Private Sector Landlord - EMPO › downloads › Private Sector Landlord... · 2015-04-13 ·...

Private Sector Landlord

Are landlords the new frontline

in policing our borders?

Caught in the crossfire – Social tenants under the

microscope

A L I F E M A G A Z I N E S P U B L I C AT I O N I N C O N J U N C T I O N W I T H E M P O

E A S T M I D L A N D S E D I T I O N

AUG – SEPT 2014

Croydon Clamp Down: About face

on landlords

Buying Power – Why joining forces can get the deal

done

Subscribe

for FREE

see page 19 for details

Looking for a Buy to Let Mortgage?

Mortgages for Business can help...

Experienced landlords

First time investors

Trading Ltd Co’s, SPVs & LLPs

Loans up to 85% LTV

HMOs, multi-units, student lets

Instant remortgages

Bridging, auction & development finance

Est. 1990. Independent. Whole of Market.

www.mortgagesforbusiness.co.uk

Call: 0845 345 6788






Loans up to 85% LTV


Instant remortgages




Call: 0845 345 6788






Loans up to 85% LTV


Instant remortgages




Call: 0845 345 6788

4

AUGUST/SEPTEMBER 2014

WELCOMEWelcome to the August/ September edition of Private Sector Landlord. Social tenants are increasingly in the news at the moment. Landlords don’t want them because they are more likely to run up rent arrears and damage their properties; councils have an obligation to fi nd housing for them. In our Big Issue feature we see if there are ways to break the impasse.

EMPO’s Giles Inman takes a look at the Immigration Act 2014 which comes into force in October. One of its clauses puts the onus on landlords to ensure they are not letting out their properties to illegal immigrants. For once, there are no nasty surprises and the legislation will actually make it easier for good landlords to comply with the law. At the same time, it will provide councils with a useful tool to tackle rogue landlords.

Our lead news story focuses on Croydon Borough Council which has just performed one of the biggest policy U turns in history. From implementing enlightened schemes to encourage landlords to take on social tenants, they have slapped down a selective licensing scheme that penalises every single landlord in the borough. Is this the shape of things to come?

Finally, we talk to a landlord who harnesses his own know how with investor’s capital to bring in successful rental developments. It is a win, win situation for everyone involved and it’s good to see the banks being cut out of the loop for a change.

Enjoy the holidays

Howard Clemmow | Editor

Copy deadline: For Oct/ Nov edition: 12th September

CONTACTT: 01636 815561 M: 07812 575540 Life Magazines, GPR House, Mill Park, Station Road, Southwell NG25 0ET

Sales: [email protected]: [email protected]: [email protected]

Published by: Life Magazines (Notts) Ltd

Editor: Howard Clemmow

Contributors: Adeela Ahmed, Lisa Chamberlain, Howard Clemmow, Giles Inman

CONTENTS

Landlord News 6

Gascoines Auction House 8

The Big Issue: Social Tenants 10

The Knowledge: the Immigration Act 12

The Secret of My Success: Andy Churchill 16

Letters Page 18

Subscribe to Private Sector Landlord 19

Bishop & Sewell LLP are a commercial law firm based in Central London specialising in residential and commercial property. The firm provides a wide range of other legal services including company commercial, litigation, private client, family law and employment.

The Landlord and Tenant department deal with all aspects of the leasehold reform legislation including; lease extension, freehold purchase and right to manage.

We also deal extensively with service charge disputes, possession cases and other property litigation. Talk to our experts about your landlord and tenant matters.

Contact: Mark Chickt : 020 7631 4141f : 020 7323 0498e : [email protected]

Bishop & Sewell LLP Solicitors59 - 60 Russell SquareLondon WC1B 4HP

t : 020 7631 4141f : 020 7636 5369e : [email protected]

Insurance scheme for EMPO members

We have developed an insurance scheme especially for EMPO members delivering a broad form of cover at a competitive cost:

What are the benefits? We provide unique benefits, which include:

Discounts available for a good claims history

Employers Liability for maintenance staff

Property Owners Liability limit of £5,000,000 extended to provide:

o Liability from Legionnaires disease limited to £1,000,000

Loss of rent limited to 1/3rd of the building sum insured

Landlords contents at £7,500 per location

Special arrangements for unoccupied properties

Options to include commercial properties

Dedicated service….

Dedicated team based in the East Midlands

24/7 claims service delivered by dedicated Loss Adjusters

Contact us…

PJ Frankland Ltd Exeter House Stanier Way The Wyvern Derby DE21 6BF

Telephone: 01332 545720 Fax: 01332 545721/545722 Email: [email protected] Website: www.franklands.co.uk

6


Landlord NewsCroydon launches ultra-stringent licensing schemeOn the 23rd of June Croydon Borough Council announced the launch of a selective licensing scheme. The scheme will cover every privately rented property in the borough and a fee of £1,000 is proposed for a five year licence. Landlords renting out a property without a licence will face fines of up to £20,000 while those breaching the terms of the licence will face fines of up to £5,000. This is one of the most stringent additional licensing schemes introduced so far.

The announcement comes less than 2 months since Labour wrested control of the council from the Conservatives in the May local elections and is being billed as part of their campaign pledge to “clean up Croydon.” The justifications of the scheme are that there are now more tenants in private rented accommodation than in social housing. It is claimed that the increase in the number of private tenants has had the negative consequences of poor quality housing, fly tipping, antisocial behaviour, litter and noise. In support of this claim

the Council cites the statistic that complaints to the council about housing standards in the private rented sector have risen

from 630 in 2010/2011 to 1371 in 2013/2014. The RLA and NLA have yet to comment on the matter.

