Sunday, August 17, 2014

Why Greater Powers Are Essential To Regulate Private Residential Landlords

Landlords across the UK must be rubbing their hands together at the thought of the large amount of prospective tenants who will be paying ever increasing rents, a situation which is not likely to change for the foreseeable future

With rising house prices and the general lack of affordable homes in the UK many who may want to step onto the property ladder for the first time are being forced to consider rented accommodation.  Even those thinking of using the Governments Help to Buy scheme as a way forward are still required to save a 5% deposit in order to be eligible for the scheme.  A 5% deposit may not seem too bad however with an average UK house price in excess of £250,000, this still requires a deposit in excess of £12,500, which can often prove to be difficult to save once you factor in the cost of living and the cost of paying rent. Consequently demand for rented accommodation has continued to rise and in particular within the private rented sector. Financial Reporter (Online) (Link) report:

‘Average UK private home rents have increased 7.5% in the last 12 months while national average earnings now rising at 1.7%. The average cost of renting a home in the UK has risen more than four times as quickly as national average incomes, according to new findings released today from the May 2014 HomeLet Rental Index’

Landlords across the UK must be rubbing their hands together at the thought of the large amount of prospective tenants who will be paying ever increasing rents, a situation which is not likely to change for the foreseeable future. This high demand for rented properties has provided the opportunity for some Landlord’s to try to take advantage of the current situation by attempting to encourage tenants to leave their properties by not carrying out repairs or attempting to evict tenants in order to hike up rents.  In a recent article, the Independent (online) (Link) explained:

‘Soaring numbers of people in private rented homes face eviction despite being up to date with their rent because rising house prices are prompting landlords to ask tenants to leave. In the last year, Citizens Advice Bureaux has seen a 38 per cent increase in desperate tenants coping with the threat of eviction even though they have no rent arrears, according to figures seen by the Independent.

More than 5,000 of these cases were reported to Citizens Advice in 2013-14, up from 3,750 the previous year – and as the housing shortage reaches critical levels, the figures show how increasingly precarious the situation is  for renters.

Eviction by private landlords is the most common cause of homelessness encountered by Citizens Advice, causing one in 10 of the 80,000 problems with homelessness the charity saw in the last year.

Tenants report being evicted following a request to carry out repairs, because the landlord wants to sell their home, or because rents are suddenly hiked to unaffordable levels’

Tenants have statutory protection under a raft of legislation such as the Rent Act 1977, Housing Act 1985, Housing Act 1988, depending on the type of tenancy, and the Landlord & Tenant 1985 in terms of obligations and responsibilities to carry out repairs. It does appear that Landlords are choosing to ignore their statutory responsibilities in increasing numbers in order to chase higher rental yields.  So what can a tenant do in these circumstances?

I am regularly contacted by people who experience difficulty, sometimes silence when contacting their landlord to carry out repairs.  In nearly all cases this involves private sector Landlords who for some reason think that if they ignore their tenants for long enough then they will just go away.  The issue of course is that the Tenant has rights and the Landlord has responsibilities under a whole raft of legislation (as indicated above)) and vice versa. In the event that a Landlord fails to carry out repairs for which he/she is responsible, a tenant can take action to remedy the situation. The problem becomes magnified if the repair that is necessary is something that may be dangerous or posing a health risk to the occupants.

In my early career as a Building Surveyor I undertook a number inspections on behalf of Solicitors who had been appointed by Tenants where complaints had been made about living conditions and in particular habitation standards in their homes.  In those days a Surveyors report would be used as evidence that a landlord had breached their duty under legislation such as section 11 of the Landlord & Tenant Act 1985 or Public Health Acts such as the Environmental Protection Act 1990 or others.  In order to assess fitness for habitation at the time a Surveyor would consider the requirements of something known as the ‘fitness standard’ under section 604 of the Housing Act 1985.  Nowadays an assessment of the health & safety of a dwelling is considered under a much wider context under the Housing Health & Safety Rating System 2006 (HHSRS).  A tenant can contact their Local Authority and request an inspection under HHSRS if they feel that there are health, safety or habitation issues.  The Local Authority has enforcement powers under HHSRS where category 1 hazards are identified.  For more information on HHSRS refer to my previous article (Link)

Nobody wants to go through a legal process as this can be time consuming and expensive.  Ultimately, however this is one form of recourse that may be considered in which the tenant will effectively try to force the landlord to meet their statutory obligations through the courts.  In most cases tenants will not want to take this option as costs (money, time and stress), will be deemed to negatively outweigh the benefit that could be attained if successful.  Note the word ‘if’, because there is never any guarantees that legal proceedings will succeed. Although legal action should be used as a last resort this is nevertheless an option that a tenant may utilise.

Better regulation, particularly of private landlords is essential to addressing some of the issues considered above.  Rather than dilly dally around with suggestions the Government should introduce a landlord registration scheme such as that introduced in Northern Ireland earlier this year.  Under the scheme all private landlords are required to register under the Scheme and it is an offence to commence a new let of a residential property under a private tenancy without being registered. In the rest of the UK there are currently a number of voluntary registration schemes however the fact that they are not mandatory will mean that those who are likely to cut corners or do not meet their responsibilities are hardly likely to sign up!  Therefore this is something that has to become mandatory through legislation.  Mandatory registration schemes can state minimum levels of service that tenants should expect including transparent fees, improved property conditions, better communication between landlords and tenants, improved response times for repairs and maintenance and protected deposits. If all private landlords are required by law to meet these requirements then they will be made to think twice about the manner in which they deal with their tenants.

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1 comment:

  1. Another great article and I totally agree with its observations.

    One of the continual statements made by the landlord bodies is that licencing will penalise the good landlords and let the others continue unpunished.

    However, the idea behind licensing as per the Rugg Review was to also raise the visibility of those that continue to practice 'under the radar'. No license would raise the question as to why the landlord did not have one, thereby educating the tenant market that production/proof of a licence was part of the whole renting process.

    Licencing continues to be adopted by more and more councils including my own, that of the London Borough of Waltham Forest and I will not hestate in providing the names of all of the landlords on my block should any not comply.

    I already use HHSRS legislation on behalf of tenants when landlords fail to meet their obligations which appears to have improved the operations of those who were reported but it is a slow process and requires constant monitoring.

    Another issue is that of many teants not having English as their first language, which is another reason I am constantly called upon for assistance.

    I am by the way a leasehold manager not a renting landlord but with 18 of the 22 flats sublet, my role has shfted considerably to the PRS side.

    These sectors straddle each other and if you add the role of councils placing the homeless into the sector and failing to carry out due diligence on the landlord and the needs of the prospective tenant (some come here with drink, drugs and anti-social behavour issues) then my role continues to increase in its complexities.

    Myself and my partner (the freeholder) have managed to reverse a number of situations but not without tremendous personal strain incuding physical assaults and false arrests but we have no choice when those that should be dealing with their tenants and their properties fail to do so.

    I can also use leasehold legislation for some of our actions but as I've already mentioned, both the leasehold and the PRS cross over each other and failure to operate professionaly as a landlord means failure to operate within the terms of the lease.

    Forfeiture however is often a non-starter due to a) financial constraints b) the terms of the lease) and c) the issue of waiver which can string any process out for much longer than it needs to thereby putting option a) back into play.

    So, if renting is to be the way forward, then lets see some more progress into making ALL of it 'fit for purpose' because as a former tenant myself with a really good landlord and agent for the last 7 years of my renting life, I have certainly seen how well the sector can actually work!