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How Long Will Tenant Referencing Take? Understanding the Process
As a landlord, you want to make informed decisions about your rental property. One of the critical pieces of information you need to consider is the tenant's background, which is why tenant referencing is an essential part of the rental process. But how long will it take to complete the tenant referencing process? In this blog post, we'll explain the timeline for tenant referencing and what you can expect.
Credit Checking
Our credit checking service is instantaneous, and you will have a report in a matter of moments. This report will provide valuable information about the tenant's credit history, payment history, outstanding debts, and bankruptcy or court judgments.
Standard Referencing
We aim to complete all tenant referencing enquiries within 24-48 hours. However, any delays in the referencing procedure are nearly always due to referees not responding to the reference request. We will call referees and send them emails, but we cannot guarantee to get a response from them (e.g., if someone is on holiday or unreachable for some reason).
Notification of Completion
Once the tenant referencing process is complete, tenants and landlords will receive a notification email. This email will let you know if the tenant has passed the reference check or any issues need to be addressed.
Tenant referencing is a critical part of the rental process, and it's important to understand how long it will take. With Lets Safe, you can expect instant credit checking and enhanced instant referencing, with standard referencing completed within 24-48 hours. Rely on Lets Safe for fast, efficient, and thorough tenant referencing services.
Tracking the Progress of Your Tenant Reference: A Step-by-Step Guide
Managing tenant references can be time-consuming and complicated for a landlord. You may have multiple references to keep track of, and it can be challenging to know the status of each reference and if any issues need to be addressed. In this blog post, we'll show you how to easily track the progress of your tenant reference using Lets Safe's tenant referencing services.
Step 1: Log in to Lets Safe
To get started, log into the Lets Safe portal using your login credentials. This will give you access to the tenant referencing progress report, which shows the status of all your references in one place.
Step 2: Check the Tenant Referencing Progress Report
Once you have logged into Lets Safe, you will be able to see the tenant referencing progress report. This report will show you the current status of each reference, including the following:
Pending: The tenant reference check process has yet to start.
In Progress: The tenant reference check process has started, and the reference provider is in the process of completing the reference.
Completed: The tenant reference check process has been completed successfully.
Issues: There is an issue with the reference, such as an invalid email address submitted.
Step 3: Receive Regular Email Updates
In addition to the tenant referencing progress report, you will receive regular email updates informing you of the progress of your references. These emails will let you know what stage your references are at and if any issues need to be resolved.
Tracking the progress of your tenant references can be a hassle, but with Lets Safe's tenant referencing services, it's easy and convenient. With regular email updates and a tenant referencing progress report, you can stay up-to-date on the status of your references and ensure a smooth reference check process. Start using Lets Safe's today to streamline your reference checks and simplify your rental process.
How tenant referencing can protect your property investment
As a landlord, ensuring that you rent your property to responsible and trustworthy tenants is crucial for protecting your investment. While conducting thorough background checks and interviews can give you some insight into a potential tenant's character, tenant referencing offers a more comprehensive and reliable way to evaluate a tenant's suitability for your property.
Tenant referencing involves verifying information provided by a tenant, such as their employment history, credit score, and previous rental history. This process can help you identify any potential red flags and make an informed decision about whether to rent to a particular tenant.
One of the most significant advantages of tenant referencing is that it can help you avoid renting to tenants with a history of not paying rent or causing damage to rental properties. This protects your property and saves you the time and expense of dealing with evictions and repairs.
In addition to helping you avoid problem tenants, tenant referencing can also help you attract high-quality tenants. Tenants with a good rental history and a clean credit score are likely to be more responsible and reliable, which can lead to a smoother and more profitable rental experience for you.
Another benefit of tenant referencing is that it can provide you with added legal protection. In the event of a dispute with a tenant, having a comprehensive tenant referencing report can help you defend your actions in court. This can save you time, money, and stress in the long run.
Overall, tenant referencing is an essential tool for protecting your property investment. By conducting thorough and reliable tenant referencing checks, you can make informed decisions about who to rent to, avoid problem tenants, and reduce your risk of legal disputes. If you're a landlord looking to protect your property, consider using a professional tenant referencing service like Lets Safe to ensure that you make the best possible decision for your investment.
House Sharing – The Pros and Cons for Tenants
House sharing is when two or more people live in the same property. It can be a great way to meet new people and reduce your living costs, but there are also some potential downsides to consider. This blog post will explore some of the pros and cons of house sharing from a tenant's perspective.
Pros of House Sharing
Reduced Living Costs – One of the biggest advantages of house sharing is that it can help reduce your living costs. When you share a property, you will split the rent, bills, and other household expenses with your housemates. This can make life much more affordable, particularly if you are struggling to live on your own
Meet New People – If you move into a property with strangers, you will have the opportunity to meet new people and make new friends. This is particularly beneficial if you have just moved to a new city or town and don't know anyone yet.