The PRS in Croydon has been in the news recently for another reason. The council’s two schemes to encourage private landlords to rent out their properties to benefits claimants have received widespread plaudits. Under one scheme, housing benefit is paid directly to the landlord for a period of one year and the council underwrites the cost of repairing any damage to the property when the tenancy ends. Under the other, the landlord leases the property to the council for a period of five years. The landlord is guaranteed a fixed monthly rental income and the council manages repairs and maintenance of the property.

The plan for selective licensing would appear to fly in the face of these initiatives. It is not yet clear whether the two schemes will continue in their present form or if landlords subscribing to the schemes will be exempt from the licence fee. (See The Big Issue: Social tenants – good business or a political football.)

Rentals magnate puts empire on the block “Super landlord,” Fergus Wilson is putting his entire portfolio of rental properties, amounting to around 1000 houses, up for sale with a price tag of £200 million. Wilson built up his empire in the run up to the market crash in 2008 by mortgaging and remortgaging his properties as house prices rocketed in the early 2000s. The portfolio consists almost entirely of 3 and 4 bedroom houses, most of them new builds, all located in Kent. He

attempted to sell off sizeable blocks of houses in 2009 when it emerged that he was over £300,000 in arrears on his mortgages, but was stymied by unfavourable market conditions.

The portfolio is being sold as one lot and Wilson argues that it will be very attractive to a large investor such as a pension fund. The properties deliver an income of about £1 million per month, equating to a yield of 6%. He points out with both

prices and rents continuing to rise strongly in the south east, it should be a very low risk investment. Outstanding mortgages account for 60% of the valuation and, should the portfolio achieve the asking price, he will face a tax bill of between 20 and 28% of his £80 million windfall, depending on how the sale is structured. He commented, “I’ll do whatever I can legally to reduce the (tax) bill but we’ll pay all we owe and not a penny more.”

Wilson was in the news a few months ago when he announced that he was evicting 200 of his tenants because they were claiming housing benefits. At the time he claimed this was purely for financial reasons because benefits claimants are more likely to be in arrears on their rent. Now speculation is mounting that the controversial move was an attempt to “sanitise” the asset to achieve a higher valuation.

7


Article 4 comes into force in LeicesterAn Article 4 Direction requiring landlords to gain planning permission to convert properties from a single dwelling house to an HMO, comes into force in Leicester on the 20th of August. This makes Leicester the last university in the East Midlands to bring in Article 4. However, this is a non-immediate Direction meaning that landlords have at least a year from this date before they have to seek planning permission. The areas where the Direction is in force are also relatively limited, restricted to Clarendon Park, Westcotes and a small area in the city centre.

The RLA has been campaigning against the introduction of Article 4 in Leicester for some time. They argue that the council already has enough legislation at its disposal to ensure that properties in the PRS are fi t for purpose and that any problems can more easily be resolved by enforcing the existing legislation. It is widely predicted that the introduction of Article 4 will result in a marked decline in the availability of family accommodation in the affected areas.

Rents on the march againAfter a period of below infl ation increases, rents in the private sector are rising briskly once again. Research by Homelet, the landlord insurance specialist, suggests that average rents had risen by 7.5% in the year to June and now stand at £868. The research also found that house prices had risen by 10% over the same period and that average incomes among tenants were up 7.2%. However, these numbers do not chime with fi gures released recently by the Offi ce for National Statistics (ONS), which had rents across the board rising by just 1.8% and average income including bonuses and

overtime easing up by a scant 1.7%.

Spokesman, Martin Totty, said that rents continue to outstrip pay rises but that middle income earners were enjoying strong increases and so could comfortably afford rents at their current levels. In turn, low income tenants were being priced out of the market in many areas. Totty speculated that recent changes to mortgage affordability rules and increasing prices would continue to drive demand for rented property as buyers fi nd it ever harder to get on the property ladder.

Illegal landlord must pay £170,000 or go to jailReading based landlord, Michael Aslam, has been ordered to pay £170,000 within 6 months or face going to jail after ignoring two planning enforcement orders. The case related to a property he owned in Sipson, West London. Aslam had constructed a number of wooden chalets in the grounds of the property and was using them as “beds in sheds” illegal rentals. He was also using the main house and an adjoining property as a hotel. Hillingdon Council ordered him to demolish the outbuildings and stop using the houses as a hotel but he continued to claim rent for the properties.

He pleaded guilty to breaching the two enforcement orders at

Uxbridge Magistrates Court but was referred to Isleworth

Crown Court for sentencing. The court fi ned him £7,500 for each breach. If the fi nes are not paid within 6 months he faces a year in jail. Separately, the court ordered him to pay £170,000 under the Proceeds of Crime Act. If this is not paid within the same timescale, he faces an additional 30 months in prison. He was also ordered to pay

£17,676 in costs.

The case highlights the growing problem of unscrupulous landlords letting out unsuitable and unsafe buildings to desperate tenants, many of whom are illegal immigrants. There have been cases of sheds, outbuildings and even garages being used as rental properties.

8


It has never been easier to buy and sell quality furniture at Newark Auction Centre. Part of the Gascoines group, we are one of the U.K’s most established and popular auction salerooms, offering a wide selection of new and returned furniture from leading manufacturers and well-known retailers. Both wholesale buyers and members of the public are welcome at our weekly Thursday sale. Situated in the centre of Newark, near to Newark Castle, we are easy to get to and there is plenty of free parking and space for deliveries and unloading.

Recently, the auction centre

has undergone a series of major changes to improve both facilities and customer service. We have taken on new staff and have updated and re-launched our website. This now includes a brand new online catalogue, complete with comprehensive photos. Consequently, purchasers can browse online before they attend the sale, or they can contact our friendly staff beforehand to put in commission bids.

Luke Saywell, auction centre manager, explains the benefits of all the recent changes. He comments: ‘We have increased our saleroom

to over 20,000 sq. ft. which has enabled us not only to better showcase our vendors’ products, but also vastly improve the buying experience. We think purchasers will be pleasantly surprised at the range of

furniture we sell. Whether their style is antique, rustic, vintage or contemporary, there is something to suit everyone.’

