London Borough to Ban Letting Fees – but only if you feel like it!

OLYMPUS DIGITAL CAMERA

The London Borough of Hackney, home to Shadow Home Secretary Diane Abbott, co-host of the London Olympics in 2012, and birth place of Jeremy Beadle has unveiled its latest attempt at making  history by announcing its intention to ban letting fees – voluntarily.

A voluntary ban?

That’s right, a ‘ban’ which is ‘voluntary’.

Or to put it another way – to officially or legally prohibit the charging of fees, without officially or legally requiring anyone to comply, which must be entered into at the discretion of those detrimentally affected.

We’re not making this up, for the avoidance of doubt Cllr Sem Moema, the Borough’s mayoral advisor for private renting and housing affordability, has written to interested parties stating:

“I’m proud to say we’ve launched England’s first voluntary letting fee ban – encouraging our borough’s letting agents to scrap unnecessary fees and charges ahead of the Government’s long-delayed legislation”

According to local press reports Cllr Moema is optimistic that letting agents will sign up to the scheme, which she describes as ‘pioneering’.

Better Renting

This forms part of the Borough’s ‘better renting’ campaign, which has a very important point to make in a part of London with 2,800 homeless households living in temporary accommodation and where one in three households rent privately.

The campaign is without a doubt well-intended, but you have to wonder about the effort which has gone into publicising a ‘ban’, which is not only voluntary but of something that is to be prohibited in due course anyway.

In the aftermath of the Government’s announcement of their intention to ban fees (that is to actually ban, with rules and sanctions) it has become clear that some letting agents are guilty of imposing some pretty nasty, opaque, and largely unjustifiable charges on tenants. These agents should be dealt with, and perhaps the only positive thing about the blanket ban is that they will (probably) no-longer be able to get away with it.

That being said, my suspicion is that these same letting agencies make up a large proportion of those not complying with advertising guidelines, fee transparency, EPC regulations and a whole plethora of other statutory responsibilities local authorities are already able to enforce against.

Powers to improve housing?

It is evident from Hackney’s campaign that they are very concerned – quite rightly – about the quality of landlords, letting agents and properties in the Borough. They would like more powers and the ability to enforce.

However looking at the figures available for housing related prosecutions in London, which granted are two years old, Hackney ranked 13th out of 33 boroughs and only accounted for six prosecutions during the three years leading up to the end of 2014. Neighbouring Newham managed 359 over the same period.

Perhaps the Council would be better served focussing on enforcing against the criminal offences committed by the minority of landlords and letting agencies failing to live up to the high standards expected and demanded by those calling the Capital home before moving on to lobby for the next set of regulations local politicians would like to see added to their arsenal.

What now?

The Hackney ‘ban’ is of course an aspiration, it has no teeth and will in all likelihood be forgotten about a couple of press releases down the line. Lots of agents are already turning to alternative ways of doing business that minimise fees, statements like this will have little impact.

In the meantime the majority of responsible letting agents who charge justifiable fees and commissions are busily trying to adjust their business model to accept the huge cash flow disruption that the ban will eventually cause.

Maybe it’s too much to ask that the Council takes this into account and tries to support local rate paying businesses. After all there aren’t that many of us left on the highstreets.

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Modern day slavery: Could letting agents be complicit?

NCA wallThe National Crime Agency (NCA) this week reported that there are currently more than 300 police operations live tackling modern day slavery, suggesting that the problem is much more wide spread than previously though.

In fact the Agency went so far as to state that its previous estimate of 10,000-13,000 victims in the UK is likely to represent only the ‘tip of the iceberg’.

Trafficking is apparently so widespread that individuals and companies may well be encountering operations and victims every day.

In particular the NCA highlighted sectors such as care workers, agriculture, food processing and construction as potential areas of concentration – in addition to traditional target businesses such as car washes and food service.

What has this got to do with letting agents?

On the most basic level, everyone needs somewhere to live and traffickers have been known to source private rented property for this purpose. Likewise some of the criminal enterprises most commonly linked with traffickers and modern slavery are far too often fun from privately rented premises.

