Citizens Advice argues Tenant Fees Bill ‘not tough enough’

logo-citizens-adviceFollowing the second reading of the Tenants’ Fees Bill in the House of Lords last week, Citizens Advice have come out swinging. The charity is now arguing for even stricter regulation, following a claim that over a third of tenants are only told about additional fees that could be charged during their tenancy after putting down money.

Following a chorus of outrage from organisations with little understanding of the lettings sector, Citizens Advice argue that tenants are easily “trapped” into unfair contracts by agents and landlords, resulting in considerable fines if the contracts are breached.

Highlighting individual cases of unfair tenancy terms, some contracts have included clauses ranging from a fine for failing to update a landlord with contact details, to a £50 charge for a written notice if a term is breached.

The charity also conducted a small survey which found:

· 23 per cent of tenants have received a tenancy contract they felt contained unfair terms, but more than half of them signed the contract anyway;

· A third of renters signed a tenancy agreement with their landlord or letting agent without fully understanding it.

Ultimately, the charities aim is to highlight individual cases of bad practice in order to argue against the default fees clause in the Bill. What the charity calls “unfair terms”, really means landlords and agents charging for reasonable costs when tenants break on a contract term.

The charity also fails to address how landlords or agents will need to provide proof of reasonable costs incurred, such as a receipt for any property maintenance or tenant issues. As the Bill progresses the Government will be drafting guidance on what landlords and agents will be able to charge for. Potential options include billing to replace lost keys or for their time.

Despite this, the charity wants the government to significantly tighten this clause to give tenants and landlords greater clarity on what terms landlords can charge reasonable costs.

“In no other consumer market would people be asked to put down hundreds, or even thousands, of pounds before seeing the small print. Unscrupulous landlords and letting agents can take advantage of tenants, who lack real bargaining power in the private rented sector” says Gillian Guy, chief executive of Citizens Advice.

“Tenants shouldn’t be forced into a game of rental roulette, where they are putting down money on a contract they’ve not seen. For the Tenants’ Fees Bill to truly stamp out unfair fees as intended, the government must close the ‘default fees’ loophole.”

The Bill is likely to come into law next autumn.

Speaking on the results of the study, Chris Norris, Director of Policy and Practice at the National Landlords Association, said:

“It is in the interest of all parties to have an agreement that everyone is happy with and that is clear about default fees that may be charged during the tenancy. Tenants should feel comfortable questioning any clause in the agreement and should have the opportunity to ask a third party for advice.

“Default fees are necessary for landlords to recover any costs they incur on the tenant’s behalf during a tenancy. Common sense should be applied to these fees, but it is unrealistic to expect that landlords would not seek to recover any costs which arise due to their tenant’s actions.

“Removing the default fee clause would push landlords either to seek to recover their costs elsewhere – through higher rents – or to become increasingly discerning about the tenants that they will let to, reducing accessibility of the private rented sector for those who need homes.”

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1.5 Million deposits still not in any protection scheme

46A4CB2700000578-5112193-image-a-2_1511473150861The comparison website (ComparetheMarket) claims that over 1.5m tenants know their landlord has not placed their deposits into a government-backed deposit protection scheme. 

The survey conducted amongst 1,000 UK adult private tenants, claims that despite the legal obligation for landlords to put deposits into schemes such as the MyDesposits and the DPS, many tenants say they know this has not been done.

Meanwhile a fifth of tenants claim that they do not have a contract with their landlord, while a similar proportion claim to have had money taken from their deposit when leaving a property.

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1.5 Million?!

The research also suggests that some landlords can be slow to respond to requests made by tenants, with one third reporting that they need to chase their landlord when a problem requires fixing. A further 12 per cent claim that they need to make repeated requests before receiving a response.

Almost 10 per cent say that it can take between a fortnight and a month for an issue at their property to be resolved.

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Changes to the Section 21 notice come in to force Monday 1st October

Woman at office desk signing a contract

On Monday 1 October, changes to the Section 21 notice come into force that will affect letting agents and landlords in England.

This will require all Assured Shorthold Tenancies (ASTs), regardless of their start date, to comply with guidelines as to when and how a landlord can serve a Section 21 notice, used to terminate a tenancy agreement.

On 1st October 2018, letting agents and landlords need to stop using their existing notices. Moving forward, agents will be required to use Form 6A when issuing a Section 21 notice. This form, prescribed by Government, combines the two previous types of notices into a single notice, and will serve both periodic and fixed-term tenancies.

