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Which Flats Count Towards a Licensable HMO?

Licensable HMOs – rather an esoteric subject which turns out to be rather complex. As complicated as it is, a Landlord also has to get it right because failing to license an HMO carries draconian penalties:

  • A fine and costs – the legislation says up to £20,000 but prosecutions are generally brought for multiple offenses, so the biggest fine I have heard about personally was a Blexley Landlord who had to pay £110,000 + £5000 costs.
  • Rent Repayment Order – Tenants and Local Authorities are entitled to have their rent & Housing Benefit returned to them.
  • No Eviction Rights – If a property is unlicensed a Landlord cannot serve legal papers such as S21 Notice, or proceed with evictions.

I think that this illustrates that the issue is more than theoretical and Cotswold District Council established in Court :

This case brought by Cotswold District Council is of particular importance because it clarifies the ambiguous legislation that defines which storeys within a building should be counted when determining if a house in multiple occupation, or part of it, comprises three storeys or more.

A legal judgment on the case given on December 21st 2007 at Gloucester confirmed that a self-contained ground-floor flat at a property does in fact count towards the total number of storeys. This clarified a grey area within the legislation.

However 5 years later another court made what I consider an inconsistent ruling:

when counting storeys in a building for HMO purposes it is not necessary to consider other residential storeys unless they are actually part of the HMO being considered. It is necessary to consider business premises.

And now we have yet another oddity as the above cases relied upon 2004 Housing Act defines a Mandatorily Licensable HMO as:

a)the HMO or any part of it comprises three storeys or more;

(b)it is occupied by five or more persons; and

(c)it is occupied by persons living in two or more single households.

It additionally defines which parts of a building should be defined as a storey where there might be some doubt or argument as to whether they are included in the living accommodation:

3) The following storeys shall be taken into account when calculating whether the HMO or any part of it comprises three storeys or more—

(a)any basement if—

(i)it is used wholly or partly as living accommodation;

(ii)it has been constructed, converted or adapted for use wholly or partly as living accommodation;

(iii)it is being used in connection with, and as an integral part of, the HMO; or

(iv)it is the only or principal entry into the HMO from the street.

(b)any attic if—

(i)it is used wholly or partly as living accommodation;

(ii)it has been constructed, converted or adapted for use wholly or partly as living accommodation, or

(iii)it is being used in connection with, and as an integral part of, the HMO;

(c)where the living accommodation is situated in a part of a building above business premises, each storey comprising the business premises;

(d)where the living accommodation is situated in a part of a building below business premises, each storey comprising the business premises;

(e)any mezzanine floor not used solely as a means of access between two adjoining floors if—

(i)it is used wholly or mainly as living accommodation; or

(ii)it is being used in connection with, and as an integral part of, the HMO; and

(f)any other storey that is used wholly or partly as living accommodation or in connection with, and as an integral part of, the HMO.

These are the clauses which caused so much heartache in the previous 2 cases.

If you have an HMO with 2 principle storeys of living accommodation on the 1st and 2nd floor, but a private access stair from the ground floor, Local Authorities have been reading this as a 3 storey mandatorily licensable HMO. The situation translates directly to the specific example given in the Housing Act where it talks about counting a basement if it is the main entrance to the HMO, so I agree with that.

Link to Original Story

Original Story

However in an odd and contradictory development a recent judgement at Bristol Magistrate’s Court District Judge Zara ruled that a property on the upper two floors of a two story building, accessed by a private staircase leading from the ground floor is not a Licensable HMO. Bristol City Council believed that the layout at the premises was such that the ground floor hallway and first floor landing associated with the maisonette constituted a storey, thus making the premises liable to licensing. The judge however ruled that the areas concerned only formed part of a storey. The ruling means that Local Authorities that have two storey maisonettes with private means of access within their areas may now face claims for the return of licensing fees.

