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Agents welcome mandatory qualification, new regulator and code of practice

Letting agents have responded with enthusiasm to the government’s announcement over the Easter weekend that the industry would in future have to abide by a mandatory code of practice and individuals would have to achieve a nationally-recognised qualification.

The government caught some sectors of the industry by surprise when it revealed on Sunday that  criminal charges would be brought against those letting and managing agents who break the code, and said that a new regulator will be set up to police the code.

Agents failing to comply will be barred from trading, while those who commit serious code breaches will face prosecution.

Former RICS residential faculty chairman Jeremy Leaf said on Twitter: ”Excellent long overdue news which should compromise rogue operators and enhance customer confidence, but must be properly enforced.”

But he added: “We need firm dates for delivery as all a bit wishy washy in that regard at the moment.”

Kristjan Byfield of London agency Base Property Specialists also took to social media to say: “In principle this is good news … How this is legislated, funded and enforced will be pivotal. However, with it taking 18 to 24 months for the government to configure a letting fee ban this could be a slow task.”

ARLA was also supportive with David Cox, chief executive, saying in a statement: “We are hugely supportive of these proposals. After 20 years of campaigning, the government has finally listened to our call for proper regulation of the industry. For the last two decades, successive governments have passed significant amounts of complex legislation on landlords; none of which have been properly policed or adequately enforced.”

He continued: “These announcements demonstrate a very sensible shift towards focusing on the root cause of the issues affecting the sector rather than trying to find legislative solutions to individual problems. For landlords, their rental property is usually their biggest asset after the home in which they live; and for tenants, it’s their home.

He continued: “These announcements demonstrate a very sensible shift towards focusing on the root cause of the issues affecting the sector rather than trying to find legislative solutions to individual problems. For landlords, their rental property is usually their biggest asset after the home in which they live; and for tenants, it’s their home.

“It must be the right of every landlord and every tenant to have a letting agent who knows what they are doing, is professionally qualified and the money they entrust to their agent is protected. This is a huge step towards creating a level playing field across the industry, and we look forward to working with the government on this.”

NALS also backs the measure, with chief executive Isobel Thomson saying: “We welcome the government’s recognition of the current contribution that lettings and management firms play within the Private Rented Sector. Creating a level playing field will eliminate the poor practice and dishonesty that currently tarnishes the sector and ensure a safe and fair experience for tenants and landlords. Agents who already submit to self-regulation should have nothing to be concerned about.”

The government’s announcement reads: “With thousands of renters and leaseholders suffering at the hands of rogue agents every day from unexpected costs, deliberately vague bills or poor quality repairs, a new mandatory code of practice is proposed to stop managing and letting agents from flouting the law.

“To further professionalise both sectors, letting and managing agents will be required to obtain a nationally recognised qualification to practice, with at least one person in every organisation required to have a higher qualification.

“A new independent regulator responsible for working practices of agents will be given strong powers of enforcement for those who break the rules – and agents who fail to comply will not be permitted to trade. Criminal sanctions could also be brought in for those who severely breach the code.”

Housing minister Heather Wheeler says: “Most property agents take a thorough and professional approach when carrying out their business, but sadly some do not. By introducing new standards for the sector, we will clamp down on the small minority of agents who abuse the system so we can better protect tenants and leaseholders who find themselves at the end of a raw deal.”

Other proposals to be brought in under the code include:

– a new system to help leaseholders challenge unfair fees including service charges;

– support for leaseholders to switch their managing agents where they perform poorly or break the terms of their contract;

– a requirement for all letting and managing agents to undertake continuing professional development and training.

The new code will be developed by a working group comprising representatives of letting, managing and estate agents, as well as tenants and regulation experts. The government says the group will be established as soon as possible and is expected to draw up the final proposals early next year.

The group will also look in greater depth at unfair additional charges for freehold and leaseholders and whether they should be capped or banned. This includes the use of restrictive covenants, leasehold restrictions and administration charges.

The government has also published its response to its consultation on the introduction of mandatory Client Money Protection schemes for letting agents, with legislation to be brought forward to introduce privately-led schemes and civil penalties of up to £30,000 for agents who fail to comply with the scheme.