Easy to Find Houseshares – These days, many websites and apps make it easy to find compatible housemates and houseshares. This means you can browse through potential options and find something that suits your needs without too much hassle.
More Social Lifestyle – When you live with other people, you will naturally have more opportunities for socializing and interacting on a daily basis. If you enjoy a more social lifestyle, house-sharing could be ideal for you.
Built-in Support network – When tough times hit, it can be really helpful to have a built-in support network around you in the form of your housemates. Whether you're dealing with relationship problems, work stress, or family issues, having people close by who understand what you're going through can make things much easier to handle.
Cons of House Sharing
Less Privacy and Freedom – One downside of living with other people is that you will have less privacy and freedom than if you lived alone. If you like your own space and value having complete control over your environment, house-sharing may not be right for you.
Shared responsibilities can be challenging – When you share a property with others, it's important to remember that everyone is responsible for pitching in with tasks like cleaning and cooking. If everyone doesn't pull their weight, it can lead to tension and conflict within the household.
Bills can be expensive – utility bills for things like gas, electricity, and water can quickly add up, particularly if multiple tenants use these resources daily. If someone isn't paying their share of the bills on time, it can cause problems for everyone involved.
You might not get along with your roommates – Even if you carefully vet potential housemates before moving in with them, there's always a chance that things won't work out once you start living together. If personality clashes arise or lifestyles clash too much, it can make life difficult (and even uncomfortable) daily. In some cases, moving out prematurely may even be necessary if things get too bad. Despite these potential downsides, it allows many people to reduce living costs. Meet new people, and enjoy a more social lifestyle. Remember that it's important to consider both sides carefully before making any decisions. Are the pros more significant than the cons? Or vice versa? Only you can answer that question.
Weighing up the pros and cons is an important step in any decision-making process - and this is certainly true when deciding whether or not to engage in house sharing as a tenant. Considering all angles, you can make an informed decision about what path is right for you. House sharing isn't suitable for everyone, but it can provide many benefits when done right. Just remember that there are also some potential challenges involved. Ultimately, the decision comes down to what you want and need from your living situation. What works for one person may not work for another - so trust your gut instinct and go with what feels right for you.
The Importance of Tenant Referencing
If you're a landlord or letting agent, then you know that tenant referencing is an important part of the renting process. But what exactly is tenant referencing, and why is it so important? Keep reading to find out.
Tenant referencing is the process of conducting a background check on potential tenants. This usually includes running a credit check, verifying employment and income, and checking for any previous evictions or rental disputes. The goal of tenant referencing is to ensure that the tenant is able to pay rent and will be a good fit for the property
Why Tenant Referencing is Important
There are a few reasons why tenant referencing is so important. First, it helps you screen out tenants who may not be able to pay rent or may cause damage to your property. Second, it protects you from liability in case something does go wrong. For example, if a tenant doesn't pay rent and you have to take them to court, having good documentation from the referencing process will help your case
Third, it's just good business practice. Screening tenants helps you find good renters who will take care of your property and pay their rent on time. This saves you time and money in the long run by reducing the likelihood that you'll have to deal with problem tenants down the road
In conclusion, tenant referencing is a vital part of the renting process. It helps landlords and letting agents screen tenants, protect themselves from liability, and save time and money in the long run. If you're not already doing tenant referencing, now is the time to start!
Fraud and ID Risk
A landlord is vulnerable to many potential frauds.
Some unlawful tenants mortgage properties after fraudulently transferring the properties into their own names. A tenant is able to do so when the correspondence address for the property is the property address.
Similarly, a landlord must be cautious of criminals renting out properties for criminal purposes. For instance, criminals often turn rental properties into cannabis farms. Cannabis farming ends up ruining the property as holes are made in the walls to provide ventilation for the plants. Also, criminal activities could diminish the market value of the property. Further, properties in which criminal activities occur are fire prone. Damages inflicted by criminal activities on rental properties are not covered by many insurance policies. In this article, it will be explored how tenants commit frauds and how a landlord can protect himself/herself from such frauds.
There have been cases where tenants have falsified their identities and the documents submitted to the landlord for vetting. Such tenants have bad credit scores and use fake identities to overcome this hurdle while obtaining a house for rent. An unsuspecting landlord who deals with such a tenant is usually left with unpaid rents, bounced checks and a tarnished property. Also, as mentioned above, such fraudsters could even mortgage the properties they rent or carry out criminal activities within them.
Apart from the use of fake identities by tenants, landlords are also at risk of identity theft by tenants. It is landlords who rent out properties they used to formerly reside in who are majorly affected by identity theft by tenants. Rogue tenants who reside in such properties exploit the laxity of landlords of not having updated the addresses provided to banks and other service providers, to impersonate the landlords.