There are some additional things letting agents should be aware of under the Deregulation Act 2015, and if you wish to issue a Section 21 notice you should also:

  • Share the ‘How to rent: the checklist for renting in England’ guide with tenants
  • Ensure the property has an up to date Gas Safety Certificate, and it has been given to tenants
  • Publish the property’s Energy Performance Certificate
  • Issue tenants with the prescribed information regarding their tenancy deposit protection
  • Provide a copy of the property licence (if applicable) to all the tenants.

When issuing documents, ask tenants to sign to confirm receipt or to send an acknowledgement email if documents are emailed. This will help if an eviction is challenged and goes to court.

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AXA: Rental Standards have made “significant leaps forward” but there’s still a long way to go…

1200px-AXA_Logo.svgAccording to a new report published by AXA, there have been significant leaps forward in the standards of the private rental sector since 2014. However, there is still some way to go in terms of improving safety standards.

The report identified some significant safety weaknesses, with only 58% of properties having had a gas inspection in the past year despite these being an annual requirement.

Furthermore, 4 in 10 tenants say they do not have smoke alarms installed, despite landlords or their agents being legally required to fit them on each floor of a property.

According to AXA, this is still a considerable improvement on their 2014 survey, where (prior to the legal requirement), when 6 in 10 tenants lacked them.

Alongside oversight in gas safety and smoke alarms, only a third of tenants reported they had seen the properties EPC, (up from 19% in 2014) and just 15% of those eligible have received the government’s mandatory How To Rent guide.

The report also exposes considerable knowledge gaps among tenants of tenants, with 75% of tenants not knowing their landlord is legally required to ensure a minimum energy rating for the property, and a similar number were unaware of the requirement for EPCs and gas safety checks.

So what impact has this oversight had on the tenants themselves? It turns out, a significant impact according to AXA; half of tenants surveyed said they feel their rental property negatively impacts their health: poor energy performance was quoted by 21 per cent. Most tenants in this group also cited damp or out-of-date heating systems at the same time.

Commenting on the revelations, Gareth Howell, managing director of AXA Insurance said:

“Landlords are getting more professional, and we are seeing standards rise in British rentals, driven by legislation and desire of landlords themselves. We know that many start out as ‘accidentals’, and there is a big learning curve for them at the start, particularly as legislation changes so often”

“We find that both landlords and their tenants lag behind, so public awareness campaigns are vital to correct myths and promote new rules and standards. Gas and fire safety should be the priorities here: our research suggests that millions of properties are not compliant with today’s laws.”

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“Stop blaming letting agents for rental sector problems” Lettings expert comments on landmark report

sale-signsEarlier this week, The Evolving Private Rented Sector: Its Contribution and Potential, was published by Dr Julie Rugg and David Rhodes. This landmark report on private renting outlined the “confused and contradictory” nature of regulation, as well as a sector that is “failing at multiple levels”.

However, Kate Faulkner, who runs the Propertychecklists consultancy, as well as working closely with consumer group Which?, has backed the report but has also highlighted the issue of landlords and letting agents being scapegoated for wider problems in the sector.

“I am delighted that this much needed report is now in the open. I hope very much that it will encourage more sensible content and conversations from the industry, government and tenant groups, reported in a balanced way in the media – all of which will ultimately benefit the key consumer in this market: renters” Faulkner says.

Critically, Faulkner also rebuked the scapegoating of landlords and letting agents for the sectors problems, adding: “The current rhetoric blaming landlords and/or letting agents for any problems in the private rental sector is wrong. Rather than encouraging landlords and agents to put decent roofs over people’s heads at an affordable price, it makes tenants the biggest losers.”

The report by Dr Rugg is a follow-up to a 2008 examination of the sector by the same authors.

The report builds upon its predecessor, outlining a sector where landlords and tenants alike are unsure of their rights and responsibilities. The pair also claim many homes are in a poor condition with bad management being the primary cause of poor conditions, rather than old housing stock.

Alongside poor conditions and contradictory regulation, the report also identifies:

  • Newcomers to the sector, such as Build to Rent are increasingly focused on helping higher and middle-income renters, with no help for those on low incomes.
  • The need for a mandatory national landlord and letting agent register. In this system, penalty points would be accrued for contravening regulations, leading to a ban if sufficient points are awarded.
  • A new annual property ‘MoT-style’ certificate, required by law to let a property, in addition to wider welfare reforms to improve ‘safety nets’ for many renters.

On discussing the impact of the report on the future of the sector, Faulkner says: “I can’t wait to see what happens next. I hope very much that this excellent review will be listened to by MPs and those wanting real change in the sector rather than creating headlines for headline’s sake.