If you are a landlord looking to furnish your buy-to-let property, Newark Auction Centre could be just the place for you. We have a diverse range of furniture including sofas, dining tables, wardrobes, chairs and mattresses all under one roof ready to purchase at the best prices. We even have our own on-site estate agency to help with residential sales and lettings across Nottinghamshire.

Newark Auction Centre is one of the region’s biggest weekly sales with up to 2000 individual lots regularly on offer. Viewing takes place on Wednesdays 12 noon until

7.00pm, and Thursdays 8.30 am until 11.00am. The auction itself takes place on Thursdays from 11am. If you visit our new website at www.newarkauctioncentre.com, you will find detailed information about both the buying and selling process, in addition to all the services that we can offer.

If you plan to pay Newark Auction Centre a visit, we are located on Great North Road, Newark, Nottinghamshire NG24 1BS. You can also email [email protected], or telephone 01636 605544.

Gascoines - Newark Auction Centre

Do your properties contain asbestos?

“Any residential premises should provide a safe and healthy environment for any potential occupier or visitor”- principle of the Housing Health and Safety Rating System (HHSRS) established by the Housing Act 2004

Asbestos presents a severe threat to health & safety and is one of the 29 hazard categories identified within the HHSRS

Our surveys will identify asbestos materials in your property & advise you on the best course of action at competitive rates.

We offer a full range of asbestos consultancy services and hold UKAS accreditation for air monitoring, fibre counting, bulk sample fibre identification, asbestos surveying and 4-stage clearances, with full UK coverage.

Other Asbestos Services include

o Laboratory Fibre Identification o Asbestos Management Plans o Project Management

o Bulk Sampling o Training o Asbestos Registers

For more information 0115 932 7782

[email protected]

10


The BBC recently broadcast an episode of its Panorama documentary programme devoted to the plight of people who are made homeless when their private sector tenancy agreement comes to an end. Government figures reveal that the single biggest cause of homelessness is tenancy agreements coming to an end, the bulk of which are in the private sector. This was one of the statistics behind Ed Miliband’s proposed assault on the PRS a couple of months ago.

It is fair to say that the Panorama programme was heavily biased against landlords and the individual cases had been carefully selected for their emotional impact. However, viewed dispassionately none of the cases supported the unspoken subtext of the program, which was a burgeoning homelessness problem driven by greedy landlords ending tenancy agreements so they could put the rent up. In fact, only one of the families interviewed was actually homeless. This was a middle class family living in Surrey. The father had lost his well-paid job and their house had been repossessed. None of the private sector landlords in the area were prepared to take on tenants who were dependent on benefits but the Council had offered appropriate social housing. However, the parents were worried about crime levels on the local council estate so instead had opted to live in a camper van berthed in the car park of a church hall. In this case, the family hadn’t been made homeless because a private tenancy agreement had ended, they

just weren’t prepared to live in social housing.

Three of the families featured had been forced out of private rented accommodation when their tenancy agreements ended. Two of them had ended up in emergency accommodation that was clearly inadequate to their needs, for instance a family of four living in a two room studio apartment. One was living in a house with a serious damp problem that the landlord clearly had no intention of remedying. No reasons were given for the previous landlords ending the tenancy agreements but, judging by comments made by the tenants, rent arrears featured strongly in all cases. The final family featured a working mother who had never been in arrears on her rent and treated the property as if it were her own home. She was evicted purely because she claimed housing benefit. Regular readers of this magazine might be able to guess who the culprit was; that’s right, it was Fergus Wilson, the landlord with a thousand houses who evicted 200 of his tenants because they were claiming housing benefits. While the programme did little to illustrate the causes of what is clearly a significant social problem, it spoke volumes about the uneasy relationship that exists between private sector landlords, social tenants and local authorities.

Ten years ago, letting properties to social tenants was a sound business model and a lot of landlords such as Kevin Green have built their property empires on it. There were two principle

advantages to social lettings. Firstly, the rent was paid directly to the landlord in the form of housing benefit. As the local council was hardly likely to go bust, landlords were guaranteed to have their rent paid, even if it might be slightly late due to administrative delays. Secondly, councils have a duty of care to provide appropriate accommodation for housing benefits claimants. With a limited stock of social housing and a steadily rising claimant count, councils were increasingly reliant on the private sector to pick up the slack. This meant that not only could landlords let out poor quality accommodation that would be spurned by “Generation Rent,” they could also command a substantial premium over market rental rates.

There was one downside though. One of the commentators on the Panorama programme observed that homeless people and low income families tend to be offered housing that is at the bottom end of the spectrum. What he failed to mention is that, from a landlord’s perspective, some social tenants tend to be at bottom end of the spectrum too. Most social landlords with lengthy experience of the sector have war stories regarding properties left in a filthy condition, with insect infestations, damage to furniture and fittings or worse. It is not unheard of for landlords to face a repair bill equivalent to 6 months’ rent when the tenant vacates the property.

Over the last six years a range of legislation

has been brought in that makes life much harder for social landlords. In 2008, local authorities stopped paying housing benefit direct to private landlords apart from in exceptional circumstances. The current government has brought in a series of caps on both the number of bedrooms that can be claimed for and the total amount of housing benefit payable, dependent on number of bedrooms and what area of the country the claimant lives in. At the same time, years of shortfalls in the number of new houses being built coupled with mortgage rationing has heavily boosted demand in the private rented sector. Most landlords can find working or student tenants for their properties without having to look to the social sector. The result of these changes has been a massive drop in the proportion of private landlords prepared to take on social tenants, from 60% in 2007 to around 20% today.