 

Mayor’s Views of Renting in London


Accreditation

The Mayor believes that now is not the time for further regulation of the PRS. Any further changes would bring instability and costs to the sector at a time when new investment is what is required. The case for further regulation is weaker still when the poor use and enforcement of existing legislation is taken into account. The Mayor will continue to promote the better use of existing legislation and enforcement powers to deal with the worst standards in the sector.

The Mayor remains committed to significantly expanding the number of accredited landlords and agents in London.  The single badge of accreditation will be key to improving consumer awareness of accreditation and promoting the London Rental Standard.

It is important that these proposals are delivered in a way that doesn’t compromise on standards, is enforceable and sustainable, and can include all accreditation schemes. The Mayor has set out a plan to deliver the London Rental Standard and a single badge of accreditation, whilst also supporting a significant expansion in accreditation. In summary:

  • the GLA and the London Landlord Accreditation Scheme (LLAS) will work together to deliver the London Rental Standard and will ‘license’ other compliant schemes to use the single badge of accreditation
  • significant investment in LLAS will ensure that it is capable of expanding its membership and better targeting its services at a wider variety of landlords
  • the Mayor will support a major public awareness campaign, lasting at least one year, which will be aimed at promoting accreditation to tenants, landlords and agents
  • the boroughs will be asked to continue their support for accreditation and to explore how they can encourage local landlords and agents to sign up to the London Rental Standard – this includes offering incentives and working with landlords with whom they already have a relationship.

New housing supply

The single biggest housing challenge facing London is increasing the supply of new homes. The private rented sector and buy-to-let landlords in particular, are central to dealing with this challenge. Around two thirds of new market housing supply is private rented housing, demonstrating the scale of investment by landlords in the capital’s housing stock. In the future, the Mayor wants to see even more new supply of good quality private rental homes, to meet public demand and reduce price volatility. The £1 billion Build to Rent Fund was launched in January 2013 and is designed to promote institutional investment, by long term professional landlords, in our private rented sector. The GLA is working with government to ensure that as much of this investment as possible comes to the capital.

There is very little evidence that landlords keep a large number of their homes empty – though the wider issue of empty homes is, of course, very important.

Letting agents

The Housing Covenant also applies to letting agents; changes through this consultation will include letting agents and management agents being subject to the same ‘fit and proper person’ tests as landlords. It committed to ‘explore proposals to encourage competition and transparency in the letting agent market’, and consequently the Mayor supported a campaign to ensure the letting agents are forced to join a consumer redress scheme. This has now been adopted by government and is being implemented.

The estimated average cost of accessing the PRS in London is now £2,166, consisting of a deposit, upfront rent and various letting agent and landlord administrative charges. The Housing Covenant identifies this as a major barrier to entering the private rented sector and moving within it, worsened by a lack of information for both tenants and landlords about what all the charges are for. The London Rental Standard includes standards related to transparency of fees and charges, collection of rent and the operation of a complaints procedure.

Quality of housing

Promoting standards is a key tenet of the Housing Covenant, with particular emphasis on energy efficiency and preventing the conversion of illegal outhouses into ‘beds in sheds’.

In terms of design issues, the Mayor intends to bring forward GLA-owned and other sites specifically for purpose-built PRS schemes and these schemes will be designed with the needs of renters in mind. We will work with design experts and advisors, including representatives from RIBA, and ensure that additional weighting is given to the design element of bids.

Deposits

The London Rental Standard reiterates the minimum legal standards for the protection of tenants’ deposits. They must be held in a secure deposit protection scheme and tenants must be informed how their money will be kept.

Affordability

The Mayor recognises and is seeking to address the affordability issues facing London’s private tenants, not least through a range of measures to increase housing supply in the capital. However, the Mayor does not support rent controls as an answer to these issues, which are essentially a function of housing supply. Experience of rent controls in the UK points to a smaller, poorer quality tenure and their reintroduction would be disastrous for investment in London’s PRS, which already has some of the lowest yields in the country.

On-going Mayoral policy promoting the London Living Wage across London’s businesses works to ensure that every hard-working Londoner can earn enough to afford a home that meets their needs.