A landlord’s best defence against potential frauds is tenant referencing. Proper tenant referencing must be done for each potential tenant so that it is verified that the tenant to whom the house is handed over on rent is a genuine person, who will take good care of the property and will pay the rent on time.
The tenant referencing process includes former landlord’s reference, credit check, bank details, proof of employment, proof of income, proof of residency, proof of identity, and right to rent check. As criminal and fraud tenants are adept at providing falsified documents for the tenant referencing process, it is always advisable for landlords to engage professional tenant referencing services to carry out the tenant referencing process.
Credit Risk and Affordability
Credit Risk
A credit risk from a landlord’s perspective is the possibility of a tenant not being able to pay the complete rent and/or the inability of a tenant to pay rent on time. Therefore, it is always desirable for a landlord to select a tenant who exposes him/her to a low credit risk.
The credit check is the method used to assess the credit risk posed by a potential tenant. It analyses the potential tenant’s bank account, County Court Judgments, and other similar documents to determine his/her financial position and discipline. A credit check reveals whether a potential tenant is in debt, whether he/she has ever missed repayments and whether he/she has made bankruptcy declarations in the past. The data obtained from a credit check is used to create a credit score for the potential tenant. The higher the credit score of the potential tenant, the lower the credit risk for the landlord. Credit checks are done for landlords by various tenant screening agencies. A landlord may choose the right tenant screening service based on the criteria used by the agency for credit checks, the reliability of the tenant screening service as confirmed by other landlords and the price levied by the tenant screening service for credit checks.
Affordability
The test to determine whether a potential tenant can afford the rent of the property is to check whether the annual household income of the potential tenant is at least 2.5 times the annual rent of the property. If the annual household income of a potential tenant is less than 2.5 times the annual rent of the property, it means that the potential tenant might not be able to afford the rent and may not pay the rent on time.
Sometimes, a potential tenant who fails the affordability calculation given above might still be able to afford the rent on the property as the potential tenant has savings or is supported by the potential tenant’s parents or the potential tenant has a student loan which will cover the rent. In such circumstances, it is best for a landlord to agree to give the property on rent to the potential tenant only if the potential tenant is able to provide a guarantor. A guarantor must be a resident of the United Kingdom, must have the financial capacity to pay the tenant's rent in case the tenant defaults and must have a good credit score.
Right to Rent - The Cautious Landlord
THE RIGHT TO RENT SCHEME: Cautious landlords are not letting homes to people without British passports
The ‘Right to Rent’ check which has been mandated for all the landlords in England involves verification of documents of prospective tenants by landlords to ensure that the prospective tenants are not illegal immigrants. If an illegal immigrant is found to be staying in a property, the landlord could end up paying a fine of up to £3,000. Landlords who are repeated offenders could get imprisoned for a period of not more than five years.
A research conducted by the Joint Council for the Welfare of Immigrants (JCWI) suggests that the fear of the punishments mentioned above for non-compliance of the ‘Right to Rent’ check rule has led to more and more landlords opting to lend only to British passport holders. In the survey which was conducted among 108 landlords, 51% of the participants said that the likelihood of letting their properties to a foreigner has decreased because of the ‘Right to Rent’ scheme. 42% of the participants surveyed revealed that the ‘Right to Rent’ scheme has made them more skeptical about accepting people without British passports as tenants.
The study claims that the ‘Right to Rent’ scheme has led to discrimination of prospective tenants by landlords while acknowledging that the landlords have been put in a situation where they are forced to discriminate. Apart from the disadvantages faced by foreigners and racial minorities while trying to get houses on rent, the scheme has resulted in a large majority of the UK population being discriminated against in the rental market as only 17% of the British citizens have passports. Further, the study mentions how the Government has been unable to provide any evidence for the benefits of the ‘Right to Rent’ scheme. Based on the findings of the research, the paper concludes that the ‘Right to Rent’ scheme must be scrapped altogether.
The Chief Executive of JCWI, Saira Grant, said the following about the ‘Right to Rent’ scheme after unveiling the research:
“We have been warning for some time that the right to rent scheme is failing on all fronts.
It treats many groups who need housing unfairly, it is clearly discriminatory, it is putting landlords in an impossible position, and there is no evidence that it is doing anything to tackle irregular immigration.
Creating a so called ‘hostile environment’ that targets vulnerable men, women and children is bad enough, implementing a scheme that traps and discriminates against British citizens is absurd. It is time to stop the scheme before it does any more damage.”
