The Landlord Law Blog

Ben Reeve Lewis Friday Newsround #43

2012-01-27T08:02:34Z

[Ben Reeve Lewis is in Cassandra mode this week...]

So a man is on his hands and knees under a street light looking carefully at the ground.

A copper comes along and asks him what he is doing. “Looking for my car keys” he replies. “Oh I’ll give you a hand, where did you drop them?” and the man points 100 yards away to where his car is parked. The cop says “If you dropped them over there, why are you looking under this street light?” and the man replies “Because the light is better here”.

Life’s a joke …

I met a real life version of that yesterday. A man came into our reception and told me that he had paid £2,500 to a letting agent to move into a property but when he turned up it was already occupied. When he went to the agent they wouldn’t give him his money back.

I said I didn’t recognise the street name and asked him where it was, “Barnet” he replied cheerily, which is about 25 miles north of Catford. I asked him why he had come to South London for help with a problem on the edge of North London and he replied “Well, I was in the area, so I thought…….”.

How dodgy agents do it

I mention this because we have agents in our area who do the same thing as his letting agent. How? You may well ask, when they have a walk-in shop front?

Well they employ 2 way mirrors and CCTV to spot disgruntled customers coming through the door and nip out the back when they come in.

They stay in business for a few weeks, dodging irate tenants whilst raking in huge amounts of cash and then disappear before the council can get their arse in gear.

Looking into subletting

Which is why I was surprised to read in the Telegraph this week of a massive and proactive project looking into just how many homes may be being sub-let. I stopped being surprised when I read the project was in fact run by a private company, HJK Investigations not a council. That explains it.

For once even I was shocked. I wrote last week somewhere that I thought the government’s estimate of 160,000 unlawful sub-lets was probably on the conservative side but this report suggests the problem could be even bigger than I thought.

HJK ran the details of a mere 27,000 London social tenants in 2 out of the 33 boroughs and 4 housing associations and compared them against things like mortgage accounts, utility bills and active credit accounts and found in 5,300 cases they didn’t match up. What HJK call “Fraud indicators”

Are one fifth of social tenants fraudsters then??

That’s a fifth of the group surveyed, and there are 8 million social tenancies in the UK. Quite sobering huh? [Course it depends on which 27K they checked - was it random? Ed]

One of the useful things of being a front line housing worker, especially when like me you also write about housing, is you become a very effective thermometer of subtle changes in housing world and pick up trends long before many others do.

Writing this column I regularly read shock-horror news stories about something that we have been seeing for the past year. Letting agents and landlords will be able to see the same things, most journalists are latecomers in many respects.

High rents = high risk of default

I have been writing for a long time now about the effects of high rents on tenants and the way that this is setting up problems for landlords in future.

I have been rubbished, ridiculed and attacked on many occasions for either being a party pooper, ignorant of landlord’s true costs or a good old fashioned tenant whinger [we don't do that here though Ben - Ed]. But I interview people everyday, tenants mainly, and I get to examine their finances closely.

Last week I mentioned the Shelter report that showed a third of tenants are cutting back on food and fuel to pay rent and this week I noticed a marked increase in concerns being expressed about rent levels from the landlord press.

Landlord support service website Property 118, who Tessa and I also write for, ran a story “Landlords ready for massive rise in rent arrears” The article took on board Shelter’s figures as a warning to landlords. I predicted before Xmas that many tenants, sick of living so austerely for so long may well splash out and not worry about the rent. The article says:-

“Landlords are bracing for a flood of rent arrears cases as renters struggle with their bills over the festive period”.

Landlords, not being every tenant’s favourite people, come low down on the list of priority debts for many at Xmas time. The Property 118 article reported figures from Britain’s largest landlord LSL Property Services that rent arrears jumped by 10% from November to December and shows rent arrears are at highest level since 2009.

Landlords mortgage default

This report on “Letting a Property” website quotes Paul Jardine of LPA Receivers Templeman, who would normally take back properties from buy to let landlords, talking about problems with rent arrears and their knock on effect to the mortgage market. Mr Jardine said:-

“The growing level of severe tenant arrears has yet to filter through into mortgage payment problems for landlords. Mortgage rates have kept monthly payments low, but there has also been a change in landlords’ behaviour.

With capital gains falling by the wayside in the past six months, rental income has become the most important component in an investor’s annual return – but it also pays a landlord’s mortgage cheque”.

