Letting agents don’t always get much good press thanks to a reputation for hidden fees and rip off charges levied at tenants and landlords. Well in the case of a North London online letting agent, the accusations have been completely justified.

Disgruntled customer

Following a complaint from an aggrieved customer, the DSSCribs agency has been criticised by the Advertising Standards Agency (ASA) for not making clear what the charges related to a premium rate contact number were on their website. The customer that made the complaint was interested in two properties listed on the agent’s website. She called the premium rate number to speak to an advisor, but was put on hold several times and despite the call lasting for half an hour, she was not given the information she rang up for.

Once a complaint had been received, the ASA investigated. They concluded that the lack of information about call charges was unacceptable and that the property listings on the website “…had not been substantiated and were misleading.”

Beware of dodgy letting agents

There have been numerous complaints about unregulated letting agents over the years and numerous landlords have ended up out of pocket and ripped off as a result of shady operators. To avoid being one of these unfortunate individuals, always read the small print when dealing with a letting agent. Not all agents are upfront about their fees and charges so make sure you know exactly what to expect before entering into a business arrangement with them. And if you need to call them, make sure you are fully aware of the call charges before dialling a premium rate number.

Scottish landlords are being warned that the deadline for registering for a tenancy deposit scheme has arrived. Landlords in Scotland were given until May 15th to sign up for the scheme and if they fail to do so, it could cost them dearly.

Stamping out unfair landlords

The tenancy deposit scheme has been introduced in Scotland to try and prevent unscrupulous landlords from refusing to pay back their tenant’s deposits for no good reason. Figures indicate that around £3.6 million worth of deposits have unfairly held each year, which is something the Scottish government is keen to put a stop to.

Tenancy deposit scheme

Landlords and letting agents are now obliged to pay all deposit monies into an official deposit scheme. If they don’t bother and are subsequently caught out, the tenant has the right to claim back up to three times the original sum. Many landlords are aware of the scheme and have already signed up, but there are still a large number who have yet to register, and it is these who face the prospect of legal action if they don’t get a move on.

According to Malcolm Lindo from SafeDeposits Scotland: “Based on the latest Scottish Government figures, we estimate there are up to 56% of tenancies eligible for taking a deposit where a deposit has not yet been paid into a scheme.”

So if you are a landlord in Scotland and you have yet to get around to registering for the tenancy deposit scheme, you better hurry or you could soon be facing legal action.

With rental accommodation in the UK so much in demand right now,
there have been lots of stories in the press about “beds in sheds”
and other miniscule homes to rent. Of course many of these so-called
bedsits are marketed at those who are desperate and who cannot afford
to pay the extra for a full sized home. Indeed, in many cases, the
resulting property is illegal and is eventually pulled down by local
housing inspectors. But sadly desperate tenants in the UK are not
alone in having to put up with sub-standard housing so small a coffin
would be more spacious.

Life in the not-so big Apple

New York is one of the most expensive places to live. The average
rent for a property in the city is more than twice that of anywhere
else in the United States. There are also rental variations within
the city itself. As you might expect, Manhattan is the most costly
place to rent a room or apartment, but Brooklyn comes a close second.
Rental properties are in great demand in the city and unless you can
afford to pay top dollar for a penthouse apartment overlooking
Central Park, you may as well get used to spending a fortune for the
privilege of living in a tiny cupboard sized room.

Unhappy tenants

One disgruntled resident has taken to blogging about his unhappy
experience of trying to find a normal sized abode for a reasonable
rent and some of the pictures on his blog defy belief. Imagine having
to live in a tiny room with no natural light and bare, concrete
walls. And even worse, imagine the pain of having to pay $1k per
month for a space barely large enough to squeeze in a double bed.

According to recent figures, mortgage lending to buy to let landlords has increased considerably since the beginning of the financial crisis. Landlord mortgages now account for just over 13% of the total mortgages in the UK. This means that lending institutions handed over more than £4 billion in the first quarter of 2013.