According to industry estimates, £2.7 billion in client funds is held by letting agents at any one time.

“Making this scheme mandatory is vital to ensure every agent is offering the same level of protection, giving tenants and landlords the financial protection that they deserve, and will mean they are reimbursed if their letting agent is fraudulent or goes bankrupt” says the government’s statement.

https://www.lettingagenttoday.co.uk/breaking-news/2018/4/agents-welcome-mandatory-qualification-new-regulator-and-code-of-practice

 

Can Build to Rent fill the Buy to Let vacuum?

The UK is in desperate need of more homes. As the shift from owner-occupied homes to rented homes continues to be the new normal, the number of rented homes available needs to expand.

The problem is, the punishing additional 3% stamp duty on buy to let homes means that 69% of landlords have been put off investing in further rental property, according to the Residential Landlords Association.

Jonathon Ivory, Managing Director, Atlas Residential, says: “Just as the UK needs more rental homes than ever before, the stamp duty change has significantly dented investors’ interest in providing those homes.

We’re in danger of seeing a real vacuum in the buy to let market – many of those submitting their tax returns this April and May will be thinking carefully about alternative ways to make money. Thankfully, the build to rent sector is growing rapidly, providing the UK with the means to fill that vacuum.”

According to the Institute for Fiscal Studies, just 25% of those born in the late 1980s owned a home by the age of 27, compared with 43% of those born in the late 1970s. The situation is not going away, but the buy to let landlords are.

The changes are setting the scene beautifully for an influx of build to rent developers looking to create the next generation of rental homes. Packed with purpose-built facilities for socialising and working from home, build to rent schemes elevate rented housing to the next level.

Build to rent is still in its infancy in the UK, with just 105,000 units either complete, underway or planned, compared with a UK population of 65 million people. However, with buy to let rapidly losing its charm in investors’ eyes, it’s time for the build to rent sector to grow up fast.

Jonathon concluded: “Build to rent provides an unprecedented opportunity to put renters’ needs first. Renters can enjoy premium facilities that have been shaped around the contemporary urban lifestyle. Demand for homes in the UK is stronger than ever and the build to rent sector is ideally positioned to meet that demand. It is also well placed to adapt to the changing needs of the market. As the build to rent sector in the UK evolves, family homes are starting to take shape.”

 

http://www.propertyreporter.co.uk/landlords/can-build-to-rent-fill-the-buy-to-let-vacuum.html?utm_source=Email+Campaign&utm_medium=email&utm_campaign=21136-253796-Campaign+-+23%2F03%2F2018+MC

Three things to consider before you take the plunge into property investment

According to the latest figures released by IMLA, new investment in the buy-to-let market has fallen by £20bn in the last two years, so it may seem that putting your money into property is no longer a wise move.

Recent changes in legislation and greater scrutiny from lenders have meant that many buy-to-let investors are no longer expanding their portfolios as rapidly as they once were. However, if you do your homework, property can still be a good, solid long-term investment, providing excellent annual returns and appreciation rates.

If you are looking to take the plunge into property investment, or even if you have already built up a portfolio, here’s what you need to know about the latest legislation …

landlord key

1: Allow for stamp duty surcharges

If you have a pot of money put aside for a second property make sure you do your sums first, factoring in all the charges you are likely to incur in addition to the price of the property itself.

Changes in stamp duty land tax mean you will have to pay 3% on top of the existing stamp duty rates currently paid on main residences. This will apply even if your existing home is abroad and you are purchasing your second property in the UK.

Furthermore, unlike the tiered stamp duty rates, which are applied proportionately to the value of the property, the 3% charge applies to the entire purchase price. For example, if you are buying a property for £300,000, you will pay 3% on the full amount and then the standard rates of 0% on the first £125,000, 2% of the value between £125,001 to £250,000 and 5% for the remaining portion of £251,000 to £300,000. To put it into context, if you were purchasing the property as your main residence you’d pay £5,000 in stamp duty charges, but as a second property it will cost you more than double the amount at £14,000.

