Issue 14 - June 2009
Welcome to the June 2009 edition of the Greater Nottingham Landlords' Electronic Newsletter.
Dates for your diary
The Rushcliffe Landlord Forum - Wednesday 10th June. Contact Michelle Howell on 0115 9148511 to book your place
Contents
- Rushcliffe Landlords' Forum 2009 - Book your place now - Rushcliffe Borough Council are holding their first Landlords' Forum of 2009 on Wednesday 10th June...
- Decent and Safe Homes (DASH) Research of the Lettings Market in the East Midlands - This research set out to establish a broad picture of the Private Rented Sector in the East Midlands...
- Ignorance Could Cost New Landlords Dearly - LACORS (Local Authorities Coordinators of Regulatory Services) is spearheading a council campaign to warn landlords that failure to comply with legislation and other requirements could end up in fines and even repossession...
- Letting Rooms in your Home - a Guide for Resident Landlords - Guidance entitled "letting rooms in your home a guide for resident landlords" has been issued and can also be downloaded from the Communities and Local Government website...
- Government Housing Welfare Scheme "Failing Vulnerable Tenants" - Major changes to the way housing benefit is paid to tenants wastes millions of pounds and will result in increased homelessness, according to a piece of research just published by the National Landlords Association (NLA)...
- Proposed Database of Rental Properties is "Well Meaning But Flawed" - The National Landlords Association (NLA), the leading representative body for private residential landlords, has labelled the latest Government recommendations on the proposed database of rental properties as "well-meaning but flawed"...
- Results of the Birthday Competition!
Rushcliffe Landlords' Forum 2009 - Book your place now
Rushcliffe Borough Council are holding their first Landlords' Forum of 2009 on Wednesday 10th June in the afternoon. The event will last 2 ½ hours and there will be a range of short presentations on a variety of subjects including: Benfits update, Energy performance certificates, DASH, First Lets Accreditation Scheme, Coping in the current financial climate.
The event is a good opportunity for landlords to meet others and keep up to date with current issues. Feedback from last year was very good and has been used to choose topics for this year.
Contact Michelle Howell at Rushcliffe Borough Council on 0115 9148511 now to book your place.
Decent and Safe Homes (DASH) Research of the Lettings Market in the East Midlands
This research set out to establish a broad picture of the Private Rented Sector in the East Midlands, to provide further data to accompany the initial DASH report on the introduction of LHA and to assess the impact of the economic downturn.
The results of the survey are both positive and negative. On the positive side, landlords reported relatively low re-let times, some degree of satisfaction with Broad Market Rental Area (BRMA) levels and a healthy student market. 88% of respondents had an occupancy rate of 90% or higher. The outlook for the next 12 months was reasonable, with a widespread expectation of stagnating rental levels, but no suggestion of any imminent collapse in demand or achievable rent. 56% of respondents had no tenants in rental arrears by two months or more.
Less than 10% of respondents were considering withdrawal from Local Housing Allowance (LHA) tenancies within the next 12 months, providing a more positive outlook for LHA than was apparent in earlier DASH research. Added to this, the fall in interest rates has more than offset any stagnation in achievable rent levels for many landlords.
However, there are several concerns. If the economic downturn continues, the number of respondents who have at least one tenant in arrears by two months or more can only be expected to increase. Anecdotal evidence suggests that re-let times are increasing and landlords are asking for a larger deposit or guarantor, particularly for LHA claimant tenants, reducing the amount of choice for some LHA recipients. There is concern that the serving of Section 8 notices will increase markedly in the next 12 months. LHA still remains unpopular, with direct payments to tenants receiving criticism, and many respondents stating that they are only continuing with LHA until the economy recovers, as they are concerned about their properties standing empty if they opt out of LHA tenancies in the short term. Nearly a quarter of respondents had previously offered properties to LHA or Housing Benefit claimants and no longer did so.
Landlords' dissatisfaction with their local authority is also highlighted. The main issue appears to be the perceived tenant bias of Local Authorities and apparent lack of concern or assistance for the landlord. This raises questions over the future of the relationship between Local Authorities and the private rented sector.
80% of respondents who currently offer property to LHA tenants were not aware of the Rent Service and what role they play in setting BRMA levels, highlighting communication issues between Government and landlords.
Practical solutions to these issues are suggested within this report, which is on the DASH website.
Ignorance Could Cost New Landlords Dearly
LACORS (Local Authorities Coordinators of Regulatory Services) is spearheading a council campaign to warn landlords that failure to comply with legislation and other requirements could end up in fines and even repossession.
LACORS chairman Councillor Geoffrey Theobald OBE, advised recently that "there is more to being a landlord that many people think, and the cost of getting it wrong can be high. Failure to put a tenant's deposit in an approved protection scheme could cost a landlord three times the amount in compensation. Worse still, if a property is rented without the mortgage company's agreement, people could risk losing their home".
For more information on how to avoid the pitfalls of private renting and to download the new guidance leaflet, see the LACORS website.
Letting Rooms in your Home - a Guide for Resident Landlords
Guidance entitled "letting rooms in your home a guide for resident landlords" has been issued and can also be downloaded from the Communities and Local Government website.
The guide is for 'resident landlords' who are landlords who live in the same property that they let to a tenant. The guidance is laid out in 6 chapters and includes the following:
- some important principles for the resident landlord,
- some important points to consider before arranging a let,
- advice on charging for bills and rent,
- advice on repairs maintenance and safety,
- ending a letting, and
- money issues.
The guide provides some useful advice to resident landlords, particularly those that may just be starting out and trying to earn some extra income in the current economic climate.
Government Housing Welfare Scheme "Failing Vulnerable Tenants"
Major changes to the way housing benefit is paid to tenants wastes millions of pounds and will result in increased homelessness, according to a piece of research just published by the National Landlords Association (NLA).
