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

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.

Association of Residential Letting Agents warns of flood unqualified agents…

From the Guardian:

It seems that estate agents up and down the country, unable to sell property, are pouring into the lettings business instead. Like rental properties themselves, the market for letting agents is now saturated. The influx has been so great that the Association of Residential Letting Agents has warned about a flood of “unqualified” agents without professional qualifications or standards hitting our high streets.

An interesting article highlighting the unregulated, poor quality of the private lettings agency business.

http://www.guardian.co.uk/money/blog/2009/mar/17/patrick-collinson-letting-agents

Perils of Defaulting Landlords

This story is been run by the BBC, including a few case studies of blameless tennants evicted due to landlords in arrears.

http://news.bbc.co.uk/2/hi/uk_news/7912025.stm

When asked for comment on why letting agencies credit check tennants, but not landlords, I think the response from Townends (a large agency in Surrey) sums up the problem:

“Credit checks are not something any agent would do on a client. Landlords sign a contract, and have to make sure everything runs smoothly, and we conform to a code of conduct.”

So no argument against credit checks on landlords, other than the fact that they dont already do it.  In this market, with more and more agents attempting to sign up landlords as their sales businesses collapse, it would be a brave agency who tried to credit check a landlord!  This is why legislation or at least changes to the code of practice are required as it will never happen without this change.

Agents are there to represent the interests of landlords and derive their income from the landlords, not the tennants.  Unless that can be changed through legislation, I dont see any way of improving the lot of private tennants.