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This section contains the following topics:- A Permanent Change in the Way We Live? - Cautionary Tales of Reference Checks - Changes in Law RE: Electrical Work - Notices of Possession (Section 21 Notice) A Permanent Change in the Way We Live?
We believe we are seeing a major change in the housing market in this country and one which we think is permanent. We know that on the Continent renting plays a much more important role in providing homes for people from all walks of life. This is beginning to happen here. A recent survey showed that 70% of those in their late 20s did not think they would ever buy a house- even some couples who have sold their houses tell us they will probably not buy again.
Renting facilitates the mobility of labour and as that also becomes a more important aspect of life, so does renting. Buying a house can 'cement' you into an area which you may need to move away from within a year or two.
Such is the demand for rental properties we are in danger, as a country, of running out of good quality homes to rent out.
Is this really permanent? Unless we return to the era of freely available mortgages of 90% plus, this has got to be an irreversible trend. No one believes the situation will ever return to what it was before and maybe that's a good thing anyway. Estate Agents who looked askance at the very idea of rentals are now doing their best to get into that end of the business. We think this is because they also see that a major and permanent change is occurring, not just a temporary hiccup in the selling of houses.
Where demand exceeds supply, and it's on the way, this is likely to lead to a sharp rise in rents. We can only hope that the supply increases and it may well be that market forces will help bring this about- if not, serious problems will result.
The views you read in some of the national press about the death of Buy-to-Let are way off the mark in many areas outside the big conurbations such as London, Liverpool etc. Owners in this area are not finding any problems letting their properties; even houses around the £1000pcm and above bracket are moving well just now.
In fact, this may be just the time to consider getting into letting as property prices are static and rents are stable or even rising in many areas. (Written 26/07/11) Energy CertificatesThese came into operation October 1st 2008. Any property put up for rent from that date has to have its energy certificate in place as no one can even be shown round a property which has not got one. Tenants must be given access to the EPC before signing the tenancy agreement or a fine of £200 applies.
Leaving aside the usefulness or otherwise of these certificates, compliance is mandatory so it makes sense for owners to make sure they get these carried out as soon as a tenant gives notice from now on. Existing tenancies are not affected but as soon as a property comes up for rent again they will need doing before it can be advertised for re-let. Keys Letting are charging £60.00 flat fee for the certification regardless of the size of house. Energy certificates are valid for 10 years.
Although landlords are under no obligation to carry out any changes at their properties as a result of the checks, properties which get a poor rating may find some resistance from prospective tenants who may fear high heating bills. Estimated costs for heating properties is given in the certificates but the accuracy of these estimates is open to question, on the basis of the ones we have seen so far. Health & Safety - see LAW Section for latest nonsense.Tenant DepositsThe law on holding tenant deposits changed in April 2007. From then on all tenant deposits must be registered in one of three schemes. Keys Letting have opted for the non-custodial scheme by which we pass on deposits, where collected, to the Deposit Protection Service.
At the end of the tenancy the deposit may not be returned to the tenant or given to the landlord/agent unless an agreement is reached between both parties. If no agreement is reached within 28 days the matter can be referred to arbitration but as this is likely to involve a prolonged delay it is obviously in the interests of both parties that some agreement is reached privately.
The penalties for not registering deposits involve the payment of compensation to the tenant of three times the deposit amount; it may also be that the rights the landlord has under the tenancy agreement will be unenforceable.
Under two of the schemes Letting Agents and Estate Agents are allowed to keep the deposit money but under severe restrictions. If a dispute arises between tenant and owner about proposed deductions from the deposit the matter must be referred to the respective scheme organisers and no monies can be kept back without their permission. Their word is final. Letting agents would have to pass on any fees for using the system to owners; we would, in effect, be holding money we have little or no control over and so there would appear little or nothing to be gained from us using these particular schemes..
Obviously there is a potential here for chaos and delay. It is true that some landlords have been unfair in the disposal of their tenants' deposits and we know of cases where tenants have simply been 'ripped' off. We also read that around 20% of tenants nationally cancel their last month's rent payment and tell landlords to use their deposit as rent thereby breaching their tenancy agreement and leaving owners with no protection at all (our experience has been nothing like this).
This new system offers protection for tenants from dishonest landlords but considerably reduces protection for landlords from dishonest tenants. As letting agents we see both sides of this question; we know there are some dishonest owners out there as well as some dishonest tenants.
This change will mean that thorough referencing of applicants will be even more important than ever. We believe that housing benefit recipients will become less attractive as tenants. The expanding market for letting will even more be at the quality end of the market where the risk is less. This has been the case for some time now but the changes are likely to accelerate this trend. "I'll take it!" - Cautionary tales of reference checksThere are always those who do not think that their references will be taken up....
First Case We once received a glowing testimonial for a man wanting to rent a small flat. In it his employers spoke of the applicant's integrity, the fact that he was about to get engaged and they wished good luck to him and his fiancee in their new life together at the flat, noting also that he had been living in company accommodation and been an excellent tenant. Something made us suspicious; the standard of English in the letter was not very good considering it was supposed to be written by the secretary of the business. We phoned them. It turns out the letter had been written by the applicant himself on headed notepaper he had stolen from the office. Unfortunately, he got the sack but we also learned that he was currently renting flats all over the country and had a fiancee in each one. He was serial philanderer whose job as a coach driver enabled him to live this life style. And, as you might expect, he was in arrears all over the country as well. Having once moved in he paid no further rent and disappeared after he had pushed his luck as far as he could. He had not rented from his employer.