Once upon a time a landlord was able to claim tax relief on rental income by deducting both mortgage interest and other allowable costs associated with a let property. However, changes being phased in since April 2017 mean this relief is being significantly reduced over the next few years until it is replaced with a new 20% tax credit system in 2020.

Therefore, 100% of any rent you receive will have to be declared and added as income on top of any income you already earn from other sources. For example, if you are already in paid employment earning an annual salary as a basic rate taxpayer at 20%, you could end up tipping the scales into the higher rate tax band of 40%, which will also affect your personal savings allowance.

3: Should you set up as a limited company?

Limited companies are not subject to the same set of tax relief rules as sole traders, so setting one up might seem like an ideal solution. However, investors should do their homework before jumping straight in. Research has suggested that using a limited company for property investment is only worthwhile if you’re buying four or more properties, and in the case of existing landlords this could be a lot more.

For example, rates on mortgage loans are usually a lot higher than for personal borrowers so this could offset any potential savings. And if you do decide to move an existing property portfolio over into company ownership you could be in line for a hefty bill in the form of capital gains tax and stamp duty payments.

What next?

Whatever you are planning, before making any final decisions always make sure you seek professional advice from a tax specialist and independent mortgage adviser. They will be able to fully assess your situation and provide you with information so you can be armed with the full facts before taking the plunge.

http://www.propertyreporter.co.uk/landlords/three-things-to-consider-before-you-take-the-plunge-into-property-investment.html?utm_source=Email+Campaign&utm_medium=email&utm_campaign=21136-251414-Campaign+-+06%2F03%2F2018+Oblix

Should You Buy the Freehold to Your Flat?

If you own a flat it is likely that you will not hold the freehold to the property. You will most likely be paying, not only your mortgage but also ground rent to the owner of the freehold. So what are the benefits and pitfalls of buying the freehold?

What is a Freehold?

A freehold is the permanent and absolute ownership of property or land. If you own the freehold, it means that you own the building and the land it stands on.

What is a Leasehold?

A leasehold is where you hold the property on behalf of the freeholder for a fixed period of time. This means that you have a lease to use the home for a number of years until your lease expires. Leases are usually long term – often 90+ years but can be as high as 999 years.

Check out our video Freehold vs Leasehold: The key differences for more information.

What Does Buying the Freehold Mean?

You can ask the landlord to sell you the freehold at any time. By law, if landlords wish to sell the freehold, they must offer all leaseholder first refusal to buy it.

Buying the freehold isn’t something you can do on your own, however – to qualify you have to get your neighbours involved too. By law, at least half of the leaseholders in the building must come together to purchase the freehold.

At the end of the process, the flat-owners would:

  • Together own the freehold of the building (often by forming a limited company – this company will be owned and controlled by the flat owners); and
  • Separately, each would still have a long lease – but instead of this lease being from the old freeholder it would now be from the new entity that owns the freehold and that you and your neighbours now control

Once you jointly own the freehold, you can collectively set ground rents, shop around for the best insurance and generally be in control of your own destiny. You are also able to extend your lease so it is a long lease with the only cost being legal fees.

Am I Eligible to Buy the Freehold?

Generally, the requirements for a group of leaseholders to buy the freehold are:

  • The building needs to contain at least two flats;
  • No more than 25% of the freehold building can be used for non-residential purposes (e.g. shops/offices);
  • At least two-thirds of the flats must be owned by leaseholders who own long leases (originally granted for at least 21 years); and
  • At least half of the total number of flats in the building must be owned by leaseholders who want to buy a share of the freehold – so you don’t need to have all owners on board but you do need to have at least half of the flat-owners involved. If there are only two flats in the building, then both leaseholders must want to buy the freehold.

How Much Does It Cost to Buy the Freehold?

Freehold prices vary in the same way property prices do but certainly the shorter your lease, the pricier your freehold.

In terms of what the costs involve, to buy your share of the freehold you will need to pay your flat’s share of:

  • The purchase price for the freehold
  • The cost for a surveyor to do an accurate freehold valuation so you avoid paying over the odds
  • Legal fees for the leaseholders
  • The freeholders legal and valuation fees
  • Stamp duty land tax (if the purchase price is over £125,000)

What Are the Benefits?