Police forces around the country regularly urge letting agents to look out for ‘signs’ of modern slavery. As far back as 2015 Thames Valley Policy suggested agents ask themselves a series of simple questions before agreeing a let, in order to help identify potential victims and criminal gangs:

  • Do you know exactly who you are renting your property to and who is residing in the premises?
  • Is the occupant the same person who completed the tenancy agreement?
  • Does the occupant pay for their own tenancy, from their own bank account?
  • Are you aware of any anti-social complaints relating to the property?
  • Do the occupants of the property change on a regular basis?
  • Is the occupant in possession of their own passport and identification documents, and have these been checked for authenticity prior to the start of the tenancy?
  • Does the occupant appear withdrawn, frightened or show signs of physical abuse?

Obviously the right-to-rent checks carried out by all landlords and letting agents in England will reduce the risk of unknowingly assisting traffickers, but it is important to remain vigilant.

Responsible businesses

Large companies, those with annual turnover in excess of £36 million,  are required to publish a statement outlining their policies and practices in respect of slavery and human trafficking. This is unlikely to be a useful exercise for most small to medium firms, but there are some practical steps that smaller companies could consider – based on this regulatory approach.

For instance:

  • Provide training and guidance to staff on the topic
  • Establish a system of supply chain verification to ensure that contractors do facilitate modern day slavery, either actively or passively.
  • Review existing suppliers and contractors. Letting agents frequently employ cleaning and maintenance contractors, which operate in sectors considered high risk by the NCA.

Above all any letting agent who suspects they may have encountered a case of modern day slavery should report it. This can be done using the dedicated helpline on: 0800 0121 700 or online at: https://www.modernslaveryhelpline.org/report

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Is it time we had Tinder for letting agents?

Tinder

Swipe left or right to rate your agent

The idea of a simple way to rate your letting agent is something that would appeal to many I’m sure, but asking tenants and landlords to swipe right or left to rate their agent would surely create more problems than it would solve – which is probably why it hasn’t yet taken off.

However, not to be put off by this Newham Council has instead introduced their own rating system to name and shame rogue letting agencies.

Yep, plans are afoot for to create the UK’s first public rating system for letting agents, from zero to five stars (where five is the best), which will include information about agents such as whether they have failed to refund deposits, pass on rental income, charge unjustified fees, or been shoddy at addressing customer complaints.

The star rating will be public for all to see!

Is this for real?

Completely. In fact, there was even a 21 day consultation on the idea, titled ‘A better deal for private renters’ in July.

The council says the scheme will allow tenants and landlords to make more informed choices and encourage increased professionalism in the private rented sector.

How will it work?

The ratings are based on the results of Newham’s Fair Lettings Project, which saw all letting agents in the borough audited by the council over a two year period. The audit looked at things like: overall performance, compliance with the law, whether they meet current best practice, and, of course, customer feedback.

Once star ratings have been determined by the council, each agency will be informed and invited to appeal if they think the information is wrong.

Commenting on the scheme, Mayor Sir Robin Wales said: “The extreme demand in the private rented property sector is being exploited by some unscrupulous letting agents, who rip off landlords and tenants. We have seen tenants charged outrageous fees and had deposits withheld, and landlords who never see the rent that is due to them.

“The law gives us limited powers to act against these cowboys, but by scrutinising their activity, and sharing information with our residents and landlords, the ratings should see the unscrupulous agents pushed out of business, while professional and hard working agents are rewarded.”

Why should I care?

Well, Newham has a reputation as a bit of a trailblazer when it comes to private rented sector standards and enforcement, having been the first council to introduce borough-wide licensing in 2013. It seems that where Newham boldly goes first, other councils tend to sit for a bit, wait and watch for a while, and then duly follow.

Well, kind of…

Of course, not all councils have introduced borough-wide or city-wide licensing, and certainly not all intend to do so. Likewise, we can’t imagine that every council will take forward plans for a rating system even if Newham’s pilot proves successful. That, in part, will be down to the sheer amount of work involved in first ‘auditing’ agents in any given area.

However, for the time being the fact of the matter is that Newham is up to it again, so expect to see more and more about this scheme over the next few years and remember: you heard it here first (unless you heard it somewhere else).

 

Posted in Accreditation, Letting agent redress, Regulation | Tagged , , , | 2 Comments

Letting Agents Needed to Help Design Government Register

New energy efficiency laws are coming into effect over the next few years that will affect the private rented sector and agents’ ability to let properties. The Department for Business, Energy & Industrial Strategy is looking for views of landlords and letting agents to ensure the exemptions register is designed with those active in the sector in mind.