Source

10 Top Tips For London Tenants to Save Money

Money Saving Expert Martin Lewis has turned his attention to tenants and come up with 50 fabulous tips for saving money when you are renting a flat. Here are his top ten with appropriate links to his website where he fills in with more detail.

1. Renters have a right to switch and save on energy (even prepaid). If you pay the gas & electricity bill directly (not via landlord), you can and should compare and switch. Don’t stick with the previous tenants’ supplier as often it’s costly. Always do a meter reading as soon as you move in.

Speedily find your cheapest tariff: The MSE Cheap Energy Club checks you’re on the cheapest, and if not, compares across the market to find it (check the ‘top picks’ tab for fixed deals which guarantee no price hikes). After, it monitors your tariff and lets you know when to switch again.

What if I don’t know my usage? Cheap Energy Club can estimate for you.

What about prepaid? You can still switch supplier and save (seeCheapest Prepaid Energy). Yet switching from prepay to a normal meter sadly usually needs your landlord’s permission, as it physically changes the property.

2. Beware joint bank accounts with flatmates. Shared bank accounts for bills can mean you’re credit-linked – even if you hardly know each other. Then, when applying for products, their history can be taken into account. If it’s poor, it hits you.

If you used to have a joint account, but don’t any longer, apply for a notice of ‘disassociation’. See How Credit Scoring Works for more.

3. Is your deposit protected? A fifth of private renters don’t know if their deposit’s been protected (source: Shelter), so check. By law, for most private renters who moved in after April 2007 in Eng & Wales, your landlord must use a Govt-backed deposit protection scheme – giving you rights. See Is Your Deposit Protected?
4. Landlords must ask before entering. Landlords may need to come in occasionally for repairs and inspections, yet they should arrange a time with you. If they enter without asking, you can ask them to stop. If it continues, it can be considered harassment. Contact Citizens Advice or a solicitor for help, or the police if you feel threatened.
5. Cheap contents insurance. If you rent, your landlord is responsible for buildings insurance, so you only need contents (essentially the stuff that’d fall if you turned your home upside down).

Only you / your family live in the home? To get cheapest cover combine comparison sites Confused.com* & Compare The Market* to bag the max quotes in min time, then Aviva* and Direct Line*, which they miss. Better still, try the full Cheap Home Insurance guide where some get PAID for cover.

If you live in a houseshare. Getting cover from mainstream insurers can be tricky (a locked room helps, so ask for one). Confused.com*,Gocompare* & MoneySupermarket* say they provide flatshare quotes, but double-check the policy allows it – comparison sites are very flaky on this. You may find a specialist such as Home Protect* or a local broker viaBIBA easier.

6. Furnish for FREE – sofas, beds, TVs & more. If you’ve gone unfurnished or part-furnished, then online giveaway sites can help you for nowt. Hundreds of top-quality goodies are available daily for free from web communities – some’s tat, but some’s treasure. See Furnish for Free tips.
7. Don’t redecorate without the landlord’s permission. You generally need to return property in the state you got it (minor wear and tear’s allowable). So get the landlord’s permission in writing to put up shelves or repaint, unless you want to have to undecorate before you leave.

Beware putting pictures up. Don’t get hammer-happy – it destroys walls and deposits. Forumites recommend specially-designed picture strips to hold up pics without using damaging nails. See full Rental Decoratinghelp.

8. Letting fees can be perverse and nasty, check. Renters can be hit by huge and unfair fees. Some reported to us include £120 for permission to buy a dog or £60 for photocopying a contract.

Sadly there’s little regulation over these charges – but at least make sure you know what they are so you avoid them. There are growing campaigns for stronger rights. For more (limited) options, see Beware Unfair Fees.

9. Does every renter need their own TV licence? In shared homes, this usually depends on the tenancy agreement. Joint tenants can usually share, but if you’ve your own tenancy you need your own licence. For exact rules (incl lodgers), see TV Licence help.
10. Are you eligible for help? If you’re on a low income and struggling to pay rent, check if you’re eligible for housing benefit/grants. See Extra Cash Help.