In Another Case A very self-confident man approached us to rent a house. He had just been appointed chef at a reputable restaurant in the area. He put down a deposit by pulling out the fattest wad of notes I have ever seen and peeling off the required number. I suppose by this we were supposed to be impressed and think that here was a man of considerable financial standing. We phoned his "employer". They didn't know him. We didn't bother with the credit check. We just gave him his notes back.
And yet Another... A very well-spoken man applied to rent a cottage. He was renting already locally. His landlord never answered the phone. One of his referees was a knight of the realm and actually in "Who's Who". Impressed? Yes we were. Unfortunately, he was out of the country at the time (in Madagascar as it happens) and his wife did not like being disturbed and we were told not to call her. She was far too important to be bothered by tradesmen. We presented his deposit cheque to our bank; it bounced. The cottage was soon successfully let- to someone with more ordinary, if more contactable, referees none of whom were in "Who's Who".
Moral of the stories: never accept anyone at face value and phone, fax or whatever, those referees.
Law Changes RE: Electrical WorkFrom January 2005 the law governing electrical work at let properties changed.
Owners who are not qualified electricians are no longer be lawfully able to carry out anything other than very minor electrical work at let houses and flats without consulting the local works department and ensuring Building Regulations are complied with.
Employing a qualified electrical contractor will mean that owners do not have to do this. In this way the law governing electrical appliances and installation moves closer to that relating to work on gas appliances. Work can be carried out by a non-electrician but it must be 'signed off' by an accredited electrician which can sometimes cost nearly as much as having him do it in the first place.
It is already a necessity, in effect, to have a certificate for electrical appliances and installation.
Installation checks need re-doing about every 4 years; appliance checks must be done once a year and now the courts are holding agents and landlords responsible for any faults not spotted between tenancies, even if the annual check is not due for some time. This is on the grounds that outgoing tenants may have tampered with either appliances or wiring etc. We know of a case where the previous tenant replaced a gas cooker with an electric one but made no changes to the electric supply. The landlord, surprisingly, did not notice this rather basic change as he kept no detailed inventory and did not visit the property very often. Soon, a new tenant moved in and the cooker literally blew up shortly afterwards. Death or injury could have resulted.
TAKE NO RISKS WITH TENANT SAFETY OR YOUR LIBERTY FOR THE SAKE OF A FEW QUID! Always use qualified personnel for your electrical and gas work. Crime Figures of InterestCrime and our Area- South Lakeland, which includes Ulverston and surrounding areas, is a good place to live.
Notices of Possession (Section 21 Notice).
Warning: this article is very boring but it could save you thousands of pounds and the mother of all headaches
Important Developments
Good landlords will know that notices of possession must give the tenant at least 2 months' clear notice and must date from the beginning of a rent period. The last day of a tenancy period which started on the 10th of the month would be the 9th of the following month. In this case many landlords would give notice to expire on the 10th of the second month following as it is obviously not possible to take possession on the 9th as the tenant is still paying rent until midnight!
In an important court case, James McDonald v Fernandez (19/8/03), the judges ruled that a Notice issued by the landlord in such a manner was invalid.
Without going deeply into the reasons for this judgement we point out that their lordships decided that as the legislation says notice should expire "after" a given date not "on", it is necessary to use the date which is the last day of the rent period. In the example we have given this would be the 9th day, so the expiry date of that Notice must read "after 9th of (month X)", not "on the 9th" or " after the 10th"or "on the 10th". t may seem like hair-splitting but in this case the tenant went to court and had the Notice overturned delaying the date of possession by months and entailing whatever legal and court expenses were involved for the landlord, not to mention his time and effort and stress.
What do you do if the Tenant still doesn't Leave the Property when the Notice expires?
The only way to legally remove the tenant in this case is through the courts. Any attempt to pressurise the tenant, by repeated visits, forcible language, interfering with gas, water or electrical supplies etc. can land you in court. In some cases tenants have obtained very large sums of money from landlords (£20,000+) for this type of activity. To avoid this adding of insult to injury, you have to obtain a possession order from the county court. There are two types relating to Assured Shorthold tenancies, the most used perhaps being the Accelerated Possession Order.
This is generally the quickest route but it does not enable landlords to obtain any order for re-payment of arrears- only for court expenses. Landlords should be careful in accepting rent after the notice period has expired as a court could interpret this as a setting up of a new tenancy and hence major legal problems can result which you would need to employ a solicitor to resolve. If the date set by the court for the tenant to leave the property is not complied with another application has to be made for their eviction by court bailiffs. This is all very wearisome for the landlord and no doubt there are tenants who know how to play the system. Fortunately, it is a rare event but landlords should avoid the temptation to 'short-circuit' the process. If you stick by the letter of the law you will get the result in the end.
And next time no doubt take more care who you let in. Most problems with tenants stem from poor referencing.
Keys Letting Centre - Letting Agents |
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