“It’s time to put tenants first and to help ensure they feel they are in a sector where they will be well looked after, whatever their budget, rather than constantly telling them they are getting a raw deal and should expect to be treated badly.”

 

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New DPS figures find cleaning and damage dominate list of deposit disputes

ZEiGicxd_400x400New data released this week by the Deposit Protection Service (DPS) has found that cleaning and property damage are among the most common reasons for landlords and agents to make deposit deductions.

The data charts results going back over the last year, finding 63% of landlords who engaged with the dispute resolution service, cited cleaning as the most common reason for engaging with the DPS.

The full ranked list of reasons is as follows:

1.       Cleaning (63%)

2.       Damage to property contents (53%)

3.       Redecoration (37%)

4.       Rent arrears (23%)

5.       Gardening (16%)

6.       Missing items (16%)

7.       Outstanding bills (4%)

Speaking on the breakdown of the issues, managing director of the DPS said: “Many of the problems that lead to deductions can be avoided when both tenant and landlord are aware of their responsibilities and stay in regular communication throughout the tenancy”.

“Around 98% of tenancies end without any dispute between landlord and tenant over the deposit, but in the rare occasions they cannot agree, access to a free, impartial dispute resolution process helps ensure that everyone is treated fairly.”

Research conducted by the National Landlords Association (NLA) highlights the increasing issues landlords and agents are facing from problem tenants in the private rented sector. With increasing numbers of disputes, their research found that our members experienced these issues with tenants:

·         Rental arrears (38%)

·         Property damage (30%)

·         Anti-social behaviour (15%)

For the best results in protecting your portfolio, NLA property insurance is a must have, as other normal home insurance policies are not valid in these scenarios, something most landlords are not aware of. Over 90% of our members choosing NLA Property Insurance renew their policies, you can read more about the best policy for protecting you and your property here.

Alongside protecting your property, ensuring you get the right tenant is key to a successful investment. NLA tenant check will ensure you take the risk out of renting by protecting your rental income and reduce the risk of letting to unreliable tenants, conducting a full background check on income, credit history and referencing. The service will also protect your rental income, covering up to £2,500 in arrears each month.

You can find out more about NLA tenant check and other services on offer here

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Home Office launches campaign to help letting agents avoid letting properties to criminal ‘County Lines’ gangs

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The Home Office launches campaign to help letting agents avoid letting their property to criminal ‘County Lines’ gangs

Urban drug dealing gangs are moving into rural towns and coastal communities, where they rent properties and establish a base. The National Crime Agency’s County Lines report shows that these gangs are now even moving into towns in affluent areas to do this.

These gangs use a drug dealing model, known as ‘County Lines’. Children and teenagers – some as young as 12 – are exploited by these gangs to carry drugs from urban areas to rural towns.

To help estate and letting agents avoid letting their properties to these criminal gangs, the Home Office, UKALA, NLA and CrimeStoppers are working together to increase awareness of the signs to spot criminal tenants, and to encourage staff to report concerns to CrimeStoppers.

Possible warning signs to look out for are:

  • The prospective tenant offers to pay rent for a long period (e.g. 6 months) upfront in cash
  • The prospective tenant is smartly dressed and appears affluent, but wants to rent an inexpensive property
  • The prospective tenant is unable to provide landlord or employment references
  • The tenant prefers to pay rent in cash, and is unable to provide a good justification
  • The tenant does not want to be disturbed, and tries to prevent you from inspecting your property when given reasonable notice.

County Lines gangs often use other people to procure accommodation as a means of distancing themselves from the criminality, meaning estate/letting agents may not have a contract with the actual criminal.

To minimise the risk of your property being used by a criminal gang:

  • Ask the prospective tenant appropriate questions about their reason for moving, try to judge if they seem genuine.
  • Visit your property within a few weeks of the start of the tenancy to confirm you have rented it to the tenants you think you have – but always remember you must observe your tenants’ right to ‘quiet enjoyment’.
  • Once the tenant is in situ, arrange regular inspections (quarterly or six-monthly) to ensure the property is being used according to the agreement and to check on the condition of the property. If the tenant seems overly reluctant to allow you to visit, be wary. If you have doubts it can be helpful to ask for feedback from legitimate contractors, for instance those carrying out gas and electricity safety inspections, as a way to assess what’s going on.

The Home Office has produced a poster for landlords and agents outlining the key signs to look out for. The poster can be downloaded here.

Estate and letting agents who have concerns that a prospective tenant might be involved in County Lines activity should report it to CrimeStoppers on 0800 555 111, or use the online form https://crimestoppers-uk.org/give-information/forms/give-information-anonymously.

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