Click here to take the survey.

From April 2018, private rental properties in England and Wales must achieve an energy efficiency rating of at least E on their Energy Performance Certificate (EPC).

An EPC is already required for a property when it is offered for rent.  The minimum standard will initially only apply upon the granting of a new tenancy to a new or existing tenant (which includes a fixed-term AST rolling over to a statutory periodic).

Then from 2020 the standard will apply to all privately rented properties which are required to have an EPC, unless a valid exemption applies.

Exemptions from the minium standard include:

  • the work needed to bring the property up to an EPC E rating would result in a greater than 5% reduction in the value of the property, or would negatively impact the structure of the property; or
  • third-party consent for the work (such as freeholder or planning consent) cannot be obtained.

Where an exemption applies, the landlord will be required to register that exemption on the PRS Exemptions Register – a new digital service which is now being developed. The register will enable landlords or their agents to register exempt properties, upload data such as EPCs and survey reports, and submit evidence of compliance. Members of the public will also be able to use the register to search for properties which are exempt from these new EPC requirements.

Anyone who fails to register an exemption, before going on to let out a sub-standard property in breach of the regulations could face a fine of up to £4000.

The Exemptions Register is currently being developed by Northgate Public Services. To help them ensure that the register is designed with the PRS’ needs in mind we would be grateful if you could take the time to complete the following short survey:

Click here to take the survey.

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Welsh Government announces its own tenant fee ban!

Welsh Govt Fee consultation(1)

The Welsh Government has published its very own consultation on fees charged to tenants in the private rented sector.

Following on the heels of the government in Westminster, the consultation seeks to determine which fees, if any, are justifiably being charged to tenants. It also seeks information on fees paid by landlords to agents, and also on the possible consequences of banning fees.

A similar exercise in England received approximately 4,700 responses, despite being interrupted by a thoroughly inconvenient general election, so it is likely that this Welsh specific effort will attract a fair amount of attention from landlords and letting agents operating in the Principality.

It is not yet known if the Welsh Government will go as far, especially in light of their Rent Smart Wales scheme already charging landlords and agents a premium to operate their businesses in Wales.

Explaining the decision, the consultation states:

The Welsh Government believes many of the fees charged to tenants to be unjustified and arbitrary. Fees can act as a barrier to privately-rented housing. In the long run, a failure to address this issue risks making the Private Rented Sector unaffordable for some people. Together with a ban on letting agents’ fees, we propose to include a ban on fees charged to tenants by landlords and third parties.

Redressing this imbalance and addressing charges will incentivise agents to provide competitive services to attract landlords. It will also provide prospective tenants with a level playing field where they can search for potential homes with the knowledge that they will not face additional fees and charges in order to secure the property and compare on a like-for-like basis across agents.

Letting agents with businesses or branches in Wales are encouraged to respond to the consultation, which is available online here:

The consultation is open until 27th September and can be read in full here.

 

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Are you assessing fire risks properly?

check-list-1150080In the aftermath of the recent tragic events in London, questions are quite rightly being asked about the fire safety of rented homes.

Understandably, most of the focus has so far been on social housing; specifically the risks posed by high-rise blocks, but it is important to remember that we all have a duty to understand our responsibilities and obligations to mitigate the risk of fire.

Landlords and letting agents’ legal responsibilities vary depending on the type of property involved, for instance HMOs are subject to different standards.

However, as a basic starting point all landlords and letting agents should carry out a fire safety risk assessment.

The National Landlords Association (NLA) has produced a pro-forma log-book to make it as simple as possible to keep a single record for each property. These are available to download from landlords.org.uk.

That’s great, but how do I perform a risk assessment?

There are no strict rules about how to go about assessing a property, and of course the specifics will depend on the individual property and residents.

That being said it is possible to break a basic assessment down into five steps – outlined below.

ONE: IDENTIFY THE HAZARDS WITHIN THE PREMISES

For a fire to start it needs:

  • A source of ignition
  • Fuel
  • Oxygen

The goal of fire risk assessment is to minimise the chances of these three components coming together.

To do this we must identify hazards.

Sources of ignition are generally things which get hot enough to ignite the materials around them.

In a residential setting this is likely to be:

  • Cooking appliances
  • Heaters
  • Boilers
  • Electrical installations
  • Lights
  • Naked flames
  • Cigarettes

Fuel can be anything which will burn, so you should look for things which are likely to catch-fire and burn with relative ease.

