even the street lighting as it takes an enormous amounts of electricity.

They will rip huge holes in the floors and ceilings to run  ventilation ducts and there will be dripping supply pipes everywhere watering the illicit crops.

Finally they will ‘booby trap’ the premises to stop rival gangs stealing getting in.

This can even include connecting  door handles to the mains and installing spikes  on the insides of windows to impale the curious.

These are the traps which will be waiting for you if you venture in because the neighbours have phoned to report:

• blacked out windows,
• condensation, 
• piles of soil appearing in the garden and;
• someone living in a tent in the garden as its too hot inside for the ‘gardener’  looking after the plants

All-in-all: Landlords be suspicious, the phrase :-

‘I’ll pay 6 months up front’ –  is not a dream come true, it is an alert of potential criminal behaviour.

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As a landlord it is vital that you take out specialist residential landlord property insurance as normal home insurance policies may not be valid, especially when you’re tenants deviate from the norm.

NLA Property Insurance has been developed specifically for landlords, taking into account all your requirements. NLA members benefit from up-to 15% discount. To find out about other benefits of membership click here

Did you know that 99.9 per cent of businesses are classified as SMEs (Small and Medium Size Enterprises)?

That is according to the Department for Business, Innovation and Skills (BIS), who’s director of Enterprise came along to the Trade Association Forum this week to talk about their importance to the UK economy.

According to Mr Jackson (the man from the ministry) of those 99.9 per cent, 74 per cent would like to grow their business in the next twelve months but only 30 per cent will – if recent trends continue.

Why so few?

SME Barriers to Growth

According to BIS  the main reasons are the state of the economy, fierce competition and the complexity/cost of the tax regime. Although Regulation, access to finance and the practical matter of ensuring that a company has the appropriate management skills to drive growth also feature highly.

Although we rarely talk in terms of landlords as SMEs, the more they were described in this presentation, the more the parallels became obvious. The NLA speaks with landlords (members and otherwise) every day on myriad issues, many of which are very much industry specific. Even so the majority fall quite neatly into one of the categories in the chart above.

I suspect that the order would be slightly different if the question were repeated solely with landlords. Almost certainly obtaining finance would feature more prominent, as would coping with the tax burden – but the challenge to landlords, like all other small and medium size enterprises is to grow and to do so in a sustainable way.

So why not learn from the approach taken by other SMEs, or more accurately from their mistakes.

The BIS research tells us that only 30 per cent of small businesses have a business plan and only 40 per cent are able to show clear management accounts – both of which make accessing finance more difficult.

Accessing all types of finance, not least Buy-to-Let has become more difficult so it may be time to take a long look at our approach to business and what our long term plans are.

However, the most striking aspect of BIS’ presentation was the revelation that a small to medium size business is TWICE AS LIKELY TO GROW if it seeks advice. Yet shockingly only 50 per cent bother.

NLA members benefit from exclusive FREE access to professional telephone advisers. In fact, the NLA Telephone Advice Line takes more than 35,000 calls every year meaning that it supports about 130 small business every working day – which might go some way to explain how the PRS has managed to defy its detractors and grow to encompass 16.5 per cent of all households in England and Wales.

In fact, the PRS  is expected to overtake socially rented housing in the next few years, but with this growth comes responsibility to one another to make sure that the sector is well respected and perceived.

Networking and peer mentoring can be just as valuable as professional experience. The benefits of sharing experience are well recognised, which is why the NLA puts so much emphasis on our local branch meetings and online NLA member forum. If you’ve a query, or something useful to share why not give them a go today.

To join or to find out about NLA membership benefits visit landlords.org.uk

To make up for the general dearth of empirical data available on the PRS, we at the NLA conduct quite a lot of primary research.

This enables us to back up our policy positions, strengthens our position with Government and stakeholders and generally makes the Association a more ‘useful’ partner to those who make policy.

It also means that we sometimes uncover interesting, if occasionally surprising, things about the UK’s landlord population. For instance, since the Association established a quarterly survey panel, two simple truths have been evident:

(1) Not all landlords make a profit, many just break even, some even make a loss. Not that everyone believes this - particularly against the backdrop of headlines implying that every rental property is accompanied by a license to print money.

