Archive for May, 2014
Another interesting read by Rosalind Renshaw on behalf of Property Industry Eye:
The checking of prospective tenants’ immigration status by landlords and agents is set to become mandatory in October.
It follows the Royal Assent of the Immigration Bill last week – just days before the Home Secretary ordered an urgent investigation into an immigration documentation scam at the weekend.
Although the checking requirement – which will almost certainly fall upon letting agents who act for landlords – was highly controversial, it forms part of what is now law.
Its aim is to prevent people with no right to be in the UK from accessing private rented housing. The requirement specifically applies to the private rented sector, not the social sector.
Landlords – or their agents – will have to request to see at least one document from a specified list, yet to be published, to confirm if prospective tenants have the right to live in the UK.
The requirement will mean having to check all applicants – for example, birth certificates of those born in the UK, and passports, but checks might have to extend to much more complicated paperwork or its lack.
If the prospective tenant does not have permission to live in the UK and the property is subsequently let, the landlord could be fined up to £3,000.
If a tenant’s right to be in the UK has a time limit, checks must also be made either annually or before the expiry date if that is after 12 months. Failure to carry out these subsequent checks will also attract fines of up to £3,000.
There is also an obligation on landlords – or agents – to report to the authorities any suspicions that tenants might be illegal immigrants.
The landlord’s responsibility to make the checks and face the fines can be transferred to a letting agent, but that must be done specifically in writing – suggesting that agents will have to revisit their standard contracts, terms and conditions.
They will also need to see if their current referencing checks cover immigration status.
Agents and landlords should also be aware of some of the issues surrounding their new responsibility, not least that they could become liable to accusations of discriminatory practice.
There is also concern as to how far the responsibility extends. Lawyer Simon Kenny, of Moore Blatch, says: “If, for example, a landlord notes from the tenant’s visa that he has the right to live in the UK but not to work, does he breach these rules if he is also aware through credit referencing that the tenant works full-time?
“It seems at least possible such a landlord could also be prosecuted in respect of ‘facilitating a breach of immigration law’ in this situation – an offence with a penalty of imprisonment.
“Guidelines are expected to say that a passport will be the main method of checking a prospective tenant’s immigration status.
“There is also likely to be an online checking facility, where the immigration status of a prospective tenant can be found, together with a free telephone checking service.
The Home Office may also confirm that the new system will be piloted in one area before being rolled out across the UK.
A good blog which outlines the main issues is at the link below this story.
However, it was written before any mention could be made of the latest scam, by which immigrants who speak no English can buy, for £500, a certificate saying they have passed a language test.
The false documentation could open the door to British citizenship but as yet there is no advice as to how letting agents or landlords could detect false paperwork.
Home Secretary Teresa May has ordered an urgent investigation.
Rosalind Renshaw from Property Industry Eye writes:
The lettings industry and the Labour party remain on a collision course ahead of next year’s general election.
Labour has repeated its vow to make letting agent fees illegal, while agents are stepping up calls for wholesale regulation of the industry.
Speaking after Tuesday evening’s failed bid by Labour to have fees banned, Paul Weller, managing director of lettings chain Leaders, said: “Fortunately common sense has prevailed, but the vote was a wasted opportunity.
“The vote should have been on banning all unregulated agents from practising.
“This would have enabled Parliament to tackle all the problems at the heart of our industry in one motion: 40% of letting agents are not members of a professional body so it is clear that self-regulation is not enough.
“What is needed is legislation that ensures that – as a minimum requirement – all letting agents are qualified, have client money protection and operate to an agreed code of conduct for the whole industry.
“The issues go much further than agents charging fees to tenants. We need to rid the industry of rogue agents who charge extortionate fees, who do not protect their clients’ money and in some cases abuse it, who put their tenants’ lives at risk in unsafe properties and who provide a sub-standard service with little regard for the law.
“The best action politicians can take to protect tenants is to properly regulate letting agents. We have been calling for this for decades.”