Possibly the biggest issue here is what constitutes a social tenant. Excluding pensioners, there are a staggering 11.6 million households in the UK that are in receipt of some kind of state benefit. Should any of these households that don’t own their own home be classified as social tenants? As many of them will be relatively high income families who receive child benefit, until recently a universal benefit, probably not. Perhaps a better test would be to assess what proportion of their income comes from benefits. On this basis, 7.3 million of these families derive less than half their income from benefits,

The BIG IssueSocial Tenants – Good Business or a Political Football

11


leaving 4.3 million families perhaps best classed as social tenants (assuming they are not also home owners).

In this case, we should consider a study done by an independent expert on behalf of the Sunday Times. In the study, the expert compared two hypothetical single mothers with two children, both working in a hospital in Manchester. Parent A was a senior nurse on a salary of £31,000, Parent B was an administrative assistant earning £14,000. By the time the full range of benefits available for the lower earning mother was taken into account, both families had a virtually identical monthly income after taxes. In fact, because Parent B worked shorter hours, she would have to pay less in child care and so would have a higher disposable income. The reality is that both families would have a comfortable income and would have no problems in paying the rent on a three bedroom house in a respectable part of the city yet, because Parent B derived over half of her income from benefits, she would be excluded from the majority of housing in the private rented sector.

The expert contrasted these two hypothetical cases with a real life example, a 23 year old single man working 45 hours a week on minimum wage and living in a privately rented bedsit in east London. By the time the man had paid his rent, utility bills and commuting costs, he didn’t have enough money left over to eat. If anyone was going to get into arrears on his rent, it was this man but he was not by any means classed as a social tenant.

Perhaps social tenants could be defined by what kind of benefit they claim. Fergus Wilson certainly thinks so; he takes the view that anyone who claims housing benefit is workshy and should be evicted with all due haste. But actually housing benefit is widely used as a top up benefit for working families on low incomes. In our example above, Parent B would have received some housing benefit but the bulk of her benefits would come in the form of tax credits. Arguably, if you’re going to pick out a particular benefit to target, job seekers allowance is the one to go for because, by definition, claimants are unemployed. Even so, the vast majority of claimants receive the benefit for less than 6 months – it is commonplace for a landlord to take on a working tenant who loses his job and then gets another one; the landlord is unaware that anything has changed.

The most common reason given by landlords for not taking on social tenants is that they are far more likely to get into arrears and also, when this happens, the landlord’s chances of recovering the lost income are minimal. The data would seem to support this; a recent survey of housing associations found that 73% of their tenants were in arrears to some extent. It is reasonable to assume that the same would be true of the private sector. Some landlords claim that there is also a greater likelihood of their properties not being maintained in a reasonable condition or actually being damaged. The reasons for this are simple; social tenants are by definition on very low incomes and some of them struggle with issues such as learning difficulties or alcohol and drug abuse.

I believe there is another unspoken reason for private sector landlords being so reluctant to take on social tenants. The waves of new regulations that have swamped landlords over the last few years, particularly Article 4 and additional licensing, have bred intense resentment. It is not just that these regulations cost landlords time and money, it is that they are judged to be unfair. Add in the continual demonisation of landlords by politicians and some sections of the media, clearly in the interests of making political capital, and it is easy to see how many landlords feel victimised, that their livelihood has become a political football. You would struggle to get any landlord to admit it, but I think that in some cases social tenants are being turned away because that is the only way that landlords can strike back at local authorities.

If this is true, it is a short sighted tactic. Private sector landlords are coming to the end of a golden era. Mortgage rationing and our failure to build even a fraction of the number of new houses we require has led to a surge in demand for rented accommodation from people who would normally be expected to be homeowners. The huge increase in the number of university students has offered rich pickings for HMO operators in many city centres. At the same time, house prices have been depressed by the great recession and interest rates have been close to zero for over five years. This combination of circumstances is changing rapidly; there may soon come a time when landlords need those social tenants to fill all the places in their portfolios.

There is a glimmer of light at the end of this particular tunnel. In Croydon, two innovative schemes have been launched by the local council aimed at getting round some of the problems. One, known as Croybond, offers landlords a 1 year secure tenancy agreement where the council will pay the tenant’s housing benefit direct to the landlord. The council also offers a free inventory service and provides a bond that will cover the cost of repairing any damage to the property when the tenant leaves. The other scheme allows the council to lease a property off a private sector landlord for a five year period. The landlord is guaranteed a market rate monthly income and the council will take care of repairs and maintenance for the duration of the lease. Initial trials of both schemes have proved encouraging.

Sadly, even this example of enlightened cooperation has a sting in the tail. Croydon Borough Council has just voted to bring in an additional licensing scheme that will encompass ALL privately rented properties in the borough. It seems that the war between private landlords and local authorities still has battles to be fought and social tenants will continue to be caught in the crossfire.

Howard Clemmow Editor

12


Unusually, I’m going start this article with a quotation: “There is no doubt that immigrants have helped make Britain a richer and stronger society, but we must take firm action to address illegal immigration. We are also determined to tackle the problem of rogue landlords and the exploitation of illegal migrants within the housing sector. We have already taken action on beds in sheds and we can and will do much more to tackle poor quality housing.

“Alongside existing enforcement activity and other measures in the Bill, we will be requiring all landlords to ensure that prospective tenants are here legally. This is in line with existing best practice across the rental sector. We do not want to disadvantage legitimate landlords and tenants and have devised a system which will be effective and light-touch while making it tougher for illegal immigrants to rent property, but giving us the powers to take robust action against rogue landlords.” Mark Harper, former Immigration Minister.

Oops, Mark Harper resigned in February this year for employing an illegal immigrant as a cleaner. Number 10 said at the time there was “no suggestion that Mr. Harper knowingly employed an illegal immigrant.” Harper admits he “should have checked more thoroughly” when he took on the job and was involved in rolling out the Immigration Bill that the documents provided by the cleaner were genuine.