  • Free lease extensions – If you buy the freehold and you can usually extend the lease to 999 years at no extra cost (excluding legal fees)
  • You control service charges – You can choose value-for-money, quality providers
  • No ground rent – You normally don’t need to pay ground rent
  • Fewer conditions – Leases can come with a number of conditions, for example, you may need the freeholder’s permission to let the flat or have a dog
  • It can add value to your home – Buyers generally prefer freehold flats to leasehold

 

http://www.propertymark.co.uk/advice-and-guides/buying-a-home/should-you-buy-the-freehold-to-your-flat/

Buying a Leasehold Property – What You Need to Know

Did you know that four in 10 new properties in England and Wales are now sold as leasehold, ranging from one bedroom flats in city centres, to four bedroom detached homes in rural areas?

Before you buy a leasehold property, it is important to be aware of what your lease includes and understand any charges you may face when buying a leasehold home.

What is the difference between a leasehold and a freehold?

If you own the freehold to your home, it means that you own the building and the land it sits on. If your property is leasehold, you hold the property on behalf of the freeholder and rent the home until your lease expires. Leases are usually long term – often 90+ years, however some developers have sold homes with leases as high as 999 years.

Check out our video Freehold vs Leasehold: The key differences for more information.

What is ground rent?

Ground rent is an annual charge which the leaseholder must pay to the owner of the freehold. This is often a fixed sum, however, your lease may contain a clause which allows the landlord to increase the cost payable every five to eight years from the date of build.

Your agent, conveyancer or solicitor should be able to advise if there are any rent review clauses in your lease and check what this would mean for you. The costs of the ground rent may be negotiable so make sure to check this with your agent or the developer if you are buying a new build.

Why do I have to pay a service charge?

A service charge is a fee that is payable by all residents which contributes towards the upkeep of the building. This could include cleaning of communal areas, upkeep of outdoor spaces and general maintenance. Generally, the fee payable is fixed however this may change year on year.

Make sure you ask your conveyancer or solicitor to explain all charges fully and enquire as to whether the lease administrator has any plans for works which you will be responsible to pay for.

Why would I be asked to pay an administration fee?

Administration charges are payments for services connected with your buying, selling or use of the property; they can include anything from charges for document applications to exit fees. The costs of any administration fees should be expressed in your lease agreement however your conveyancer or solicitor should be able to review your lease and advise you.

What should my agent be telling me?

Your estate agent should pass on all material information in respect of the lease. This would include, but is not limited to;

  • The number of years remaining on the lease
  • Ground rent costs and when it is payable, together with details of if or how this will increase over time
  • The annual service charge costs and when it is payable
  • Details of any event-related fees & charges payable under the lease
  • Rent payable in the case of a shared ownership arrangement
  • Details of any other fees or charges contained in the lease
  • The total balance of the sinking fund
  • Details of any unusual restrictions or covenants affecting the use and enjoyment of the property

Keep in mind that estate agents are not solicitors, if you are concerned about any aspect of your contract or your lease, speak to an impartial solicitor.

What else should I be aware of when buying a leasehold property?

Developers have been known to sell the freeholds of entire developments to third-party companies who then charge escalated fees to the homeowner when they come to purchase the freehold. Spiralling fees and onerous clauses have led to some building societies and banks refusing mortgages on leasehold properties – this can make them very difficult to sell.

Can I buy the freehold?

Before you commit to buying a leasehold property, look into who owns the freehold and find out whether it is likely to be sold on and who too. If you are buying a new build, ask the sales office to quote you a price for purchasing the freehold.

If you live in an apartment or large complex, there are steps you can take to purchase your freehold, take a look at our helpful guide on buying the freehold to your flat.

Read your contract carefully

Some leases have clauses which obstruct your use of the property and some restrictions are not always obvious.

Read your lease carefully and if you are unsure of anything, speak to your solicitor immediately.

Make sure you have a clear understanding of what you are entering in to, how much you will be expected to pay on an annual basis and if there are due to be any increases.

