Right to Buy hits Pimlico Rents for Westminster Council

Margaret Thatcher

Margaret Thatcher

An interesting article today in Social Housing and Local Government news website about how Right To Buy has affected Westminster Council.

Nearly half of Westminster’s 22,000 council homes have been sold through Right-to-Buy in the past 30 years, and because government rules don’t allow local authorities to keep the proceeds of sale the properties haven’t been replaced by further social housing. Of course many of the flats purchased under Rent to Buy have been recycled into Private Sector renting – I personally know of 4 people who were able to retire to the country in middle age on the proceeds of the Right to Buy windfall which could be as much as several hundred thousand pounds in extreme cases.

This has left the council with a situation where they are paying housing benefit to tenants who are renting ex-council properties from private landlords – and this costs the council around four times the rent charged for a council home rented directly from the council, and on occasions up to five or six times the council rent.

What a mess – but probably not a mess that the government wishes to acknowledge as it stems from a conservative policy a generation ago, rather than something that can be neatly pinned on the last government.

Why Landlords Need Regulating


Landlord? (Photo credit: the justified sinner)

Just visit any property forum or website & ask what landlords think of the idea of licensing and regulation and you will get a loud and clear indication that Landlords consider regulation to be an expensive useless waste of time.

In spite of this new rules were introduced in January 2010 which meant landlords of houses in multiple occupation (HMOs) must have their properties inspected and licensed. During the first year, until December 2011, Oxford City Council issued 338 licences – and just 11 of those, or three per cent, were issued without any additional conditions. To my mind this sends a loud and clear signal – either the Private Rental Sector is rotten to the core, or the Regulations are!

97% of Privately Rented Accommodation Isn’t Fit For Purpose?

The new regulations were introduced in two phases. From January 2011, landlords of three-storey houses or two-storey houses for five people or more were told to get their property inspected for £362, make any necessary alterations and renew the licence annually. The rules were then rolled out to include properties with three or more sharers this January, resulting in an extra 1,065 applications. Oxford is currently the only council in the country to require all HMOs to be licensed, more than 2,000 warning letters were sent to landlords in December, and since the scheme came into effect there have been eight prosecutions against landlords managing unsafe HMOs and one letting agent. The council has also taken over the management of one HMO because the landlord was not a fit and proper person to hold a licence.

So what is wrong – Landlords, or Regulations? During 2011 Pimlico Flats received 2 letters from Westminster City Council threatening enforcement action.

  • One was because we had 5 Flats which only had 1 lock on the door – in spite of 30 years without a crime, a daily manned reception and a 24/7 CCTV monitoring service WCC still estimated that the likelihood of death or serious injury from there only being 1 lock on each flat entrance was 1/7. It was cheaper to put a second lock on every door than argue with the Environmental Health Office about the regulations.
  • The second was that a tenant wasn’t sleeping with his girlfriend. How WCC were able to identify the couple’s nocturnal habits is beyond me, but they readily confessed to their crime – apparently they were working different hours and were using a sofa to avoid disturbing the partner. WCC were not prepared to accept the argument that as Landlord I had no right to dictate my tenant’s sexual habits, but fortunately the tenants were happy to give me a letter voluntarily committing themselves to sleeping together.

Clearly when 97% of the Private Rented Sector fails to meet regulations something needs to be done – what do you think should be done?

How Pimlico Residents use the Internet

Pimlico IT
Westminster Council did a survey of our technological habits as part of a plan to justify an expansion of its digital services. There are some interesting insights into the average Pimlico Resident’s life in the survey, but my own concern is that WCC seem to have little concern for customer service, success for WCC involves passing it’s problems on to it’s residents. A future blog will analyse WCC’s own use of IT, meanwhile here are the results of their analysis of OUR use ………….

  • Pimlico residents exceed national averages in all areas of digital and wireless communication:
  • Nationally  30 per cent own smartphones but 64 per cent of Pimlico residents own one.
  • 6% of the UK own a tablet against 19 per cent of residents in Pimlico.
  •  86 per cent of residents are connected to the internet at home, rising to 94 per cent in the 16-44 year age bracket.
  • Online interactions between residents and the local authority cost the Council only 17p per interaction, whereas a face-to-face interaction between the Council and a resident can cost £14.
  • Online interactions cost the taxpayer only 1% of the cost of a face-to-face transaction.
  • WCC have  a deal with O2 to provide free WiFi in time for the Olympics, and of course Pimlico Flats provides wired and wireless internet access to tenants free of charge.

Clearly Pimlico Residents make a much greater use of the Internet, Mobile Computing, and Social Media, than the Nation as a whole.

A statement by the Council says “The Council can harness this by expanding the online options for contacting the Council, improving its website, and stepping up its digital publications to save real money for the taxpayer. WCC  has already shown its commitment to becoming the UK’s most digitalized city, and we will continue to expand our online options to provide excellent value for money to our residents.”

Fine words, but what is good for the council isn’t necessarily good for the residents …….

Can an Agent Charge a Tenant for Finding a Flat?

Pimlico Flats

Pimlico Flats

The answer is that theory and practice vary. This is an age old question, especially in London where Flats are harder to find, and there have long been agencies who offer Landlords free advertising and charge the tenant (the oldest and best known “Flatland” has been trading on this model since 1971). Indeed before this website came into being Pimlico Flats used to rent through Flatland and 2 other of these agencies.

In theory according to The Accommodation Agencies Act 1953 an agent is not allowed to charge the tenant. The Act was originally passed as a short-term measure, however, after a series of annual renewals, it was made permanent by the Expiring Laws Act 1969. Although the legislation was introduced nearly 60 years ago, it can still be enforced and Flatland itself was successfully prosecuted by Westminster City Council in the 1990s. The Act was introduced to prevent agencies taking fees in advance from prospective tenants in return for details of properties, and Agents cannot charge prospective tenants for lists, addresses or details of properties that they have in their possession, and the Act is quite clear in this respect.