Flats to Rent in 2020


Labour Government

I thought it would be interesting to look to the future and see how we will be renting flats in 5+ years time. There are two certainties that we can predict – firstly there won’t be a recession, it beggars belief that we could go a decade or more with a stagnant economy, so I think that it will be safe to assume some sort of economic recovery will have been underway. Secondly there will be a change of government in 2015 – whether the coalition implodes, explodes, or simply fades away I think it is a safe assumption that we will NOT have a centre right government running the show. I will readily concede that it’s not clear whether we will lurch to the left or right, but I think the most likely outcome in 2015 will be a labour government. Helped by three recent publications of the Labour Party Policy views on Housing we can see what renting in the next decade will be like.

Private Rental Sector (PRS) Center Stage

There are some very big surprises – not least that the documents lay out a future for housing which would surprise a labour supporter of the 70s 80s or 90s – the Private Rental Sector (PRS) is center stage in providing homes. Labour is determined that everyone should have a home at a price they can afford, labelled A One Nation housing policy. It intends to achieve this by supporting renters and the majority who are responsible landlords, ensuring that they are not undercut by a minority of rogue landlords. However Labour also clearly sees the PRS in it’s current form as broken, and not working.

Labour acknowledges that most people want to own their own home, however Britain faces the biggest housing crisis in a generation and therefore many people will take longer to buy and will be renting for much longer than in the past. As a consequence, the private rented sector under Labour will play an ever increasing role in meeting housing need.

Private Rental Sector (PRS) Broken

Labour sees the PRS as not fit for purpose. It sees private renting as unaffordable, unstable and subject to poor conditions and bad management.

  1. It sees a need to tackle unscrupulous letting agents and end rip-off charges.
  2. It also wants to give renting families private rented homes that are affordable and stable, providing the predictability and security that allow families to plan ahead.
  3. It considers that there are too many bad landlords who prey on vulnerable tenants and that 35% of private rented stock that is non-decent.
  4. It also sees that the £8.6billion a year paid in Housing Benefit is going to private sector landlords who provide poor and sub-standard housing that ultimately serves to create further socio-economic costs for the public purse.
  5. It also sees amateur landlords who are well meaning but unaware of their responsibilities as a problem.

 

Private Rental Sector (PRS) Solutions

Across the 3 policy documents there are some clear recommendations which are in part already being implemented by some local authorities, and are “Good to Go” as soon as the new government hits the road:

1. A National Register of Landlords

Interestingly HMRC is specifically associated with the register, and no doubt a lot of links will be tied up so that right to operate as a landlord, and use the legal system to recover debts, be paid housing benefit, recover possession of a property will be linked to being on the register, and paying tax on rental income (Landlord Tax Evasion is estimated at £500,000,000).

2. A National Private Rented Property Standard

This is a change from the Housing health and safety rating system (HHSRS) philosophy introduced in the 2004 Housing Act which moved away from prescribed standards, and made the Landlord responsible for assessing and implementing an appropriate level of Health and Safety. The review specifically identifies:

  1. Tenancy deposits
  2. Energy efficiency
  3. Property conditions
  4. Response times and repairs
  5. Improved local enforcement intended to make it easier for local authorities to introduce licensing schemes

3. Tougher sanctions on bad landlords

  1. Reviewing penalties and sentencing guidelines (expect major increases).
  2. Stamping out retaliatory eviction.
  3. Removing bad landlords from the national register so they can no longer operate.

4. Regulation of Letting Agencies

  1. A code of code of conduct
  2. Entry requirements for letting agents
  3. Compulsory business and consumer protection measures.
  4. A regulatory body with enforcement powers.
  5. Transparency, clarity and accessibility of information relating to fees and charges which are easily understandable, upfront and comparable across agents
  6. Restriction on the level and extent of activities that can be charged for, the size of deposits required in proportion to rent and the level of ‘administration’ fees for basic services, such as those for changing rental contracts.