For example:

  • Furniture
  • Textiles, such as curtains
  • Waste storage
  • Heating oils or gas

Sources of oxygen will be the air in the building; in most residential environments the risks presented by this will be considered ‘normal’

TWO: IDENTIFY PEOPLE AT RISK

Once you have identified the likely sources of combustion you will need to consider the people who could be at risk.

In a residential property this will mostly concentrate on those living in the premises, but consideration should be given to:

  • Their visitors
  • Anybody working at the premises, e.g. cleaners, caretakers or visiting contractors.

When assessing who might be at risk, you should consider:

  • People sleeping, who may be disoriented and slower to react
  • Any people with disabilities, or impairments
  • Young children and those caring for young children
  • Anyone with difficulty understanding instructions given in English
  • Visitors likely to be unfamiliar with their surroundings

THREE: EVALUATE, REMOVE, REDUCE, AND PROTECT AGAINST REMAINING RISK

Now it is time to get practical.

Having identified potential risks, you should do something about them.

Hazards should be removed, or reduced as far as possible – bearing in mind what is reasonably practical.

For instance:

  • Portable heaters could be replaced with fixed installations
  • Additional electrical outlets could be installed if there is evidence that sockets are being overloaded
  • All furniture should comply with the appropriate regulations
  • Provision should be made for the safe storage of refuse.

Once the conditions are dealt with you should ensure arrangements are in place to protect the safety of people from the remaining risk.

Appropriate measures will differ depending on the type of property but, fire precautions should be put in place to warn residents and visitors in the event of fire and allow them to escape. 

FOUR: RECORD, PLAN, INFORM, INSTRUCT, AND TRAIN

If you have fewer than five employees it is unlikely that you will be legally required to keep a written record of the assessments carried out.

However, it is good practice to do so and should a fire occur in your property you may be required to detail what assessment and actions you have previously undertaken.

This record should include ‘significant findings’ in relation to steps one and two as well as details of actions taken and measures introduced. This could include training staff or providing information about escape routes and procedures.

The NLA has produced a pro-forma fire safety log book to enable landlords to keep a record of their activities and actions taken. This can be downloaded from the forms sections of landlords.org.uk

FIVE: REVIEW

Fire risk assessments should not be considered a one-off, it is necessary to review the assessment and general fire precautions regularly to ensure that they remain accurate and relevant.

The reassessment period will vary from case to case, and matters should be kept under constant review.

Any problems which arise should be dealt with as soon as practical.

 

This is, of course, only a very basic run through and should not be considered a substitute for specialised training. UKALA provides an online library which covers fire safety in more detail and can be found here – Library

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Government finally backs down on Making Tax Digital!

s300_making-tax-digital-mock

Following concerted pressure from business representatives the Government has finally relented and agreed that small businesses and landlords should not be forced into a rapid move towards digital tax reporting.

Commenting on the announcement, HM Treasury Minister Mel Stride said:

“Businesses agree that digitising the tax system is the right direction of travel. However, many have been worried about the scope and pace of reforms.

“We have listened very carefully to their concerns and are making changes so that we can bring the tax system into the digital age in a way that is right for all businesses.”

In summary the changes announced amount to:

  • Only businesses with a turnover above the VAT threshold (currently £85,000) will need to keep digital records and only for VAT purposes
  • They will only need to do so from April 2019
  • Businesses will not be asked to keep digital records, or to update HMRC quarterly, for other taxes until at least April 2020.

VAT has been online since 2010 and over 98% of VAT registered businesses already file electronic returns.  Making Tax Digital (MTD) will build on this by integrating digital record-keeping to provide a single process, with the quarterly updates generated and sent direct from the software the business/agent uses to keep their records.

Those businesses with turnover above the VAT threshold will have the option to provide quarterly updates for other taxes but there will be no requirement to do so.

Similarly, businesses that are not VAT registered and those below the VAT threshold who have voluntarily registered for VAT can opt to join MTD.

That’s settled then. Until the next change of heart?

We expect this to be confirmed (hopefully) once and for all in the Finance Bill, due to be published after Parliament’s summer recess.

Fingers crossed businesses will actually be able to start to plan, without even more uncertainty about their future reporting procedures.

 

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