He employed the cleaner for his London flat back in 2007 and was given a copy of her passport and a Home Office letter stating that she had indefinite leave to remain in the UK and the right to work and run a business. In January 2014 – mindful that he was steering the immigration bill through the Commons and publicly warning employers of the need to check the status of employees – he sought fresh evidence of her eligibility to remain and work in the country. Regrettably, he was informed after checking with immigration officials that she was in the country illegally.

At this point he decided to resign stating “Although I complied with the law at all times, I consider that as immigration minister, who is taking legislation through parliament which will toughen up our immigration laws, I should hold myself to a higher standard than expected of others.” In a reshuffle that took place shortly after all this drama, junior Home Office Minister James Brokenshire has replaced Harper as Immigration Minister.

The Immigration Bill received Royal Assent on the 14 May and by doing so has become the Immigration Act 2014. This development has triggered a series of reforms which are designed to ensure our immigration system is fairer to British citizens and legitimate migrants and tougher on those with no right to be here. The Immigration Act will prevent immigrants from accessing services which they are not entitled to. It also leans heavily on private landlords to check

the immigration status of their tenants and to ensure they have the right to rent, therefore preventing those with no right to live in the UK from accessing private rented housing. Failure to comply with the checking requirements within the Act could result in financial penalties for landlords who rent to illegal immigrants.

The Immigration Act 2014 is set to come into force in October 2014 and contains 77 clauses and makes fundamental changes to how our immigration system functions. It will limit the factors which draw illegal migrants to the UK, make it easier to remove those with no right to be here and ensure the Courts have regard to Parliament’s view of what the public interest requires when considering Article 8 of the European Convention on Human Rights in immigration cases.

In terms of landlords and letting agents, the Act will not apply to existing tenancies. The two million plus buy-to-let landlords in the UK will only have to conduct checks on new tenants from October. My

understanding is tenants without passports will be able produce alternative documents including their birth certificate (or adoption certificate) in combination with a national insurance number or driving licence, or alternatively a naturalisation certificate or right of abode certificate. For citizens of the 27 member countries of the European Union (and also Iceland, Lichtenstein, Norway and Switzerland), presentation of a passport, national identity card of an EU member state or evidence of receipt of UK benefits will satisfy the future requirements.

The vast majority of documentation may be accepted by landlords at face value without the need for further checks. To assist landlords the Home Office will operate a free telephone and email enquiry service with a turnaround of no longer than 48 hours, along with an option for migrants who have no documents to obtain confirmation from the Home Office that they are allowed to rent a property. If a landlord has not had an answer from the Home Office within 48 hours, they

The KnowledgeWhat the immigration act means for landlords

Former Immigration Minister Mark Harper

13


can go ahead and rent without fear of a fine in the event the tenant turns out to be an illegal migrant. This service will be designed to advise in all situations where the landlord, letting agent and those taking in lodgers are unclear about the necessary checks and documentation they may accept. It can also help in situations where the landlord needs to verify some of the less common forms of documents to ensure they are acceptable not fraudulent.

The government will ensure there is a robust publicity campaign to help landlords understand their duties and responsibilities under this legislation. The intention is not to catch out good landlords for small mistakes but have meaningful penalties for those rogue landlords who break the rules and provide accommodation to illegal migrants.

The Act will also assist vulnerable tenants by making it easier for homeless and vulnerable people to prove their entitlement through much simpler documentary requirements. This will be achieved by exempting those parts of the housing market such as homelessness refuges, hostels and student halls of residence where further regulation is deemed not appropriate for this type of tenant.

So why bring in new checks for landlords now?

Data from the ONS Labour Force Survey and Annual

Population Survey indicates that use of the private rented sector is particularly high among recently arriving migrants, with 85% of migrants who have been in the UK for less than a year renting privately. Under the Act, the Home Office will be equipped for the first time with powers to deal with landlords who rent homes to illegal migrants. The government wants to ensure tenants in private rented housing are not living in the UK illegally and is already working with councils such as Derby and Nottingham. These Councils, along with others, have received significant Government funding to undertake robust, intelligence-led, targeted enforcement, ensuring illegal immigrants who are refused housing by reputable landlords will not be pushed straight into the arms of the criminals who deliberately exploit vulnerable people.

Evidence suggests that many private landlords already make checks on a tenant’s identity and credit status, making it difficult for illegal migrants to rent properties from them, but not all landlords do that. The Act will ensure landlords mirror the existing and long-standing requirements on employers to address illegal working, therefore making it harder for illegal migrants to establish a settled life in the UK. In fact, this legislation is no more onerous than what employers are expected to do. Put simply, under this legislation landlords are not expected to be immigration experts, but they are expected to undertake straightforward steps to

avoid a criminal penalty.

So to be clear, under the requirements of the Act it will become illegal with few exceptions to assign a tenancy to a person who does not have the correct immigration status. Landlords doing so will risk a fine of up to £3,000 per tenant. Where a landlord accepts documents that turn out to be fake, forged or fraudulent, they will have a ‘statutory excuse’ from paying any penalty.

Remember, landlords will be required to check the immigration status of all the people living at the property at the start of a tenancy, not just those whose names are on the tenancy agreement. During each tenancy the landlord will need to have measures in place to ensure they are aware of any new people that have been invited to live in the rental property by their tenants. The latter point raises some controversial issues – effectively it makes landlords responsible for carrying out checks on those with whom they have no contractual relationship, or indeed any ability to enforce their rights under the tenancy agreement. These conditions and duties also apply to social landlords.

The government has emphasised that actions required of landlords will be fairly quick, simple and straightforward and will not put them to excessive additional expense. Government does warn landlords to be careful to ensure that all potential tenants are put through a

similar checking process, as applying different criteria to those tenants that appear “foreign” could lay them open to charges of discrimination.