Ian Potter, outgoing managing director of ARLA, said: “Fees are not arbitrary or unnecessary – they represent a business cost that those tabling the amendment failed to recognise.
“ARLA’s call, as ever, is for wholesale regulation of the market to ensure fair and transparent practices for all consumers, landlords and agents alike.”
Darren Harley, of EweMove, said: “Whilst we agree that there are far too many lettings agents across the country who don’t disclose their application fees too readily, banning all fees to tenants isn’t the way to promote fairness. It will simply drive up fees to the landlords which, in turn, will drive rents up.
“Ewemove charges no application fees, and only ever charges tenants once a property has been offered to them. We believe this is a much better system because it ensures more applications per property, and we can find the very best tenant for the landlord every time.
“Yes, the agent earns slightly less under this model, but it’s not all about the agent.
“Regulation of the industry is clearly required.
“We’ve all seen the reports from Shelter and other organisations, declaring the unscrupulous practices of a few rogue agents. I really don’t believe that those horror stories are the norm in the UK, but I do think that things can be improved, and a professional standard would be the way forward.
“The most obvious route would be compulsory membership of ARLA, and ARLA’s standards being strengthened.”
However, one person who took to Twitter to complain about the way the vote went was London Evening Standard columnist and landlord Victoria Whitlock.
She said: “Am disappointed MPs bought that bunkum that tenants would have paid more if letting agent fees were banned.”
The tireless Stella Creasy, Labour shadow consumers minister, was back on Twitter yesterday claiming: “An agency has contacted me to argue fees to tenants justified because they ‘give them a bag for life & mug’ upon arrival. Yes really.”
Meanwhile, shadow housing minister Emma Reynolds put the industry on warning by making it clear that the whole issue has not gone away.
She said: “Generation Rent needs proper protection against being ripped off.
“A Labour government will ban letting agent fees on tenants.”
* There were just three rebels when it came to Tuesday evening’s vote on letting agent fees – one Tory and two Lib Dems who refused to toe their party line.
Phillip Hollobone, the Tory MP for Kettering, and Lib Dem MPs Julian Huppert (Cambridge) and Ian Swales (Redcar) all voted to ban letting agent fees.
Of the Lib Dems, 38 voted against a ban, and 16 were missing. Among the absentees were Nick Clegg, Vince Cable, Danny Alexander, Andrew Stunell, Sarah Teather and Jo Swinson.
There were 242 Tory MPs who voted against the ban, with 58 absent from the vote. Absentees included David Cameron and George Osborne.
Labour’s attempt to ban letting agent fees was defeated by a majority of 53 (281 to 228).
Another interesting read from Property Industry Eye:
Eric Walker, managing director of Northwood, was scathing about Labour’s proposals, including the pledge to make it illegal for agents to charge fees to tenants.
He said some agents would not be able to survive such a move. “Contrary to the universal misconception that agents are raking it in, many make small profits indeed and this policy may push some over the edge.”
He went on: “If agents are forced to scrap fees from tenants, then inevitably, landlords will end up paying more which in turn could increase the rent the tenant pays.
“Couple this with the proposed draconian rent-capping idea, then of course some landlords will reconsider their position.
“It is of sinister concern that rent caps would be introduced at a time interest rates are predicted to rise, which spells disaster for many landlords.
“The lettings market is fine. It’s regulation and consumer protection which should be Miliband’s priority, not State controlled pricing.”
Carole Charge, director at lettings chain Leaders, said: “Labour’s three-year tenancy proposals are unrealistic. Without the right to regain repossession of their property, most investment landlords would not take the risk and pull their property from the market.
“The picture painted by Labour of tenants being forced out of their homes is not accurate. Reliable statistics show that the majority of tenancies are ended by the tenant rather than the landlord.”
Dorian Gonsalves, director of franchising at Belvoir, said his firm would be “dead against” the changes proposed.