UK soon to have 100K Build-to-Rent units
According to a recent report of the British Property Federation (BPF), the Build-to-Rent sector in the UK is currently 95,918 units strong. Not all of these homes are completed units though; the figure includes homes under construction and homes awaiting planning permissions. The latest report indicates a whopping 37.4 percent growth in the sector as the Build-to-Rent sector comprised of only 69,824 homes by the end of the first quarter of 2017. Therefore, the progress of the Build-to-Rent category is being demonstrated by not just the proximity to the 100,000 units milestone, but also by the rate at which the sector is marching towards the achievement of this landmark.
With 54,978 units, the majority of the Build-to-Rent units (completed + under construction + waiting planning permissions) in the UK are in London. But, the number of units under construction in the Build-to-Rent sector is 12,316 in the regions, while London has only 11,696 units currently under construction.
The British Property Federation’s Director of Real Estate Policy, Mr. Ian Fletcher says:
“Our data allows us to track Build-to-Rent’s growth across the UK, and ensures we are as transparent as possible when communicating the sector’s current and projected contribution to the country’s housing supply. Correcting the supply-demand imbalance in the UK is fundamental to addressing the housing crisis, and we have demonstrated that Build-to-Rent has much to offer.”
“We are pleased by the Mayor of London’s continued support of the sector and his recognition of its capacity to deliver much-needed homes. We look forward to the government’s formal response to the national Housing White Paper, which formally recognised Build-to-Rent in the National Planning Policy Framework. We need all housing tenures to be fully supported by the right policy framework if we are going to reverse the damage caused by years of undersupply.”
Though the data from British Property Federation’s report suggests that the Build-to-Rent sector will be able to largely salvage UK’s housing market, it is alarming that only just above one percent of the investments made in the Build-to-Rent sector in the UK are in Scotland. The implementation of a new Private Residential Tenancy regime in Scotland from 1st December 2017 is being viewed skeptically by investors and this could be one of the reasons behind the slow rate of growth of the Build-to-Rent sector in the region. The Scottish Government seems to have realized the significance of the Build-to-Rent category as Kevin Stewart, Scotland’s Minister for Local Government and Housing says:
“Build to Rent is an important part of the Scottish Government’s approach to growing and improving the private rented sector.”
Highest Fine for Non-Compliance of Selective Licensing in UK
When the selective licensing scheme of the West Lindsey District Council came into effect in July 2016, Mr. Jagdish Singh wouldn’t have thought that a year down the line he’d go on to become the poster boy of the regulations.
Mr. Singh has been ordered by the Lincoln Magistrate’s Court to pay a total fine of £108,000 for not licensing eight properties of his under the selective licensing scheme. Apart from the £13,500 fine per each of the instance of failure to license, he was also fined £4,500 for each of the three occurrences of ignorance of improvement notices. Further, he is also liable to pay £ 2,000 as costs to the winning side. The £108,000 fine received by Mr. Singh is said to be the highest ever handed out in U.K. to a single landlord for non-compliance of a selective licensing scheme.
All the landlords renting properties in selective licensing areas are supposed to get licenses in accordance with the selective licensing scheme of the area. The three major aims behind selective licensing are improvement of property management standards, maintenance of real estate values in the area and elimination of unacceptable landlord behaviour.
Other than Mr. Singh, the Lincoln Magistrate’s court found three other landlords also guilty of having violated the selective licensing scheme of the West Lindsey District Council. Gurjit Singh, Balbir Kaur, and Harpal Bindra Singh were each fined £ 15,000 for each of the times they failed to comply with the selective licensing scheme. The total fine amount payable by the four defendant landlords amounts to £232,155.68.
Councillor Sheila Bibb who heads the Prosperous Communities Committee of the West Lindsey District Council had the following to say about the Lincoln Magistrate’s court’s verdict:
“The courts have made it very clear in these prosecutions – that landlords will face tough fines and restrictions if they do not comply with the scheme.
The private rented sector is the only option available for some of the most vulnerable people in our area and this action sends a clear message that the council wishes to work with good landlords to improve this sector and identify the poor or criminal landlords.”
Seeing how the court has issued hefty fines for failure to license properties under a selective licensing scheme, it is imperative that all the landlords in U.K. cross check whether they are running afoul of any of the regulatory requirements which they are supposed to meet.
Interest Rates Hike: Effect on Mortgages
The hike of interest rates by the Bank of England last week marks the first increase in interest rates in U.K. in a decade. The last time interest rates were increased was in July 2007. The interest rates have been increased to control the inflation that is currently affecting U.K. The base rate has been increased from 0.25% to 0.5%.
This decision of the Bank of England is not surprising as the 0.4% growth shown by the GDP in the last quarter had indicated such a move from the part of the bank. The Bank of England’s Governor Mark Carney too had hinted about interest rates hike.
Effect on Mortgages:
Homeowners who are on fixed-rate mortgages won't be immediately affected by the hike in interest rates. But, they'll be affected once their fixed term ends.