Overall, I believe the measures contained in the Act will improve those communities blighted by landlords providing illegal accommodation in “beds in sheds” and overcrowded houses. It will also help lawful residents who face competition for rented accommodation from landlords who house illegal immigrants in their properties.

Before October 2014 the government will publish the exact process landlords need to follow to ensure compliance and they will be conducting a pilot scheme for a trial period restricted to a specific geographic area of the country. The idea behind this is to ensure the legislative process works smoothly and if any changes or tweaks are required, they are implemented before the national roll out of the Act in October. If this all works well I am sure the Act will achieve its objectives. As yet we do not have details concerning where this pilot scheme will be operating.

It would be a good idea at this time to ensure you have the necessary safeguards in place at the start of each new tenancy to reduce the risk of housing an illegal migrant. If you have any concerns how this Act will impact you and your property portfolio, seek professional advice and guidance from your Landlord Association.

Giles Inman

Alongside existing enforcement activity and other measures in the Bill, we will be requiring all landlords to ensure that prospective tenants are here legally.

Established in 1942, EMPO (East Midlands Property OwnersLimited) is a not-for-profit organisation that represents the needsof Landlords across the East Midlands.

EMPO works with Government, Local Authorities and Industry to provide the best dealpossible for independent landlords in this region.

EMPO is run by an elected committee, experts in their own field within the propertymarket, dedicated to ensuring that members of the association benefit from theircollective strength.

Our association is regarded as one of the most progressive landlord associations inthe country with over 450 members, our numbers are continually increasing and ourworking relationships with suppliers and local authorities constantly gain strength.

EMPO Member advantages

• NetworkingEMPO have regular meetings where landlords come together to hear related services, including accountants and solicitors discuss renting residential propertyas well as putting landlords in contact with other landlords.

• DiscountsEMPO work tirelessly to negotiate discounts on thousands of products that landlordsuse everyday. Be it paint, tiles, key cutting, or timber, EMPO has specially negotiatedrates with suppliers across the regions that will save you money.

• Be representedEMPO actively campaign with Central and Local Government for a better deal forlandlords. Recently several important cases have successfully been campaignedthat would have meant a harder time for landlords. As part of YOUR local landlordsassociation, we can help to make your opinion count.

• Keep up-to-dateDon’t get caught out with changes in the law. EMPO members are kept up-to-datewith changes in legal requirements that effect residential landlords.

• Reduced Property InsuranceEMPO have a specially negotiated deal with a large building insurer. Not only doesthis provide perhaps the best landlord specific building insurance on the market,it frequently saves landlords more than their annual membership fee.

• Reduced rates for HMO LicensesEMPO continue to forge excellent relationships with the councils throughout theEast Midlands area including Derby, Leicester, Lincoln and Nottingham.

Joining EMPO is easy. Simply contact us on

0845 094 0386www.empo.co.ukOr call in to our new offices at 78 Lenton Boulevard, Nottingham

To join, simply complete the application on the reverse of the form and post it to us along withyour cheque (if required). We’ll then write to you with your membership pack which will includeyour membership discount card, a list of our recommended suppliers and a copy of the latestissue of Professional Landlord, our regular members’ journal.

Subscription for twelve monthsName(s) and Address of Applicant(s). Block capitals please.

Name(s)...................................................................... Mem No. ..................................................

Address .............................................................................................................................................

.................................................................................... Postcode ...................................................

Tel ..................................... Fax .................................. Email .........................................................

I/We enclose a cheque made payable to the East Midlands Property Owners Ltd forthe sum of £55.00 + £20.00 Joining Fee, Total £55.00 or £75.00* delete as appropriate

Signed ....................................................................... Date ...........................................................

I authorise East Midlands Property Owners Limited to debit from my account the

sum of £ ................................ using the following credit/debit card details:

Maestro/Switch/Solo Mastercard/Visa/Visa Delta

(Sorry - we do not accept American Express or Diners Club)

Card Number

Card valid from / Card expiry date /

(Maestro/Switch/Solo only) Card issue Number

Security code (last 3 digits on signature strip on reverse of card)

Date ..................................................... Cardholder signature .......................................................

Cardholder Address ..........................................................................................................................

............................................................................................ Postcode ..........................................

Tel .......................................................................................................................................................(Name and address must match the name and address on the card statement. The phone number must correspond tothe landline at the cardholder’s address.)------------------------------------------------------------------------------------------------------------------------------------------------------------------------------To help us with our membership data, please indicate the type of property youown or manage.

Resident Landlord Self Contained Unit Commercial (Lives in same building as tenant) (Tenant does not share amenities)

Shared House House in Multiple Occupation (HMO) Industrial (Group of tenants living in same (Property occupied by persons notway as a family e.g. students) forming a single household e.g. bedsits)

Holiday Let Other No of properties ................................

I currently use the EMPO recommended insurance scheme Yes No

Acceptance of an application is subject to ratification by the directors.Send your completed form and cheque if applicable to the Membership Secretary atEMPO House, 78 Lenton Boulevard, Lenton, Nottingham, NG7 2EN.

We are delighted to announce that we have negotiated a discount off the cost of HMOlicensing fee with various councils. To qualify for this discount, members will need to readand take note of the paragraph below.

If you have any unspent convictions or judgments made against you with respect to fraud, dishonesty, violence,drugs, offences of a sexual nature, unlawful discrimination, housing standards or landlord and tenant law youmust tick the box and give details on a separate sheet of paper

East Midlands Property Owners Ltd always seek to promote Sound Management and acceptable standards ofaccommodation.

Annual Membership FeeAn individual property owner or any numberof co-owners living at the same property

One Off Joining FeeA fixed joining fee

StandingOrder £55(Any other method of payment is £60)

£20
















Name(s)...................................................................... Mem No. ..................................................

Address .............................................................................................................................................

.................................................................................... Postcode ...................................................

Tel ..................................... Fax .................................. Email .........................................................