“The existing Assured Shorthold Tenancy agreement can already run for a longer period, and changes to this could have a devastating effect on the supply of available rental properties.
“Ultimately, tenants would bear the brunt of fewer rental properties, higher rents and no alternative housing solution being provided by the Government.
“Experts have warned of the dangers of making changes to the existing AST or forcing landlords out of the market, which clearly some of these proposed changes by a Labour Government are likely to do.
“Tenants already have the choice of not paying letting agent fees. They can rent privately and this may be attractive to those tenants who prefer a lower standard of service, with no consumer redress and a landlord who may or may not respond to maintenance issues.”
Carol Pawsey, lettings director at Kinleigh Folkard & Hayward, described Labour’s proposals as “disastrous”. She warned that rent caps could lead to “many” landlords quitting the market.
The National Landlords Association said the proposals were “completely unworkable”.
Richard Lambert, its chief executive, said: “Were they to become government policy it would strike a devastating blow to investment in housing of all tenures and further constrain supply at a time of real housing crisis.”
The Residential Landlords Association said Labour had quite simply got it wrong. Vice-chairman Chris Town said: “All the evidence clearly shows that rent controls of the kind proposed would critically undermine investment in new homes to rent and are not needed, given that official statistics show rents increasing by much less than inflation.”
The British Property Federation also savaged the rent controls proposal. Director of policy Ian Fletcher said: “It makes no sense.
“Good landlords will be getting a perverse message that if you are providing a premium product the most you can expect is the ‘average’, whilst bad landlords with sub-standard accommodation can find another justification for charging over the odds.”
Source: Written by Rosalind Renshaw on behalf of Property Industry Eye http://www.propertyindustryeye.com/ban-fees-tenants-kill-agents-warning/
Check out this article we’ve found where ARLA accuses the Labour shadow housing minister in a row over ‘reforms’:
The lettings industry has poured scorn and fury on Labour’s proposed reforms for the private rented sector, amid fears that landlords will desert the industry in droves.
Labour – keen to capture votes from Generation Rent – plans to introduce three-year tenancies as the norm, impose rent controls, and ban agents from charging fees to tenants.
It would also make evictions harder. Landlords would have to give two months’ notice and cite one of three grounds – sale of property, rent arrears, or anti-social behaviour.
However, tenants would be able to give one month’s notice whenever they wished.
Tenancies would run for a six-month probation period, and then automatically continue for another 29 months.
Ian Potter, managing director of ARLA, accused Labour of political posturing ahead of this month’s local and European elections.
He warned that the proposals would cause “lasting damage” to the supply and quality of private rental homes, and said that none of the reforms proposed were the ones actually needed to protect consumers.
In Labour’s pledges, there is no mention of protection of client money, or regulation of the industry to impose minimum standards and stop anyone setting up as a letting agent as well as drive out crooks.
Potter said that Labour’s stance appeared to be quite different from when Jack Dromey was shadow housing minister, and added: “Emma Reynolds, the current shadow housing minister, has ducked and dived, and consistently refused to engage with us.”
He said: “Political posturing, when it has such an impact on people’s lives, is unfair.”
He also pointed out that three-year tenancies will have to be enacted by deed and require a legal presence.
He said: “Tactics such as proposals for rent controls may gain traction, but a simple history lesson looking at similar policies from 1919, 1939 and the 1960s will show that they only lead to a significant lack of investment in existing properties and new rentals. Labour’s pledge is short-sighted.”
Meanwhile, Emma Reynolds herself took to Twitter to send out a series of messages about the reforms, including accusations that the Tories had abandoned Generation Rent. She also tweeted: “We are proposing predictable rents so that tenants and landlords can plan & have certainty. The market will set rent at start of tenancy.”
Trade union Unite said Labour’s proposals were “a progressive step forward”.
Source: Written by Rosalind Renshaw on behalf of Property Industry Eye http://www.propertyindustryeye.com/arla-accuses-labour-shadow-housing-minister-row-reforms/