As far as standard variable rate (SVR) mortgages are concerned, if the mortgage amount is £125,000 and the remaining mortgage period is 20 years, the 0.25% increase in interest rates would cause a £15 monthly increase in mortgage payments and thus a £185 yearly increase in mortgage payments. Therefore, it can be seen that the increase caused in mortgage payments by the increase in interest rates is not significant. But, it must be borne in mind that the interest rates will be increased frequently and hence, eventually, mortgage payments could end up being much higher than what the borrowers had anticipated.
Impact:
It is too early to assess the impact of the interest rates hike on the people of U.K. The citizens of U.K. have been struggling with their financial needs ever since Brexit and the hike in interest rates leading to higher mortgage payments could severely affect their purchasing power and thus, their lifestyle. Further, pessimistic observations about the British economy by the Governor of the Bank of England, Mike Carney also didn’t sit well with many citizens. He made statements to the tune of the British economy having been permanently damaged by the financial crisis which occurred in the last decade. The silver lining of the interest rates hike is the possibility of some of the banks increasing the interests given on deposits. The Bank of England must be hoping that a decrease in the rate of inflation occurs so that the increase in mortgage payments is set off by the decrease in expenditure due to the low rates of inflation.
Tenant’s Injuries and Landlord’s Liabilities
A landlord is liable for the injuries to a tenant if the injuries were caused by negligence on the part of the landlord. Therefore, it is extremely important that landlords take care to prevent such injuries. Also, a landlord should be aware what constitutes negligence on his part.
Negligence Per Se
A landlord is said to be guilty of ‘negligence per se' if the tenant's injuries were caused because the landlord failed to comply with a legal duty. For instance, if a tenant suffers an injury due to an electrical fitting installed by the landlord and if that electrical fitting turns out to be not one complying with the standards prescribed by law, the landlord will be held liable for the injury caused to the tenant.
Proof of Negligence
In situations apart from negligence per se, the tenant has to prove that the injury caused to him/her was due to negligence by the landlord.
The parameter used to assess negligence is ‘standard of care’. Standard of care is the minimum prudence that should be showed by a person in a particular circumstance. In the case of landlords, the ‘standard of care’ required is ‘reasonable care’. A court first ascertains how a reasonable landlord would act in the given situation. Then, the court examines whether the degree of care observed by the accused landlord is at the minimum what a reasonable landlord would have observed.
Depending on the situation, a court may also decide that the landlord should have exhibited a standard of care higher than reasonable care. Such situations mostly involve injuries caused to children or the disabled.
Damages
There are two kinds of damages tenants can claim against landlords for injuries caused to them due to the negligence of the landlords. They are 1) General Damages and 2) Special Damages. The injury’s nature and circumstances of the case determine the whether general damages and/or special damages apply.
General damages deal with compensation for the physical, mental, emotional, or other injuries suffered by the tenant as a result of the negligence of the landlord.
Special damages deal with the compensation for the financial losses caused to the tenant by the negligence of the landlord. These include the cost of rehabilitation, cost of medical treatment, and other pecuniary losses.
As tenants being injured is not in the best interests of both the landlords and the tenant, landlords must try their best to avoid situations that could result in injuries for the tenants.
Private Tenancy Sector in Scotland Undergoes Radical Change
The Private Housing (Tenancies) (Scotland) Act 2016 will come into force on 1st December 2017. This legislation seeks to replace the Short Assured Tenancy (SAT) system in the country with Private Residential Tenancy (PRT). All current tenancies will continue to be SATs until they are terminated, modified, or extended.
Some of the changes that will be brought about by the act are:
1) Tenancies will no longer come with an expiry date. Leases can be terminated only if one of the parties gives notice for the same.
2) The existing ‘no fault’ ground to remove a tenant can no longer be used. Currently, a landlord can remove a tenant without specifying the reason for the same.
The notice period of the notice given for termination of the lease by the tenant must not be less than 28 days. In the case of a landlord, such a notice must be based on one of the 18 grounds specified in the act. The notice period for a notice given by the landlord for repossession could be either not less than 28 days or not less than 84 days, depending on the ground invoked by the landlord and the duration for which the tenant has been staying in the property.
The grounds to end tenancy as given in the act include sale of property, sale by mortgagee, renovation of property, conversion of property for religious purpose, conversion of property for non-residential purpose, breach of tenancy agreement, non-payment of rent for three consecutive months, and tenant’s conviction of a criminal offence, among others.
If a landlord invokes one of the grounds given in the statute to end the lease, and then is later found to have invoked the ground in bad faith to remove the tenant from the property, the landlord will either have to offer the tenant so aggrieved either a new tenancy or have to pay the tenant six months’ rent as compensation.
A tribunal which deals exclusively with tenancy issues will be set up. Also, under the new act, Scottish ministers will have the power to determine the maximum level of rent that can be levied in a district.