 

http://www.propertymark.co.uk/advice-and-guides/buying-a-home/buying-a-leasehold-property/

Key Differences Between Freehold and Leasehold Properties

 

If you took a very simple situation where you’ve got a building with a ground floor flat and a first-floor flat both have the benefit of the foundations of the building and the roof to keep it sheltered. You need some kind of administration system setup because the ground floor flat while it doesn’t have control over the roof is reliant on its maintenance. And the first-floor flat while it doesn’t have control of the foundations is reliant on them just to exist. Because buildings unlike in cartoons do not hang in the air when the bottom gets blown up. You also need to make sure the building is insured in case of a disaster as well.

So leaseholds were set up. The main features of a leasehold is that there are restrictions to do with what the occupiers can or can’t do. So typically, these things might include pets and not doing anything illegal or immoral. If there’s a balcony a simple thing like not hanging the washing out, so that it makes the building look unsightly across the balcony, might be another common restriction.

The other two features are a ground rent, this is a sum of money that is paid every year but it doesn’t have to be money and you’ll often hear the term ‘peppercorn ground rent’. It literally means that ground rent is paid in the form of a single peppercorn so it doesn’t really have any monetary value but it does make the lease valid.

The second thing is a maintenance and service charge. So, there might be common areas to the building not only the roof and the foundations, but it might be external decoration, some garden areas or a common hallway that needs to be lit, and cleaned and insured of course as well. The maintenance and service charge covers the costs of all of those items.

If you’re a buyer looking at leasehold property it would be wise, if the information is immediately apparent, to ask the estate agent how much the ground rent is and how much the maintenance and service charge is.

Then the other piece of essential information it’s always worth asking is the length of the lease because it will be for a fixed term. Typically, the shortest lease is started off with 99 years and the longest ones 999 years. Obviously, years will run away and it could be a lower term so you need to ask those questions.

Then one you’ve got all that information, take some advice, there are plenty of people to help you. You could ask your estate agent, you could ask your solicitor and you could ask your mortgage adviser if you’re unsure about any of those aspects. But with all that information hopefully you can now go away and successfully purchase a leasehold property.

 

http://www.propertymark.co.uk/advice-and-guides/buying-a-home/freehold-vs-leasehold.aspx

Three things to consider before you take the plunge into property investment

Donna McCreadie – Perrys Chartered Accountants, offers sound advice for those looking to take the plunge into property investment.

According to the latest figures released by IMLA, new investment in the buy-to-let market has fallen by £20bn in the last two years, so it may seem that putting your money into property is no longer a wise move.

Recent changes in legislation and greater scrutiny from lenders have meant that many buy-to-let investors are no longer expanding their portfolios as rapidly as they once were. However, if you do your homework, property can still be a good, solid long-term investment, providing excellent annual returns and appreciation rates.

If you are looking to take the plunge into property investment, or even if you have already built up a portfolio, here’s what you need to know about the latest legislation …

 

1: Allow for stamp duty surcharges

If you have a pot of money put aside for a second property make sure you do your sums first, factoring in all the charges you are likely to incur in addition to the price of the property itself.

Changes in stamp duty land tax mean you will have to pay 3% on top of the existing stamp duty rates currently paid on main residences. This will apply even if your existing home is abroad and you are purchasing your second property in the UK.

Furthermore, unlike the tiered stamp duty rates, which are applied proportionately to the value of the property, the 3% charge applies to the entire purchase price. For example, if you are buying a property for £300,000, you will pay 3% on the full amount and then the standard rates of 0% on the first £125,000, 2% of the value between £125,001 to £250,000 and 5% for the remaining portion of £251,000 to £300,000. To put it into context, if you were purchasing the property as your main residence you’d pay £5,000 in stamp duty charges, but as a second property it will cost you more than double the amount at £14,000.

2: Consider how your income tax may be affected 

Once upon a time a landlord was able to claim tax relief on rental income by deducting both mortgage interest and other allowable costs associated with a let property. However, changes being phased in since April 2017 mean this relief is being significantly reduced over the next few years until it is replaced with a new 20% tax credit system in 2020.