I/We enclose a cheque made payable to the East Midlands Property Owners Ltd forthe sum of £55.00 + £20.00 Joining Fee, Total £55.00 or £75.00* delete as appropriate

Signed ....................................................................... Date ...........................................................





Card Number






............................................................................................ Postcode ..........................................






Acceptance of an application is subject to ratification by the directors.Send your completed form and cheque if applicable to the Membership Secretary atEMPO House, 78 Lenton Boulevard, Lenton, Nottingham, NG7 2EN.

We are delighted to announce that we have negotiated a discount off the cost of HMOlicensing fee with various councils. To qualify for this discount, members will need to readand take note of the paragraph below.


East Midlands Property Owners Ltd always seek to promote Sound Management and acceptable standards ofaccommodation.




£20
















Name(s)...................................................................... Mem No. ..................................................

Address .............................................................................................................................................

.................................................................................... Postcode ...................................................

Tel ..................................... Fax .................................. Email .........................................................

I/We enclose a cheq ue made payable to the East Midlands Propert y Owners Ltd forthe sum of £55.00 + £20.00 Joining Fee, Total £55.00 or £75.00* delete as appropriate

Signed ....................................................................... Date ...........................................................





Card Number






............................................................................................ Postcode ..........................................






Acceptance of an application is subject to ratification by the directors.Send your comple ted form and cheq ue if applicab le to the Membershi p Secre tary atEMPO House, 78 Lenton Boulevard, Lenton, Nottingham, NG7 2EN.

We are delight ed to announce that we have negotiated a discoun t off the cost of HMOlicensing fee with various councils. To qualify for this discount, members will need to readand take note of the paragraph below.


East Midlands Property Owners Ltd always seek to promo te Sound Manage ment and acceptable standards ofaccommodation.




£20

16


Andy Churchill originally trained as a chartered surveyor and has now been in the property business for around twenty years. He initially began to invest in residential property as a means to supplement his pension. He also recognised that private sector rentals would afford him the added benefi t of producing an immediate income rather than having to wait for retirement.

Based in Nottingham, Andy now has two property businesses: Urban Village Property Investments and Grace Kelly Churchill Property Ventures. UVPI is a deal packaging consultancy. They source properties for investors, refurbish them and ensure that they are let and producing an income. GKC is a development company which tends to buy pubs, offi ces, or small hotels and turns them into residential accommodation.

I began by asking Andy how his property portfolio had evolved over the years. He explained, “I started out by buying single buy-to-let properties with the intention of building up a

small portfolio of between 10 and 20, prior to developing larger properties.” He went on to sell a number of these smaller projects to help fund bigger ones. Recently, he bought an old property that had failed to sell at auction and developed it into fi ve one-bedroom fl ats. He went on to tell me, “We have now put together a site in Ilkeston where we are creating 28 rooms in HMOs and 12 or 13 one bedroom fl ats. This will keep us busy for a while.”

When it comes to fi nancing his property ventures, Andy has some very interesting ideas. He suggests that potential landlords join forces with partners to leverage their potential investment. He elaborated, “I have leveraged nearly £1 million of other people’s money over the last eighteen months to get my projects bought, fi nanced and under way. I fi nd that my knowledge and experience is worth a great deal to my partners and individuals are prepared to enter into a joint venture and back me with their money.”

I wanted to know why Andy has eschewed more

traditional ways of raising fi nance. He confessed that he fi nds dealing with individuals easier than dealing with the bank and that he has been able to get all his recent projects funded in this way. He commented, “The traditional lenders are too fussy for their own good sometimes and I need people who can be decisive and timely.”

He champions a creative approach to the buy-to-let sector and advises always looking at alternative ways to do a deal. Andy believes that you don’t always have to do things in the traditional way and you will end up doing more deals as a result. He also stressed that you must be prepared to invest for the long term. Mistakes will be made, but don’t get caught up in over-analysing. Your numbers clearly need to work, but Andy feels that you can’t get a project done by sitting on the fence and worrying about what might go wrong.

So, what are the main issues facing the sector, at present? His conclusions are that the margin between the investment market and the owner-occupier market has virtually disappeared. Andy explained, “Two years ago you could buy a 2 or 3 bedroom ex-council house requiring refurbishment for around the lower end of £40k. You will now almost always be paying mid £50k to early £60k for the same kind of property. Despite this price increase, the typical resale market value for such a property has not really changed and stands at around £75k to £80k.” Andy’s opinion is that investors need to be more

creative with their deals or spend more time fi nding that special deal in order to make a similar return as previously.

In line with many property experts, Andy also thinks that there is not enough stock on the market. He explained that agents are going out to do plenty of valuations, but it would appear it is then diffi cult for them to convince people to put their houses on the market. Moreover, Andy believes that we have hit an affordability threshold, which has been an issue especially over the last few years. Salaries have not caught up with the way that house prices have risen and that has clear ramifi cations for the property market.

One thing I have learned whilst writing these articles is that the life of a private sector landlord can be very busy and challenging. Andy would agree that it is important to have outside interests. He loves spending time with his family, particularly on holiday. They enjoy camping and regularly travel to France. He is an active member of a nearby church and enjoys socialising with friends or getting out in the open air to play golf. His fi nal word is that he always likes to be able to switch off from the rigours of the day. A sentiment I am sure most landlords would agree with.

Lisa Chamberlain

The Secret of My SuccessAndy Churchill

18


Q: I have a 6 bedroom property for Nottingham

Trent University Students. The students are on a UNIPOL joint tenancy.

One tenant had rent arrears in the last term of around £140 which has still not been paid. This term he owes £1100 which also remains unpaid.