Though the act has been enacted with the noble intention of according protection to tenants, the provisions of this act could deter people from investing in the private rental sector. The increased difficulty of evicting a tenant combined with the introduction of a tenant-friendly tribunal and ceiling levels on rents introduced by this act could prove counter-productive for the tenants if landlords choose to leave or not invest in residential rentals.
Practices of Letting Agents in Scotland to be Governed by Legislation
‘Shelter’ is one of the basic needs of a human being. Malfeasance or carelessness from the part of letting agents detrimentally affects the satisfaction of this need of many. It is in this context that Scotland has introduced a legislation to regulate the practice of letting agents.
The Letting Agent Code of Practice (Scotland) Regulations 2016 will come into force from 31st January 2018. This legislation aims to improve the quality of the private rental sector, reduce malpractices by letting agents, and empower tenants.
As the name of the statute suggests, it describes the code of conduct that must be followed by the letting agents in Scotland. All the letting agents in Scotland are expected to comply with these regulations from the date of enforcement. Also, all the letting agents in Scotland are required to register their names in the Register of Letting Agents which will be maintained by the Scottish government. Non-compliance with the registration requirement would result in fines less than or equal to £50,000 and imprisonment for a period of not more than 6 months. Further, post the enforcement of the regulations, top officials of letting agencies will be qualified to remain in their positions only if they possess at least the lowest levels of training as mandated by the statute.
The statute creates an obligation on the letting agents to have Professional Indemnity Insurance and Client Money Protection. Both the landlords and the tenants have been accorded the locus standi to challenge letting agents who do not comply with these regulations at the First-tier Tribunal for Scotland (Housing and Property Chamber).
Kevin Stewart, the Housing Minister of Scotland said the following about the Letting Agent Code of Practice (Scotland) Regulations 2016:
"We are committed to ensuring the highest quality private rented sector, which empowers tenants. Our framework for regulation and the need for the sector to meet key standards and expectations through the code is an important step in achieving our ambitions.
Many letting agents already do a great deal to continuously improve standards and inspire confidence amongst landlords and tenants. The introduction of the code means a level playing field for all and ensures clarity on rights, responsibilities, and expectations.
For many people, private renting provides a place to call home, and they deserve the necessary standards and protections to find and keep that home. With six months until the code comes into force letting agents must take steps now to be ready for these new ways of working."
European Convention on Human Rights
Article 8 Of The European Convention On Human Rights and Private Tenancy
The question - Whether Article 8 of the European Convention on Human Rights can be a defence against possession claims in private tenancies? – was under the consideration of the Supreme Court in the case McDonald v. McDonald [2016] and the court answered in the negative.
Background
The Article 8 of the European Convention on Human Rights deals with the right to respect for private and family life. Post the judgments of the Supreme Court in the cases Manchester City Council v Pinnock [2011] and Hounslow London Borough Council v Powell [2011], Article 8 of the European Convention on Human Rights has become a defence against possession proceedings in public tenancies. And whether the Article 8 defence extended to private tenancies too was deliberated upon by the court in McDonald v. McDonald.
The Supreme Court’s View
According to the court, Article 8 of the European Convention on Human Rights cannot be used to vitiate the contractual relationship between the landlord and the tenant as laws dealing with the interests of both the tenants and landlords have already been legislated.
The court feels that since the legislature has enacted laws to maintain a balance between Article 8 (European Convention on Human Rights) rights of the tenant and landlord’s rights as per Article 1 of the Protocol No.1 to the European Convention on Human Rights, there is no need for the courts to further get involved and determine the proportionality of actions taken by landlords in pursuance of possession.
Further, the court observed that the Protection from Eviction Act, 1977 and the Housing Act, 1980, are sufficient to protect the interests of the tenants.
Impact
The prudence that the Supreme Court displayed while delivering this verdict is indisputable. Allowing Article 8 of the European Convention on Human Rights to be a defence against possession in private tenancies would have led to unnecessary detriments to the landlords in many ways. Firstly, as mentioned by the Supreme Court, when the legislature has already designed the laws in a manner which would be fair to both the tenants and the landlords, further accrual of rights to tenants would have caused an imbalance in their favour and therefore, would have been unjust to the landlords. Secondly, the Article 8 defence, had it been granted, would have resulted in delays in procession proceedings and thereby causing harm to the landlords. Thirdly, such delays would have dissuaded new players from entering the rental market, which would have been followed a shortage of properties available for rent. Thus, the decision of the Supreme Court in McDonald v. McDonald has proven to be a boon not just for the landlords, but also for the society in general.
Rogue Tenant Destroys House
A middle-aged landlord in Liverpool recently found himself at his wit’s end due to a rogue tenant. As reported by the Liverpool Echo, Steve Parry, a 55 years old surveyor ended up losing upwards of £9,500 because of a tenant in one of his properties. His ordeal is a great example of a landlord’s vulnerability.