(2) The more properties you have, the more likely you are to make a profit. Not rocket science, but generally true.

Of course these aren’t the surprising results. The element of surprise comes from the fact that over recent months even some large portfolio landlords have started to declare a loss.

For the first time since the survey began the percentage of portfolio landlords (>20 properties) making a loss is on the rise – reaching eight per cent for the last quarter of 2011.

So, how come I keep reading in the newspapers that landlords are ‘raking it in’?

A lot of this seems to stem from a simple misunderstanding about the costs of providing housing.

A former Secretary of State recently asked the NLA to explain how we could argue against the accusation that landlords are guilty of profiteering. He based this on a simple rental yield calculation which illustrated that gross return can indeed be quite attractive considering the Base Rate remains welded to 0.5 per cent.

Give it a try with this calculator:

However, what good is knowing your gross yield if you then ignore all of your costs. It is akin to running your household budget purely on your salary before tax.

I suggest that anyone interested in the true income most providers of housing can expect take a look at the next calculator instead.

Bearing in mind this ignores countless other costs from management fees and service charges to local licensing fees. (Without even beginning to consider tax liability).

Next time I’m asked why landlords can’t simply lower their rents I’ll certainly point out the difference between these two results.

Note: These calculators are intended as a very basic illustration to add a bit of fun to an otherwise dry subject, they are not a business planning tool.

The PRS is fast approaching the point when it will overtake social housing as the UK's second most populous tenure.

The private-rented sector has been in the spotlight today for two reasons:

(i)                  Shelter launched the latest phase of their ‘Evict Rogue Landlords’ campaign

(ii)                The Department for Communities and Local Government (DCLG) published the latest bulletin based on the long-running English Housing Survey (EHS)

Although it may not be immediately apparent, both of these events are comprehensively interlinked.

Taking the ‘Evict Rogue Landlords’ campaign first. It is frustrating that the private-rented sector and in particular private-residential landlords only ever hit the headlines because of the, frankly indefensible, actions of a small criminal minority. However, it is a minority which we, as an industry, cannot afford to ignore because of the impact they have on our reputation as a whole.

A recent survey of NLA members found that only seven per cent believe that landlords are viewed positively by the general public – which is a serious issue for a profession responsible for providing housing to millions of households.

This is especially distressing when you consider the information published by DCLG. According to the EHS 16.5 per cent of households in England and Wales now live in privately rented accommodation, only one per cent behind social tenancies. (Roughly 3.8 versus 3.6 million households)

At the current rate of expansion it is likely that around one quarter of us will rent their home from a private landlord within a decade.

Any sector demonstrating such rapid growth is bound to experience its fair share of bad practice. In actual terms, the number of complaints against landlords only amount to around 2% of all PRS tenancies. But unlike other service industries, housing is an integral part of each of our lives, it affects our ability to work, raise families, stay healthy – in essence it impacts upon every aspect of our lives. So there can be no acceptance of negligence or derogation of duty.

With growth in the PRS’ market share will inevitably (and rightly) come greater focus. What is not inevitable is bad practice.  It is up to conscientious, law abiding majority to do everything we can to change the tide, ensure rogue landlords have no-where to hide.

Why not set yourself apart from the rest by signing up to a landlord accreditation scheme like NLA Accreditation.

We have just learned from the Department for Work and Pensions that LHA rates are to be frozen from April this year.

Officials are saying that this is an “immediate change” to prepare for the pegging of LHA rates to the Consumer Price Index (CPI) measure of inflation in 2013. However, it is not something landlords knew they had to prepare for.

The Chancellor had announced this linking of LHA rates to CPI in his June 2010 budget.The subsequent detail has been that from April 2013, LHA rates will change only once a year and will be set at either: the previous annual rate uprated by the September Consumer Price Index, or the 30th percentile of local rents (whichever is the lowest).

The NLA will be updating members as soon as more information is available. We are working to understand the impact this change is likely to have on landlords and tenants.

You can contact the NLA’s policy team at policy@landlords.org.uk