5. New Laws on Tenancy Agreements

This area is potentially the most far reaching, and from a Socio-Economic POV a radical departure from the home owning model of the last few generations. Labour recognise that our society has changed. In previous generations education ended somewhere between 15 & 21, but currently the world of work seems to start somewhere north of 21, if ever. The home ownership model is now a thing for middle age, families are renting much as they did in Victorian times – however the tenancy contract used by landlords (The Assured Shorthold Tenancy Agreement) was designed in 1988 to be used specifically for accidental Landlords. It was intended solely to be used for the renting of property which would otherwise have stood empty whilst waiting to be sold, and the Assured Tenancy introduced in the same Housing Act was intended to be the Tenancy Agreement used by the PRS.

So 25 years later we have a PRS based  around a tenancy agreement designed for 6 month tenancies, but a requirement for 5 – 30 year tenancies. The only surprising thing is that Labour is the only political party to recognise this as a problem. Fortunately they also recognise that their 1977 attempt to create a level playing field was a disaster, and they make it clear that they will not be going down the road of regulated tenancies. The changes that they have indicated are less clear than in the other areas, but expect:

  1. Incentives that will form part of a “something for something” deal for landlords
  2. Direct payment of housing benefit to private sector landlords and housing associations who provide longer tenancies and predictable rents
  3. An improved legal process for long lets to evict renters who fail to pay rent and commit anti-social behaviour, including damage to the property.
  4. Current benefits of the tax system only available to landlords offering longer term stable tenancies.

Sources:

Labour Party Policy Reviews

Private Rented Housing: Improving standards for all

Private Rented Housing: Providing stability and affordability for renters and families

Private Rented Housing

Pimlico – The Number One BTL Hotspot

Buy-to-let

Buy-to-let (Photo credit: Alan Cleaver)

Writing in yesterday’s Daily Telegraph respected Property Journalist Graham Norwood fingered Pimlico as the nation’s number one Buy To Let hot spot.

In a typical “New Year” article Graham explains why thousands of people have resolved to dive into the only housing sector that is truly booming: buy-to-let (BTL).

  • Average UK rents have risen by 13.6 per cent since 2009
  • Capital values in most places have stagnated or fallen.
  • The proportion of households renting has increased in the past decade from 31 per cent to 36 per cent. In Westminster, for example, four out of every 10 homes are privately rented, not owned.

Graham’s Top 10 buy-to-let hot spots in 2013

1 London, Victoria/Pimlico

2 Maidenhead

3 Exeter

Cambridge

5 Bristol

6 Milton Keynes

Inverness

8 Aberdeen

9 London, Canary Wharf

10 Central Manchester

Graham’s How to be a buy-to-let landlord Check List

• Do your research. Pick a sector: students, professionals, first-time buyers or retirees?

• Buy in winter when sellers are anxious and may sell cheaply

• Don’t buy in a large scheme.

• Choose areas with diverse employment, great transport links, such as Reading and Southampton

• Find the right mortgage, or remortgage your main home if this option is cheaper.

• Most buy-to-let mortgage offers require at least a 25 per cent deposit – a few want 40 per cent

• Avoid ground-floor flats, which tenants believe are security risks

• Family homes rent well if they are in key school catchment areas.

• Aim for five per cent return on your investment per year

• If you use a letting agency, ensure it is Association of Residential Letting Agents-registered

Forum discussion of the article

Complete Article Logo of The Daily Telegraph, a British newspap...

London Flat Rents Expensive

London Wheel - London

London Wheel – London (Photo credit: @Doug88888)

Renting a home in Greater London is now 85% more expensive than anywhere else – the largest difference ever recorded!

Average rents in the capital have increased by 8.4% over the past year and now stand at £1,260 per month, whilst across the UK the average cost of renting a home now stands at £789 per month representing a 2% increase on the same period last year.

The majority of regions, however, have seen either a decrease or minimal increase in average rents during the past 12 months. Regions that saw the largest drop are the North East and South West where rental costs lowered over the same period by 2.6% and 2.4% respectively.

Data from the HomeLet Rental Index

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July 2015

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