Non-payment of rent and eviction
Steve served the tenant of his Wavertree property with a notice to quit the property after she went back multiple times on her promise to pay up the rent due to him. She had also breached the tenancy agreement by keeping a dog. He subsequently sent her two more notices and eventually had to go to the court and get an order for possession of his property. But Steve regained actual physical possession of his property only months later when he engaged court bailiffs.
Wreckage
It was only after the tenant left the property that Steve saw the damage inflicted upon it. There were heaps of junk in various parts of the house. The doors were broken while the cupboards had been pulled out. To top it all, the ceiling of the bathroom had come apart as a result of a flood in the bathroom.
Break – up of losses
Steve believes that he lost around £6,000 due to the damages and £2,000 as unpaid rent. He also spent £1,500 on court fees.
Impact on Steve
Steve who had looked forward to spending his retired life comfortably with the income from his two houses, is disheartened by the entire incident. He has decided to not give his properties on rent to tenants who pay rent through benefits, even though he knows that most of the tenants who depend on benefits are decent.
Takeaway(s)
The major takeaway from the whole episode is that there must be more stringent laws to prevent landlords from being taken for a ride. Landlords too are regular human beings doing business. There shouldn't be much delay in imparting justice to landlords when tenants act unfairly against them.
Also, tenants who live on benefits must realise that any bad behaviour from their part will affect many others who rely on benefits in the future.
Let’s hope that this event in Steve’s life serves as a wake-up call to the tenants and the authorities. Otherwise, the mental and financial health of many more landlords will be in jeopardy.
Private lettings possible only with minimum EPC rating after 2018
Starting 1st April 2018, all private rental properties, commercial or residential, cannot be let in England and Wales, without an EPC (Energy Performance Certificate) rating of at least ‘E’. This applies to not just new tenancies, but also to the renewal of tenancies. Even all the existing tenancies are to comply with this requirement - by April 2020, if it’s a residential letting and by April 2023, in the case of a commercial letting.
Legislative Basis:
It is The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 which has introduced the above qualification. This statute is a part of the legislature’s effort of achieving its target of ‘close to zero’ CO2 emissions from all buildings by 2050.
Penalty:
The maximum penalty for not complying with the minimum EPC rating rule is £150,000 for commercial properties and £4,000 for residential properties.
Improvements:
What this means for the landlords is that they may have to make improvements to their properties like loft insulation, wall insulation, double glazing, and boiler upgrade, among others, to be able to let them. But more energy efficiency would mean lower running costs for the building. This is beneficial to both the landlords and the tenants. In fact, a better EPC rating would make a property more attractive to potential renters, which in turn means the landlord could charge higher rents. Also, we shouldn’t forget the larger interest here - that of the environment. A healthy environment is absolutely essential for the landlords too, just like all other living beings in the world.
Exemptions:
There are a few exemptions to the minimum EPC rating condition. These exemptions are only available for a period of 5 years and that too only upon registering on the central government’s ‘PRS Exemptions Register’. Also, the exemptions are not passed over to the new owner upon the sale of a property. The new owner has to either improve the property or register the exemptions again, before letting the property. The following are the grounds for exemptions:
1) Cost-effectiveness: If the landlord has carried out all the relevant energy efficiency improvements that can be carried out cost-effectively (cost-effectiveness determined by a seven-year payback test or the Green Deal’s Golden Rule) and still the EPC rating is below ‘E’, he/she will be exempt from the minimum energy efficiency regulation.
2) Lack of third-party consent: There could be instances where the landlord is not able to make improvements to the property because he/she couldn’t obtain consent for the same from a mortgage lender, local authority, tenant, or some other third party.
3) Devaluation of property: If the implementation of measures needed to comply with the minimum EPC rating regulation would reduce the market value of the property by more than five percent.
4) Recently becoming a landlord: Sometimes a person becomes a landlord suddenly and it is not reasonable to expect such a person to abide by the minimum EPC rating stipulation. This exemption is available only for a period of 6 months.
Student accommodation rental prices haven't increased since 2015
According to a report named ‘What Students Seek’, prepared by Glide Utilities, the average student rent per week has remained unchanged in England, in the last two years.
The average weekly rent of students has been static within the £100 - £119 range for the past two years, though it must be said that 15% of the students in London are paying more than £200 a week, whereas 69% of the students in the North East pay below £90 a week.
Considering the fact that students’ expenditure on accommodation is only second to their spend on fees, the finding that rents are remaining static is extremely important. While those who are students at present must be immensely relieved that the rents haven’t increased in a while, this phenomenon could also encourage a lot of people to not abandon their plans of pursuing a higher education.