Therefore, 100% of any rent you receive will have to be declared and added as income on top of any income you already earn from other sources. For example, if you are already in paid employment earning an annual salary as a basic rate taxpayer at 20%, you could end up tipping the scales into the higher rate tax band of 40%, which will also affect your personal savings allowance.

3: Should you set up as a limited company?

Limited companies are not subject to the same set of tax relief rules as sole traders, so setting one up might seem like an ideal solution. However, investors should do their homework before jumping straight in. Research has suggested that using a limited company for property investment is only worthwhile if you’re buying four or more properties, and in the case of existing landlords this could be a lot more.

For example, rates on mortgage loans are usually a lot higher than for personal borrowers so this could offset any potential savings. And if you do decide to move an existing property portfolio over into company ownership you could be in line for a hefty bill in the form of capital gains tax and stamp duty payments.

What next?

Whatever you are planning, before making any final decisions always make sure you seek professional advice from a tax specialist and independent mortgage adviser. They will be able to fully assess your situation and provide you with information so you can be armed with the full facts before taking the plunge.

 

http://www.propertyreporter.co.uk/landlords/three-things-to-consider-before-you-take-the-plunge-into-property-investment.html?utm_source=Email+Campaign&utm_medium=email&utm_campaign=21136-251414-Campaign+-+06%2F03%2F2018+Oblix

Top tips on buying an investment property at auction

With thousands of properties already sold this year and popularity growing by the day, more and more people are choosing to buy and sell their properties via the auction room.

Recent analysis of the sector has shown that savvy investors are coming to auction rooms to find the ideal rental property and are attracted to the method by the quick completion times, lack of property chain and transparent pricing.

If you are thinking of investing in property for the first time or, are an existing landlord who has never been to an auction, read our top tips on buying an investment property at auction…

Do your research 

As a buy-to-let landlord you need to research the lot and its viewing schedule and also ensure that there is sufficient demand from tenants for the type of property you intend to purchase before placing any bids.

View the property and the legal pack

Review your finances 

On the day of the auction, you will need to pay a 10% deposit in order to secure the property and the remaining 90% to be paid 20 working days later. Before attending the auction, if you are not a cash buyer then we recommend speaking to a mortgage advisor about your options.

Place your bids 

If you plan on bidding at the auction, you must bring with you proof of ID and of course, your 10% deposit. If you are unable to attend the auction then you can either nominate someone you trust to bid on your behalf (by proxy), or bid over the telephone. If you do want to bid either by proxy or by telephone, make sure you call the auctioneer in advance to find out all of the terms and conditions.

 

http://www.propertyreporter.co.uk/auctions/top-tips-on-buying-an-investment-property-at-auction.html?utm_source=Email+Campaign&utm_medium=email&utm_campaign=21136-251698-Campaign+-+08%2F03%2F2018+SHAW

 

Discussion: Should tenants have the default right to keep pets?

Labour has today launched a new action plan on animal welfare, which includes a proposal to give tenants the default right to keep pets, unless there is evidence the animal is causing a nuisance.

You can read the NLA’s initial response here.

Under the 2015 Consumer Rights Act, a landlord should only be refusing permission if it is reasonable to do so, for instance on grounds of the animal’s size, the damage it could cause and its impact on future rental prospects.

Many tenancy agreements will be worded to reflect this position. For example, the NLA’s AST includes the clause:

Not to keep any animals, reptiles, insects, rodents or birds at the Property without our written permission (which will not be unreasonably withheld). For the avoidance of doubt, this clause does not apply in connection with registered guide and assistance dogs.

There are no actual policy details yet as Labour have only said they will consult with landlords on the proposal. The NLA very much welcomes this because there are issues that will need to be addressed to make it in any way a workable policy.

Ultimately what must be avoided is a one-size-fits-all approach that treats the whole private rented sector as a giant uniform monolith. Unfortunately, politicians of all persuasions have been guilty of this, not least Labour.

Damaging Costs

The first port of call for Labour’s consultation with landlords should be to try and reach an understanding of why some landlords are reluctant to allow pets in their properties. The policy could then, hopefully, include plans to solve this reluctance.

Luckily, the NLA has previously done some research on this with our members and the results will not surprise you.