As a general rule, the agent is at liberty to act either for a landlord or for a tenant (and accordingly to charge the appropriate commission).  The only restriction placed upon the agent by the general law is not to act for both.  Thus relocation agents may charge tenants for finding specific accommodation which includes advertising their individual requirements. Where an agent takes a deposit or fee, refundable on demand, where the deposit is not in respect of any particular property, an offence is committed. Where an agent asked clients to sign an agreement under which a fee would become payable if and when they took accommodation found for them by the agent, the payments related to the finding of suitable accommodation and not for the supplying of an address, and no offence is committed. An amount chargeable at any time before the prospective tenant finds acceptable accommodation is an illegal payment, even if deemed returnable in the event  of the prospective tenant not finding accommodation.  Yet, an agent may legitimately charge for finding accommodation for a tenant who actually takes it, but may not demand a fee (even a returnable deposit) for merely supplying him with the address in the first place.

In practice Agents seem to find it fairly easy to charge fees without contravening the Act, or else the authorities find it too onerous to enforce the law. Agents also make money by charging for services – a local Pimlico Letting Agent made the following equivalent charges in 2010:

  • Administration £350
  • Referencing £52
  • Agreement £188
  • Inventory charges depending on the Flat & can vary from £80 – £300 per inspection. The tenant pays the Check In fee, the Landlord the Check Out fee.

The charges are subject to VAT. In theory the charges should reflect the actual costs to the Agent, however there are several online Agencies who offer Landlords free advertising, and they clearly only operate if they are making a profit from the charges to the tenant. They are clearly contravening the principle that the agent should only act for either the landlord or the tenant, but as with “Key Money” the authorities clearly don’t have the motivation to address what has become a custom & practice flouting of the law.

Westminster City Council Property Investment Manager Suspended

Logo of Westminster City Council

Image via Wikipedia

An article in Property Week reports that the officer responsible for Westminster City Council’s investment properties has been suspended pending an internal investigation – for legal reasons the details of the allegations are not reported, although the officer is named as Alistair Rudd, one of the council’s most senior employees.

Rudd has been responsible for several significant property and lease disposals for the council:

  • The sale process for North Wharf Gardens, the former site of North Westminster Community School, under offer to Zog Group for around £120m.
  • Westminster council’s car parks disposals, which included the sale of Chiltern Street Car Park in Marylebone.
  • Deciding on an occupier for Old Marylebone Town Hall.
Clearly the news is of major import, and will attract much attention over the coming weeks.
Property Week

Affordable Housing in Westminster – The Slow Motion Train Crash

The Clock Tower of the Palace of Westminster, ...

Image via Wikipedia

Affordable Housing in Westminster – a brilliant way to start a Pimlico Blog, does it mean Westminster, the local authority, or Westminster that remote fiefdom where decisions are made and passed down? Well on this occasion it’s both.

The Slow Motion Train Crash – an allusion to transport, the thousands who will be leaving Central London for other places. In an earlier, and maybe greener, age Norman Tebbit famously told the unemployed to get on their bikes and find work, Grant Shapps has been wise enough not to utter the words “get on the train”, but that’s what 5000 from Westminster have to do (Westminster City Council May 2011). The Shapps-Pickles plan hasn’t been uniformly supported – referred to as “Kosovo-style social cleansing” by Mayor of London, and David Cameron’s likely successor as leader of the Conservative party, Boris Johnson.

Now whilst there were arguments on the table that the country could not afford our burgeoning Housing Benefit budget (now known as LHA)  it was difficult to resist the argument that cuts had to to be made regardless of the social consequences.  Hopes have been put forward that the Private Rented Sector (that’s private Landlords to you and me) would trim their rents to match the new LHA rates, however all the indications are that this particular straw is not to be clutched. Nevertheless the government has driven forward their policy, in the face of arguments that:

  • the social cost to families uprooted from the areas where they had been born & bred would be enormous.
  • the financial cost to local government in relocating services such as schools and health care wasn’t being factored in to the decision.

Over the weekend, and most extraordinarily, a leaked letter has emerged, sent from the DCLG to the office of the Prime Minister, setting out the concerns at the effects of the Government policy to cap total welfare benefit payments to any one household at £500 per week.  The letter confirms what critics of government policy have been saying:

  • 20,000 families will become homeless from private sector accommodation.
  • An additional 20,000 families will become homeless from the separate limits on housing benefit.
  • The £270 million pa from 2013/4 savings in welfare benefits that the policy is projected to save will be exceeded by a substantial amount by the extra welfare costs that local authorities will have to bear.
  • The stated aim of 56,000 new homes to be built for ‘affordable housing’ would fall short by 50% because of the welfare cuts.
Eric Pickles, British politician and Chairman ...

Image via Wikipedia

Whilst it isn’t unusual for government policy to get things wrong, what seems unprecedented is the fact that the letter was written 6 months ago and made no difference to policy. The government is deliberately imposing a policy that it knows will be socially divisive, and of major cost to the public purse. What exactly is the purpose of this policy?

I can’t help wondering whether there are any parallels with the 1980s policies of Dame Shirley Porter who while leader of Westminster City Council oversaw the “Building Stable Communities” policy, later described as the “homes for votes” scandal. The thing is – what is Nick Clegg going to say when he realises that 40,000 Labour Party voters are being moved from Conservative to Liberal-Democrat Constituencies?

Full text of letter from the office of Eric Pickles
Unintended clarity from the DCLG

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