Even though the rents have remained constant for a while, students are fairly divided over the question of whether their place of residence offers good value for money. Only less than half (45%) of the students answered in the affirmative, while 36% felt that landlords need to understand students better.
On an average, a student shares his/her property with four others. This is a major cause of dissatisfaction; 48% of students prefer to live with not more than two people.
The changes in the society and the way of living also reflect in the needs and demands of students from the landlords. For instance, majority of the students (60%) feel that a television is the least important factor while choosing a place of residence. In fact, after rent, it is fast broadband which is the most important factor for students. It is not impossible to draw a parallel between this and the worldwide movement of consumers from television towards web-based content.
Based on the report, landlords could do the following to improve their chances of letting to students:
1) Provide fast broadband internet.
2) Furnish properties with good storage spaces.
3) Equip the lettings with double beds.
4) Charge rent inclusive of bills.
5) Proper response on maintenance issues.
6) Good conservation of properties.
7) Clear and honest communication with tenants.
As per the report, the university cities in the North East are the best places for landlords to invest as both tenant satisfaction and annual returns are high there. Middlesbrough rentals offer 16.1% annual yield and have a customer satisfaction of 82%. On the other end of the spectrum, the same parameters are 2.7% and 76% respectively for London.
Young men can no longer afford a bachelor pad!
Talking of bachelor pads, one can’t but recall the escapades of Bertram Wooster, the star character created by the master of satire, P.G.Wodehouse, and the bachelor pad he used to live in with his faithful butler the all-knowing Jeeves. However, today, bachelor pads are hard to come by, especially for young working men who need to desperately find living quarters.
Whatever the social status of the young men of today, finding a bachelor pad of their own is just a pipedream. The only option seems to be the shedding of their cherished bachelorhood and getting hitched, so that they can find some decent accommodation. Whoever heard of a young, carefree male getting married just because he can’t find decent accommodation?
According to a research conducted by the Halifax Building Society, more than half the male crowd in the 18 to 35 age bracket are struggling to find decent accommodation and are having to turn to their partners to help them find a decent home.
Bachelor pads seem to be things of the past, and almost 20% of the young men and 10% of the young women have come to the conclusion that it makes sense to buy a property jointly, instead of chasing a house that is never in sight.
Blame it on the steadily increasing real estate prices, especially the houses in the residential areas. The sad part is that the earnings of today’s young crowd do not match the steep increase in property prices. With hardly any savings to talk about and the going rate for deposits in the range of £33,000 a home is beyond the reach of most of the youngsters of today.
It is no wonder then that most of the bachelors are desperately seeking partners, which will automatically make them eligible to rent a decent home, whether they are eligible bachelors or not is another matter. While some are contemplating buying a new home of their own, thinking that they will somehow cough up the mortgage payments, some others are totally confused with no home to go to after getting back from work.
Finding a partner overnight also is not a feasible alternative, and the sad plight of today’s young men is not appreciated by landlords and the general public who know hardly anything about their sufferings. Whether this sudden demand for homes, to buy or rent, will push up property prices is anybody’s guess.
Tenants of National Trust Properties Facing Huge Rent Rises
The National Trust couldn’t care less about the elderly. The trust has told an octogenarian tenant in his late 80s that his rent payments are set to rise from £148 to an astronomical £15,000 per annum, reported The Times recently.
It’s not just this helpless old man, there are several other hundreds of tenants who have been faithful tenants for long who face the prospect of rent increases that are unrealistically high. With over 5,000 homes owned by this charitable trust, there are over 10,000 tenants who don’t know where to go with their belongings.
There are some other problems as well. Most of these tenants are paying monthly rent payments, though in between several leases changed hands and were sold as long leaseholds. The lease agreements were drawn long back with 49-year terms, and the rents fixed were obviously based on the cost of living index prevailing then.
With most of the leases periods nearing maturity, the tenants are forced to apply for extensions. That’s when the National Trust puts its foot down saying the lease agreements cannot be extended on the same terms. The tenants have two options: either pay increased rental charges, or pay huge deposits in order to “buy up” or make up for the low ground rent they are paying.
The quandary the old man is finding himself in is that he has to cough up close to £80,000, along with some 300 others who find themselves in the same fix. What with the Government ministers pledging to ban what they refer to as “feudal” leases, and replace such rents with hefty ground rents, for which they are able to find gullible buyers through building companies.
The National Trust is not altogether merciless and is trying to reduce the “ground rents” by at least 50% for certain genuine cases, though even after such a huge discount, the amount payable is far beyond the means of the hapless tenants. While some at the National Trust feel that the leaseholders may have been misled by unscrupulous agents, they are willing to consider letting such tenants off the hook by waiving off the “ground rent” deposit demand altogether. If that should come to pass by some act of providence, the tenants who are already in a sad plight might get some succour after all. One can only wait and watch the future course of events.