This research showed that over half (55%) were unwilling to allow tenants to keep pets in their properties:

pets allow question

Of those that were unwilling to allow pets, 41% of landlords cited the main reason as potential property damage:

why not pets

The obvious answer to the risk of pet-related property damage is increase the security deposit taken. Alternatively, clauses could be inserted into the tenancy agreement such as one requiring the tenant to professionally clean the property on move-out. The Dogs Trust’s Lets with Petsscheme advises landlords to take these approaches.

However, these approaches will soon be outlawed by the ban of letting fees likely to come into force sometime in 2019. While deposits will be capped at 6 weeks’ rent under the draft Tenant Fees Bill, Labour would like to see this reduced to 4 weeks’ rent which we have already warned about. On top of that, the Bill would ban landlords and letting agents from requiring tenants to pay for third-party services, such as a professional cleaner.

This leaves no room for landlords to seek some extra financial protection against pet damage, which could see some unintended consequences. Perhaps landlords who currently supply furniture would stop, or decrease the amount or quality of the furniture or fittings provided.

While more costs for landlords does not automatically increase rent, it adds to the cumulative upwards pressure and could exacerbate the effects of Section 24 tax changes that are starting to impact on landlord finances.

Consequential?

 There are likely other consequences of a “default right” that need to be addressed by any consultation the Labour undertakes with landlords. While not an exhaustive list, here are just some issues that we hope are taken into account before any policy details are decided:

  • Landlords will likely face other increased costs as a result of the tenant’s “default right” to a pet. For example, landlord insurance premiums are already likely to rise if tenants have pets (if the policy even covers pet damage). What will the effect be in premiums if all tenants have the default right? What impact will this have of rents?
  • Some properties may not even be suitable for pets (depending on the animal and the property) such as high-rise flats, so would not automatically improve animal welfare,
  • In the case of many leasehold flats, permission for pets may not be within the gift of the landlords as the lease itself bans them. They would then need an exemption from the “default right”,
  • Houses in Multiple Occupation (HMOs) also need to be look at, so that sharers are not forced to live with pets they do not want to live with, or possibly to which they are allergic,
  • How could landlords evidence that a pet is, or would cause a nuisance, and what legal routes would be open to landlords to rectify the problem or seek redress?

We welcome Labour’s promise to consult with landlords on the development on this policy, and while we may not agree on its necessity, we will endeavour to work constructively to ensure any outcome is workable and more than just another financial burden on landlords.

 

Discussion: Should tenants have the default right to keep pets?

Private Landlords in England need to be prepared for increasing regulation

A specialist commercial property lawyer has warned that private landlords in England need to be prepared for increasing regulation following the publication of a Government consultation.

Tim Miles, a Partner with national firm Clarke Willmott LLP, says the consultation on electrical safety will have a significant impact on private landlords and the buy to let sector in England.

The consultation proposes to compel private landlords to undertake mandatory electrical installation safety checks every five years, on all private rented properties within their portfolio.

Following similar obligtions in Scotland, the consultation proposes a fine of between £5,000 and £30,000 for failure to comply, which should provide a costly deterrent. Although, unlike Scottish regulations, the consultation falls short of proposing checks on electrical appliances such as white goods supplied by landlords, it will still have a significant impact.

Additionally, landlords also need to be aware that in line with current gas safety requirements, the consultation proposes preventing landlords from being able to evict tenants under a Section 21 notice unless they have provided the tenant a copy of electrical installation safety documentation.

If approved, regulations from the Secretary of State for Housing Communities and Local Government are likely to follow later this year.

Tim said: “Private landlords in England need to be prepared for increasing regulation and should not view the consultation as a stand-alone act, but as part of a wider package of action.

Another consultation has been released in the same week proposing that private landlords will be required to sign up to a new private housing obudsmen and the Government’s support for The Homes (Fitness of Human Habitation) Bill.

These consultations are part of the Government’s clear intent to protect tenants post-Grenfall.

Additionally landlords need to be aware that the five year mandatory suggestion is only a suggestion and there is the potential that (dependent on the consultation to ensure that a wide range of views are considered.”

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