Tenants have been complaining of being crippled by high rents, particularly in London for some time now but as I have also been urging, there will come a time when tenants inability to keep up with these rents will have a knock on effect to a landlord’s ability to pay the mortgage.

I find it interesting that these concerns are now starting to be raised from the landlord’s side.

And finally a tale to warm the hearts of many a PRS landlord.

Government announced this week they will be piloting the rent bit of universal credit where benefit rents will no longer be going direct to the council or housing association.

They will be running 5 pilot schemes with social landlords for a few months from June this year to see if they go out of business through non payment of rent. Something PRS landlords have been enduring for some time now.

Of course, regardless of the true findings of the pilot scheme, payments will be going straight to the tenants anyway. The government are as pig-headed and blinkered as any government and intent on having their way regardless of any inconvenient negatives that the pilot scheme may throw up.

The big difference however is that social landlords don’t have the option of moving away from benefit tenants, in the way that PRS landlords did to protect their investment, so it has the potential to be even more disastrous.

With just about everything I see our government doing with housing I get a strong image in my head of someone studiously sawing through the branch of a tree whilst sitting on the wrong side of it.

IDS, Gobbels and Stalin

Oh and another finally, and on the same subject of Universal Credit, I listened to Ian Duncan-Smith on Radio 4 the other morning fending off concerns by Evan Davis, who was in effect pointing at the branch and waving, only to be shooed away by IDS and noticed he repeatedly referred to people on benefits “Doing the right thing”. A curiously vague phrase in itself but the fact that he must have used it 10 times tells you someone has told him to.

I am now officially on an IDS “Do the right thing” count in his interviews
If you want to know why he uses vagueness to communicate, read ‘Propaganda’ by Edward Bernays (Sigmund not Lord) Freud’s nephew, written in 1928 on how to hoodwink a nation.

The book was a favourite of Dr. Goebbels and Uncle Joe Stalin and you could always count on them to do the right thing.

Ben Reeve Lewis

Ben’s runs Home Saving Expert, where he shares his secrets on defending people’s homes from mortgage repossession Visit his blog and get some help and advice on mortgage difficulties, catch up with him on Twitter and check out his free report “An Encouraging note on Dealing with your Mortgage Lender” and have it sent right to your inbox.

CCTV pic by lydiashiningbrightly, house of cards pic by King of the Ants

What can the landlord do if he failed to protect the deposit?

2012-01-26T12:02:09Z

Here is a blog clinic question from Andy who is a landlord:

Hi, I own one (and my only) house in Wales. I am abroad working. When I left I rented it privately to a tenant as an Assured Shorthold Tenancy since 2009.

She quit in December, and left a lot of damage, uncleaned, damp, broken stained furniture etc.. I intended to keep £500 of her £650 deposit. However I did not ‘protect’ it under the Housing act 2004 (as I knew nothing of this), she is now demanding the full deposit in 14 days or will sue me.

I return to UK to live in my house on Feb 6th. Help!! If I give her the deposit back in full I will have to accept a big loss due to the damage etc.. however I may have inadvertently broken the law on registering her bond, so?!! help I need advice. I am not rich, just renting my house to pay the mortgage! Help and advice much appreciated asap. Thank you

At the moment, the most recent Court of Appeal authority is that the tenant cannot claim for the penalty payment of three times the deposit sum after the tenancy has ended. You can read about this here.

So I suppose on the basis of that it would be all right to refund the £150 and say that if she issues proceedings you will defend. People often say they are going to court when actually they have no real intention of doing this.

However if it sounds as if she is serious then refer her to my blog post (or one of the articles referred to there) and give her full details (receipts etc) to justify your deductions.

Note by the way that the rules on tenancy deposits are due to change in April and landlords who fail to protect will then be at risk of being ordered to pay a penalty payment to the tenant by the court. Ignorance of the law will be no defence.

New consultation service from Landlord law

2012-01-26T07:16:24Z

Sometimes if you have a problem you just want to talk to someone about it. Sometimes the best person to talk to is your lawyer.

Landlord Law is mostly a ‘one to many’ information service (which is why the pricing is moderate) but I do offer some ‘one to one’ advice services. To date these have been:

telephone advice (£60), and
a fixed fee written advice service (£95)

However there is now a new option – an online consultation.