Funding for Lending

The rise in mortgage lending is believed to be in part thanks to the Funding for Lending (FLS) scheme. At the beginning of the recession when the sub-prime bubble burst, lenders wised up to the dangers of lending money to those who couldn’t afford to borrow and the cash pool dried up. Naturally this lender reticence didn’t help the property market and it soon became stagnant. The government introduced the FLS scheme last year to try and kick-start the market once again. The scheme was primarily designed to make it easier for first time buyers to get a foothold on the property ladder, but much of the available money has been handed out to buy to let landlords.

Buy to let is booming

Mortgage rates have fallen since last year and they are currently at an all-time low. This, in conjunction with increasing demand for rental properties in some areas, means many landlords are expanding their property portfolios. Lending to landlords has risen 1.1% since last year. The same pattern was evident in 2012 and lending to landlords rose even higher than lending to first time buyers.

Criticism of FLS

Some believe that FLA is unfairly propping up the buy to let sector and critics have questioned the validity of allowing buy to let landlords access to subsidised mortgages. But for many landlords, the current market is a win-win situation.

The Queen’s Speech has revealed that UK landlords are now expected to
weed out illegal immigrants when they take on new tenants. Employers
will also face the same burden when recruiting new employees. This
change is just one of many introduced in the new “hard line” Immigration Bill.

Hefty fines

Checking the immigration status of potential tenants is no mean feat,
but if a landlord fails to make checks or is fooled by false papers,
they face the prospect of heavy fines of several thousand pounds.
Landlords of buy to let properties will be expected to check whether
tenants have valid passports and visa documentation, although how
they are expected to establish the authenticity of such papers has
not been clarified. Nor has the role of letting agents in the process
been established—many landlords rely on letting agents to find
tenants for their properties and play no active part in the process.
It is thought that the measures are aimed at landlords of HMOs, but
all landlords are likely to be affected.

Further changes for immigrants

In a bid to reduce the spiraling cost of benefits and so-called
“health tourism”, immigrants will soon find it a lot harder to claim
benefits when they arrive in the UK and they won’t qualify for social
housing unless they have lived in the area for at least two years.
Temporary migrants will also have to pay for NHS services instead of
using them for free. The government is probably hoping these changes
will deter thousands of Romanians and Bulgarians from travelling to
the UK once the borders have opened. Whether the changes are likely
to have any effect is debateable.

Housing Charity, Shelter, is calling for tenancy contracts to be improved in order to offer families with children more stability in their home life. The charity says that 10% of children living in rental accommodation have been forced to change schools because their family has had to move home. And with 3.8 million families living in rental accommodation, this represents an awful lot of children dealing with the upheaval of disrupted education.

Greater stability

Shelter is calling for a minimum term of 5 years for renters, during which time the landlord cannot evict them unless they have a very good reason (for example, non payment of rent). The charity also wants rents to be guaranteed for the same period. Under the current rules, tenants are protected from unfair evictions and rent rises, and the property must be in good repair.

Campbell Robb, Chief Executive of the charity, says:

“Making tenancy contracts more stable could improve the lives of children across the country by giving families more stability in their homes, and would give landlords a more predictable income.”

RLA dismisses Shelter claims

The RLA has described Shelter’s claims as “scaremongering”. It says that research has shown that in most cases it is the tenant who decides to move through their own volition rather than because they have been asked to leave by the landlord. It also points out that most landlords prefer to retain tenants who pay their rent on time and look after the property.

RLA Policy Director, Richard Jones commented:

“The RLA condemns the scaremongering that Shelter is engaged in. Whilst we agree that a small minority of landlords ruin the lives of tenants and should be banned from renting property, the reality is that the ma

The Universal Credit system of payments has now gone “live” in a
number of areas across the UK. It remains to be seen how well the
system works, but there is at least one positive change for landlords
worth mentioning.

Good news for landlords

Previously it was thought that all payments would be paid directly to
the tenants, with the onus on them to pay rent to the landlord.
Because of this new system it was feared that some tenants would
struggle with budgeting issues and would therefore fall into arrears
with their rent payments, thus leaving landlords out of pocket.
Thankfully a small policy change has been spotted by eagle-eyed RLA
experts and brought to the attention of landlords.

