A welfare state for landlords

This essay is very interesting:

In terms of privately rented housing in the last 25 years, the single biggest change in housing law was effected by the Housing Act 1988. This abolished rent control from January 15th 1989 and brought in the Assured Shorthold Tenancy, the most common form of private rental agreement today. Its impact and knock on effects have been enormous. Problems with high rents, inflated housing benefit levels, high levels of tenant debt lack of security and summary repossession all derived from this piece of legislation.

And the problem of median rents isn’t even mentioned.

The government talks about licensing landlords

So the government is considering forcing landlords to register, and ARLA have set up a voluntary scheme:

Arla today launched its own licensing scheme to cover all its members. Member agents will be obliged to adhere to a number of requirements, including holding a professional qualification, keeping client funds in annually-audited client bank accounts, and holding valid professional indemnity insurance.

Of course, as shelter says this is ‘a step in the right direction’, but makes you realise that we’re miles from home.  Presumably, before ARLA members could previously keep funds in unaudited bank accounts.

The government scheme seems to involve a £50 license for landlords that can be revoked thereby preventing them letting the property.  The times article includes this worrying quote:

Registered landlords would have to comply with certain standards and those who fail to carry out repairs or who intimidate tenants could be struck off. If that happened, all their tenants would have to move out, although this would not happen overnight, Whitehall sources suggested

This does not seem to address any security of tenure problems, but would perhaps in the long term shake out the bad landlords.  Although, this may well put more demand on the good landlords (pushing up rents) and create a market of unlicensed landlords (good for locating illegal immigrants, skunk farms, etc).

The real problem here is that a landlord needs to be compelled to provide decent housing if they fail to, and should therefore have funds set aside in escrow in case they are needed.  This is exactly how it works for tenants.  I wonder whether landlords would welcome replacing tenants deposits with a license?

Money for nothing? OFT takes on Foxtons…

We are looking to redress the balance between tenants on one side and letting agents/landlords on the other.  In this case the OFT is tackling contract issues between landlords and lettings agents, perhaps next we can encourage them to take on contract issues between letting agents and tenants…

Essentially the OFT is looking to see whether the practice of charging a comission to landlords when an existing tenant renews is an unfair contract term.

We will be following this case with great interest to see whether there is a willingness to take on these inequalities.

http://www.citywire.co.uk/personal/-/news/money-property-and-tax/content.aspx?ID=336181&Page=1

Forgotten victims of repossession crisis – joint campaign launched

A new campaign has been launched.

Their advice is all sensible stuff:

* Always open mail addressed ‘To the Occupier’. This may include notice of any possession hearings.
* If you’re thinking of moving into a new property, make sure the landlord has permission from the lender to rent it out. Otherwise, the lender does not have to recognise the tenancy at all.
* If you were already living in the premises at the time when the mortgage was taken out, the lender may take you on as a tenant and allow you to pay rent to them directly. If you think you may be in this position, contact a Citizens Advice Bureau or Shelter.
* Try to find out as much you can about your prospective landlord and his/her mortgage status before taking up a tenancy - although in practice this isn’t always very easy.

However, finding out about your landlord is difficult and agents will lie to you.  I still think some new clauses in the contract would help.

How can you avoid a bankrupt landlord?

The media is all over the rise in repossessions of borrow to letters and the impact on tenants at the moment.  On the forums, we have a story of on tenant who may be evicted, but is still expected to sit out the whole tenancy by the agent or face penalties.  He naturally wants to protect his family from a last minute eviction, so found other accommodation.  The letting agent claims he is liable for the whole tenancy.

Although credit checks for landlords are one of our manifesto pledges, we have recently be considering a clause in the AST which helps you get out if the landlord defaults.  There should be a requirement in the AST that the landlord pays the mortgage in full every month.  This way, if they get into arrears you can claim breach of contract and terminate the tenancy.  This affords you some protection from a landlord who takes your rent to pay a mortgage on another property.

Another clause I would like to see is that the mortgage is an appropriate product (i.e. not a owner occupier mortgage). No-one should have to rent from a landlord who is lying to his lender.

Video advice on rights of private tenants

Community Legal Advice has produced a video on how to deal with rent problems.  It’s signed using BSL, but has a voice over as well.  It’s a great starting point on what to do if you’re having problems.

Property Industry Calls for Government Policy shift… More rentals and on longer terms…

NDUSTRY CALLS FOR NEW HOUSING AGENDA

Date

26th January 2009

Description

Property industry wants radical rental solution to housing crisis

Leading figures from the property industry will meet today at the British Property Federation’s (BPF) Annual Residential Conference in London to call for a radical shift to rental.

With repossessions almost doubling and tens of thousands facing negative equity, the BPF believes a professionalised, branded rental sector, where big firms provide long term homes to rent, could be the answer to Britain’s woes. Read the rest of this entry »

---

The Tenant’s Dilemma

The Citizens Advice Bureau has a valuable report on their site (thanks Owen!).  As the front line for helping out tenants in trouble, it’s amazing that they actually have to qualify their advice with a warning:

One of the frustrations which CAB advisers face when advising private tenants about disrepair is that any advice about their rights has to come with the warning that exercising these rights may result in the landlord issuing notice to quit.

This situation makes it clear why security of tenure is so important.  Without it, there is little or no point in providing other rights - the landlord can simply evict rather than deal with the problem.

The report details that there is overwhelming support from Environmental Health Officers and Tenancy Relation Officers for reforming the legislation on section 21 (only 2% respond that it is not needed).  It also has a very good section on how this works in other countries.  In general, you either have real security of tenure or specific law about retaliation (similar to employment tribunals).

I recommend you read this report, the case studies make shocking reading.