We contacted him and his guarantor (mother) without success. Then we wrote an overdue rent arrears letter stating that we would have little choice but to take court action. His father then intervened and wanted to become the point of contact. He asked us to send him the signed guarantor agreement (a UNIPOL document). He then responded with a WITHOUT PREJUDICE email to state that the signature was not his wife’s so she had no responsibility going forward…his son was a responsible adult and we should therefore take any action as we saw fit.

The tenant eventually contacted us and now wants to set up a loose payment plan with lots of “maybe” promises dependant on him finding work and so on. He does not want us to take

him to court as he feels this would “ruin his life.”

Considering all the broken promises so far and the forged signature on the guarantor form, we are unsure how we should proceed.

Do we take legal action against the tenant once the entire group has vacated the property or should we keep the deposits to cover the rent shortfall? (We have 6 x £250 protected deposits). The contract we have with the tenants is joint and several for all 6 parties.

A: If the house is clean and tidy with

little damage I would do nothing as the deposits will more than cover the rent arrears. (6 x £250 is £1500) This represents a simple solution involving minimum work. However, this will undoubtedly make you unpopular with the other who will be unhappy about losing their deposits through no fault of their own. Many landlords lack the toughness to do this as it usually results in negative feedback to the university. However, this remains the most cost effective option.

I would presume you took reasonable steps to check your guarantor agreements when they were returned, principally that they were signed and witnessed and all the information was in order. Ideally you will have contacted the guarantor directly to confirm they understood their obligations. Guarantor agreements vary and without reading yours it is difficult to know what they have entered into.

If you wish to continue to pursue the one tenant, you have the legal right to take the guarantor to court (in

this case the mother). If she continues to claim that she did not sign the agreement, you then have the basis of a prosecution for fraud. We have found this is an effective way of proceeding, assuming you have a witnessed document.

Another option available to you would be to make a claim against the tenant via the small claims court. You should win the case but it will involve some cost and the most likely outcome would be the tenant receives a CCJ but you still don’t get back your money. Effectively, you are throwing good money after bad.

Q: I am being pursued by Nottingham City

Council for council tax for my tenants who have left the property without giving the required notice. One tenant gave notice but was within the fixed period of the tenancy. Do you know if there is a definitive legal ruling on this scenario?

A: Working on the basic facts you have given

me, I would say that the Council is correct in their assumption.

Unless your tenancy agreement specifically states a contractual periodic tenancy (please note EMPO AST contracts do exactly this) then the liability to pay council tax only lies with the tenant UPTO the point at which they move out.

However, your tenancy agreement will have notice period requirements built in and, if the tenant has not conformed to these, I would suggest that you have recourse to pursue the tenant for any council tax due for the period up until the ‘official’ end of the tenancy. It is one of

those cases where you will have to pay the liability and then claim it back against the deposit or via court proceedings.

We have dealt with similar cases before and that is why we insist on notifying all utilities and the relevant Council ourselves when the tenant moves in. In cases where we suspect the tenant has left early, we insist on proof of payment of final bills before releasing the deposit.

This situation really is dependent on the tenancy documentation and when the tenants gave the notice to leave, if any. It should be noted that if any party to a joint tenancy gives notice to leave, it is binding on ALL parties to the tenancy. In this case, the only issue arises if all parties do not leave when they are supposed to. Your question does not clearly state what happened but implies that one tenant stayed until the end of the tenancy period while the other left before the end of the period. If this is the case, the ‘staying’ tenant is responsible for all utility bills and any outstanding council tax until they move out.

If you have any questions or comments on any aspects of being a landlord, please email them to [email protected] Giles Inman East Midlands Property Owners Ltd

PROPERTY VINEQuestions answered by EMPO’s resident in house expert

19


Private Sector Landlord

Subscribe to Private Sector Landlord magazine for FREE!

It doesn’t cost anything to subscribe to Private Sector Landlord (PSL) magazine. Every 2 months we will post you your own copy of the magazine, packed with interesting, relevant and topical articles. PSL is the only landlord’s magazine that focuses exclusively on the issues facing professional landlords and property investors in the East Midlands.

To register for your free subscription, just provide your name, address and the number of properties you have under management. We will never send you marketing communications or pass your details on to a third party.

To register for your FREE subscription call 01636 815561 or email [email protected]

All our ducks are in a row just for you

Over 100 years know howWe understand your needs and we meet them with great adviceand outstanding service

Over 100 manufacturersYou want choice. We give you just what you want

20,000 products in stockTake away from your nearest branch today or have deliveredFREE next day across the East Midlands

Top names, low pricesBrands galore with a keen eye on design, practicality and value

Our exclusive range of plumbing, heating andbathroom products is designed to help youmaximise value in your rental properties.

BEST VALUE • GREAT RANGE • MOST ACCOMMODATING

Incentives onevery purchase Open an account, getfree monthly credit, andjoin our BOND POINTSloyalty scheme. You’llenjoy a quarterly creditnote worth 2.5% of yourqualifying purchases. No claims to make, noforms to fill in, the creditis automatically posted to your account. Bingo!

www.willbond.co.ukLandlord Service

Deakins Place, Radford, Nottingham NG7 3FT • 0115 841 8899

153 Mansfield Street, Sherwood, Nottingham NG5 4AU • 0115 962 1062

Unit 7, Ludlow Hill Road, West Bridgford, Nottingham NG2 6HF • 0115 923 4640

600 City Gate, London Road, Derby DE24 8WY • 0133 238 8600

27-33 Nottingham Road, Ilkeston DE7 5NN • 0115 932 7972

Spital Lane, Chesterfield S41 0EX • 0124 627 3657

66 London Road, Grantham NG31 6HR • 0147 651 2350

PSL Advert:Layout 1 02/09/2013 14:09 Page 1

Private Sector Landlord - EMPO › downloads › Private Sector Landlord... · 2015-04-13 ·...

Documents

Transcript of Private Sector Landlord - EMPO › downloads › Private Sector Landlord... · 2015-04-13 ·...