A welcome change in policy

If a tenant is in arrears with their rent payments for more than two
months, direct payments to landlords will automatically be triggered
and the tenant will receive support to help them better manage their
budget. This is a sharp about-turn on previous government policy,
which stated that direct payments to landlords would only be made in
exceptional circumstances. And even that wasn’t guaranteed.

However, there is no word as yet that this reversal in government
policy will be extended when Universal Credit payments are rolled out
across the rest of the country later on in the year. The RLA are also
lobbying for a reduction of the two-month period landlords must wait
before they can apply to have direct payments made, plus more details
to be made to landlords of how they can request direct payments from
tenants.

A recent case heard in the Court of Appeal has highlighted the
potential problems faced by landlords when they agree to accept
several months of rental payment in advance. Thankfully, the final
judgement from the above case found in the landlord’s favour, which
should help to clarify that advance rental payments cannot (in most
cases) be treated as a deposit.

Why accept advance rent payments?

Asking for several months rent to be paid in advance is wise for any
number of reasons. Most of the time landlords do this because a
tenant has failed their credit check or is a bad risk for some other
reason. By insisting on at least 6 months rent in advance, the
landlord can hopefully avoid being left out of pocket if the tenant
defaults on their payments.

The difference between advance rent and a deposit

The issue of whether rent paid in advance can be classed a deposit is
an important one. As all landlords know, deposits must be placed in a
deposit protection scheme whereas rent payments are placed into a
rent account as opposed to being held as security. This was one of
the grounds for appeal in the case of Johnson vs. Old: the tenant
claimed the landlord had not protected the sum of money paid in
advance by placing it in a secure deposit scheme.

How can issues like this be avoided?

Drafting a clear and transparent tenancy agreement is the best way to
avoid potential problems regarding financial issues. Make sure your
tenancy agreements are worded clearly and that your tenants
understand them before they sign on the dotted line.

The government launched the Funding for Lending scheme in August last
year. It was designed to encourage banks to offer cheaper loans to
small and medium sized businesses. As a reward for offering cheaper
credit to businesses, the banks would then be able to take advantage
of cheap loans from the Bank of England.

Funding for Lending scheme extended

The Bank of England scheme has now been extended to accommodate
property investors. This means that any business with an annual
turnover of less than £25 million can lend money to landlords and
other property investors.

“It could be a no-brainer,” commented Rob Wood, chief UK economist at
Berenberg Bank. “Lend to a landlord – collateral easy to price – and
get 10 times that lending back as essentially free funding, then
recycle some of that back out again on mortgages or BTL.”

Landlords can widen their investment portfolios

Expansion of the Funding for Lending scheme is a great opportunity
for landlords to access cheaper debt and expand their investment
portfolios. Landlords have already been able to take advantage of
cheaper buy to let lending thanks to the Funding for Lending scheme.
Since last August when the FLS launched, the average rate on offer
for a buy to let mortgage has fallen from 5.09% to 4.28%. As a
result, buy to let lending has increased by 19% in the same period.

Criticism of the scheme

There has been criticism of the FLS, however, and some experts feel
that the government should be channelling more money into helping
first time buyers get a foothold on the property ladder instead.

Derbyshire police are calling for landlords to keep a close eye on their rental properties in a bid to reduce the number of illegal cannabis farms cropping up in residential areas. The local constabulary is concerned about the rise in criminal activity associated with illegal cannabis farms and they are asking landlords and local people to report any signs of suspicious activity in rental properties.

Terrible damage

Criminals using rental homes as cannabis farms often cause horrific damage to the properties. They rip out all the furniture and bypass the electricity supply to keep their cash crops nice and warm. And since they aren’t actually living in the property, the garden is usually left to deteriorate into a wasteland.

Landlords left with the repair bill

If a rental property is used for criminal activity, this normally invalidates the insurance, so the landlord is left to pick up the bill for any damage caused. In some cases, the cost of repairing a house after criminals have used it to grow cannabis has run into tens of thousands of pounds. No landlord wants to be faced with a huge bill, especially if they only manage one or two properties.

Threat of prosecution

Paying a huge repair bill is bad enough, but the police are also keen to point out that landlords who don’t take responsibility for their properties could end up being prosecuted under the Misuse of Drugs Act. Landlords need to make regular checks on their rental properties and report anything suspicious to the local police