What the consultation service can be used for:

Discussions about a problem with a tenant – particuarly if there are several people who will want to be involved in the discussion

Discussions about a particular problem situation you or your team have, which you would like to discuss and throw ideas around and get some legal feedback

Discussions about a new service you are thinking of setting up where you would like some advice about the legal aspects. Particularly if you would like others in your team to be involved in the discussions.

And so on.

How it works

First you have to place an order and pay the fee
You will then be sent a link to an online form to complete with the details of your discussion topic. You will also need to send me any relevant documents
We will then agree a suitable time for the consultation
I will do some research into your situation before the consultation
At the relevant time, you log into the online discussion room using the login details provided, for the consultation
The system can be used for both Windows PCs and Macs

As with my other ‘one to one’ services, this is only available to Landlord Law members. The fee for a 45 minute consultation service at present is £198 which is £165 plus VAT. If you are interested you will find more information (and technical specifications) here.

Evicting the tenant where deposit not put in a scheme

2012-01-25T15:44:12Z

Here is a question to the blog clinic from Teresa who is a landlord:

Tenants deposit was not put into a deposit scheme.

Tenant refuses to leave house and has not payed rent for over 14 months. we have had previous court sessions ( tenant must have wrote the book on how not to get evicted, he used every excuse going, benefits not sorted,post never receives it, lost papers etc) and judge always accepted his lies bearing in mind there has been a different judge time and case adjured again.

Ran out of money to continue court action. He does not accept registered mail and refuses to answer door.

How do I evict him? Tenancy ended Nov 2010

The FIRST thing you need to do is to protect the deposit. If you do not it will put you in the wrong and your tenant will be able to wrong foot you in any claim for possession. Do it today. As the fixed term has ended you will need to use the DPS as I don’t think the other organisations will accept it.

Then you will need to either proceed with your current claim for possession or end that and start a new one (although you need to be careful about ending litigation as it may authomatically make you liable for your opponents costs).

The ONLY way you can legally evict a tenant who will not move out voluntarily is via a court order for possession.

Most solicitors will be reluctant to take on a case which has already started, and if they do the costs will generally be high. However you may be able to get some guidance on eviction proceedings from my do it yourself kits, which you can read about here.

By the way, it was only the fixed term which ended in Nov 2010. The tenancy will have continued as a periodic tenancy.

Five things your letting agent may not be telling you

2012-01-25T07:51:32Z

Many letting agents are good, some are outstanding, but it has to be said that many others offer a poor service.

Here are a few things they may be keeping quiet about

1. They do not have any relevant qualifications.

The letting agent industry is unregulated. There is nothing to stop any Tom, Dick or Harry setting up shop with little experience. Many do.

This is why you should ALWAYS look for an agent which is regulated by ARLA, RICS, NALS or at the very least the Property Ombudsman.

2. They are spending your money

Letting agents hold thousands and thousands of pounds of other people’s money. As there is no regulation for the industry, they can keep this where they like. Sometimes it is just put in the firms general bank account along with their own money (or more likely, overdraft) and spent on their own expenses.

This is why (again) you need to use an agent regulated by ARLA or RICS or one which has signed up to Safe Agent.

3. They have not referenced your tenant properly

Finding a good tenant is one of the main reasons why people go to an agent. However, I have had cases where I have been instructed to evict a tenant for rent arrears and we (ie the landlord and I) find out that the initial referencing was unsatisfactory. Many landlords have also complained about this to me.

The problem is exacerbated by the fact that many agents refuse to provide details of any of the referencing material to the landlord, claiming that they are not allowed to under the Data Protection Act. I wrote about this here.

4. They are getting kickbacks from repairmen used for your property repairs

Not all agents do this of course, but it is not unknown for agents to have cosy relationships with tradesman, with the hapless landlord being charged over the odds.

5. They are encouraging your tenants to leave at the end of the term so they can charge you for finding a new one

I wrote about this here. Again reputable agents wouldn’t dream of doing this, but apparently it does happen.

All of this is totally against the principles of agency law. Under agency law the agent has a ‘duty of good faith’ to deal with his principal (in this case the landlord) fairly and not put his own interests first.

Good agents will do this as a matter of course. Others however, won’t. Which category does YOUR agent come into?

(NB Do you really need to use an agent? >> Click here to find out)