Local Housing Allowance (LHA) was introduced for new tenancies in April 2008 when it replaced the old housing benefit system. Under the new rules, instead of rent being paid directly to private landlords to cover housing costs, it now goes straight to the tenants who must choose whether or not to pass on the rent money to their landlord.
In practice, the research has shown many tenants are failing to pass on these payments to landlords. This is causing major problems. In the most serious cases, landlords are facing repossession because rent money does not arrive.
The research* shows that 52% of landlords surveyed have decided they would not let, or be 'less likely' to let, to LHA tenants. A further 43% of those landlords who have already tried the new system said they would now be leaving this failing market because of increased uncertainty about rent payments.
Clearly, LHA is now actively contributing to a shrinking of housing supply for benefit claimants, and more pressure is being placed on social housing. As always, this will affect the most vulnerable tenants and increase homelessness. With a forecast £2.6 billion being spent on LHA** during 2009-10, the NLA is calling for immediate action.
Currently, a landlord must wait for eight weeks of rental arrears before the Local Authority can take action and an automatic 'trigger' pays the rent directly. In reality, arrears can be as long as three months before the landlord receives their first payment. If the landlord chooses to try and reclaim the lost money, they must pursue the tenant privately through the courts.
Contrary to the Government's intentions, LHA tenants now have less choice as landlords opt out of this part of the market because they simply cannot afford to house the most vulnerable tenants. If the Government is not going to return to direct payments to landlords, the NLA is today calling for the 'trigger' to be reduced to four weeks before direct payment kicks in.
Richard Price, Director, NLA, commenting on this research, said:
"It is clear that LHA is not improving access to housing and has actually reduced tenant choice. This was not the Government's intention but the new system is simply not working. If landlords are opting out of this part of the market, where will these families go? The situation is now becoming very serious.
"Local councils across the country are still not using the available guidance consistently and this is creating confusion. Not only are we calling for the 'trigger' period to be reduced to four weeks but the NLA believes a more creative working relationship between councils and landlords should be developed.
"Empowerment is about giving people the right to choose. The current situation is not sustainable and the Government must act to ensure that LHA tenants are not further disadvantaged."
The research can be viewed on the NLA website.
Proposed Database of Rental Properties is "Well Meaning But Flawed"
The National Landlords Association (NLA), the leading representative body for private residential landlords, has labelled the latest Government recommendations on the proposed database of rental properties as "well-meaning but flawed".
The Government has recently published its long-awaited response to the Rugg Review, an independent review of the private-rented sector brought out in October 2008. Among various recommendations, the Government proposes to introduce a register of English landlords to include not only a landlord's name and home address but also the addresses of their rental properties.
The national register would be run by an independent organisation and landlords (or their agents) would have to register every year, "paying a small fee to cover administration costs". In return, landlords would receive a unique landlord registration number to be used in tenancy agreements, court proceedings including eviction, and housing benefit claims.
The most controversial part of the national register would be the requirement for all landlords to submit details of their property holdings at the time of registration and re-registration each year. A similar compulsory landlord registration scheme has existed in Scotland for three years and has been shown to not work with one in four rental properties not registered. This means that good landlords are still suffering at the hands of the minority of rogue landlords who bring the entire sector into disrepute. There has been no direct benefit for good landlords and tenants in Scotland as there are reported to be many instances of local authorities aware of unregistered landlords and doing nothing about them due to lack of resources.
David Salusbury, Chairman, commenting on the national register, said:
"It is possible to see some benefit to a 'no hurdle', low-cost, easy-to-use register for landlords as part of a concerted drive to root out rogue operators. However, the NLA would be opposed to the collection of rental property addresses. We consider this to be overly intrusive and of no direct benefit to tenants or landlords.
"The private-rented sector is already heavily regulated and many recent changes have yet to settle down. Any further regulation, therefore, has to be very carefully considered. In the current economic climate, the last thing good landlords need is to feel penalised. If a register is introduced it needs to focus totally on pushing up standards and rooting out rogue landlords. We will be looking for assurances that a register would be properly resourced and be of direct and immediate benefit to landlords and tenants.
"Any changes must not be seen as the 'thin end of the edge' in terms of further, burdensome regulation. Reform must be workable for landlords and not damage the private-rented sector. The challenge now for Government should be to focus on incentives and encouragement."
Other proposals include:
- All tenancies should take the form of written agreements.
- Increasing the threshold for access to assured shorthold tenancies (AST) and the associated legislative framework from £25,000 to £100,000 of aggregated annual rent.
- Full mandatory regulation of letting and management agents by an independent body.
- Encouragement of institutional investment in the sector by creating opportunities to invest on a large scale and for the long term. This would include the introduction of a long-term funding model for new private rented housing in England.
- Development of a more sophisticated and disaggregated understanding of the sector in terms of improving the evidence base upon which decisions are made.
- Staff in voluntary organisations - Shelter, CAB etc. - should attend training in private rented sector housing management.
- Encouragement to landlord organisations to make support and training services more widely available to enable better understanding of what is involved in "truly professional private rented sector housing management."
- Local authorities should be actively encouraged to explore ways in which to improve their engagement with private landlords in their areas.
- Making accreditation available to all landlords wherever they operate. Consideration should also be given to whether a national accreditation scheme should be established.
- Increasing protection for tenants whose landlord default on a mortgage.
The Greater Nottingham Landlords Electronic Newsletter 2nd Birthday Competition!
In the last issue we ran a competition in honnor of the 2nd Birthday, and to obtain feedback from you about the Newsletter.
The winner has now been contacted. Congratulations to you, you have won a £25 B&Q voucher!
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