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Eviction numbers increase as tenants struggle with finances

Evictions for Rent Arrears Increase by 10.2% This Year

County court closures are being blamed for prolonging tenant rent arrears eviction hearings

The number of tenants in severe financial difficulty has climbed by 10.2% in the first quarter of this year according to the latest tenant arrears tracker by Templeton LPA, part of the LSL Property Services plc Group.

Almost 8,800 more tenants were over 8 weeks in arrears and facing the threat of eviction than there were in the last quarter of 2011.

In the first quarter of 2012, an average of 94,400 tenants in England and Wales were in severe arrears, an increase of 20% compared to the same period in 2011.

The figures were affirmed by specialist landlord service provider, Legal 4 Landlords, who handle an average of 20 tenant evictions per day across the UK.

Legal 4 Landlords spokesman Sim Sekhon said: “At the current rate of growth, the number of PRS tenants facing arrears greater than 8 weeks will climb above 100,000 in the next quarter. Tenants have been facing increasing financial pressures due to the state of the economy and the rising cost of living and unfortunately landlords without rent guarantee insurance have been suffering the most”.

Although severe rent arrears cases have continued to increase, PRS tenancies in severe arrears only represented 2.4% of all properties in the private rental sector (PRS) in England and Wales in the first quarter of 2012.

Overall tenant arrears have improved, with 9.3% of all rent either late or unpaid by February 28th, a decrease from 10.7% at the end of 2011.

Paul Jardine, director and receiver at Templeton LPA, said: “While the general tenant population has absorbed the rising cost of renting in the last two years, a minority of tenants are facing severe financial difficulties, a minority that is growing. These tenants have been pushed into deeper and deeper arrears by a combination of rising living costs, high rents and a weak labour market, and are now months behind with the rent cheque. In turn, these severe rental arrears figures have been inflated by the ongoing impact of county court closures. The closures have prolonged arrears cases, with landlords less able to gain court dates to quickly remove non-paying tenants. This is creating a backlog of tenants in extreme arrears, increasing the amount of rental income lost for landlords or their appointed receivers of rent. Despite the recent surge in severe arrears cases, overall tenant arrears have performed remarkably well given the challenging economic environment. In fact, as we often see at this point in the year, more financially robust households are now paying down post-Christmas debt and putting their finances in order, which is helping to reduce the overall level of tenant arrears.”

The annual growth in tenant arrears has been matched by a yearly rise in the number of tenants being evicted by court orders.
In the last quarter of 2011 some 24,702 tenants faced eviction notices, an increase of 9% on the 22,634 in the last quarter of 2010, although the figures reported are 4% lower than they were in the third quarter of 2011.

Reluctant landlords making the wrong choices when it comes to insurance

Don't be Confused Over Landlord Insurance

An increasing number of private residential properties are being rented out to tenants because the owners have moved out but found it difficult to sell the property on the open market. The rise in “reluctant” or “accidental” landlords has caused ripples of concern within the UK lettings industry.

In fact, according to the Association of Residential Letting Agents (ARLA), increasing numbers of property vendors are either forced into or choosing to rent out homes they cannot sell in order to avoid financial ruin, in fact 47% of ARLA members experienced movement of this nature in the final quarter of 2011.

ARLA operations manager, Ian Potter said: “Renting a property on a short term basis can be a good option for anyone who has found a buyer for their home, but who have not found the right property to buy themselves. The approach would also suit individuals considering a move to a new area who would like to test the water before committing to anything final”.

Many UK property owners are facing this position as the UK property sales market remains sluggish despite the recent rally in property prices due to the end of the stamp duty holiday. However many property owners are getting it wrong when it comes to getting the right sort of insurance cover.

Property vendors move out of the property and on to pastures new but are unable to sell the property and attempt to get it rented out in order to reduce their financial burden. In doing so new landlords often decide to cut corners and attempt to save money in the wrong areas in a bid to reduce their financial stress, with potentially disastrous consequences if they decide to scrimp on insurance costs and don’t choose specialist landlord insurance, but they only discover that they are not covered when the worst has already happened, compounding their misery.

Legal 4 Landlords spokesman Sim Sekhon said: “When renting out property there are factors that many people don’t take into consideration and even take for granted, such as insurance or making sure the rent will be paid on time, every time. New landlords need to educate themselves on their responsibilities, the demands and expectations of tenants in the current rental market as well as complying with government and safety legislation. It can be a tough world for the inexperienced but the specialist products and services offered by Legal 4 Landlords enable landlords and letting agents to protect their rental assets, including landlord and Buy to let insurance”.

Landlords are advised to check that they have the correct insurance cover for their rental properties and it may also be a requirement of the mortgage company to provide a copy of the policy document.

New data released by LSL property services has shown that in February, working tenants in the UK Private Rented Sector were paying 0.6% less in rental asking prices than they were in January.

Rents for working tenants have been falling slightly since November 2011, after rising steadily for the preceding nine months of the year.

According to LSL, the average private sector rent for working tenants in England and Wales is now around £707 per calendar month.

Tenants in employment are paying on average £24 a month more now compared to the same period last year, that’s an increase of 3.5%.However, residential property rents in London continue to outpace the rest of the UK, with rental values up 5.6% on March 2011 prices.

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Shelter want to see an end to the bad practices of rogue landlords

RLA say bad landlords are not "Rogues" they are "Criminals!"

The UK’s largest homeless charity Shelter and the Residential Landlords Association (RLA) have clashed over the issue of bad landlords.

Both organisations have been using very strong words over the last few days, whilst calling for more action by the UK government to stamp out bad landlords.

Shelter is calling on the UK coalition Government to hold a “Rogue’ Landlord” summit, but the wording has angered the Residential Landlords Association.

In particular, the RLA are incensed by Shelter’s use of the word ‘Rogue’, saying it belittles what is really ‘criminal’ activity. The RLA have also accused Shelter of using emotional clichés in their action plan, which could rebound and spell danger for tenants.

The heated exchange began after the homeless charity posted a question on its website asking if the Housing Minister, Grant Shapps, is doing enough to evict rogue landlords?

Shelter also launched a ‘5 point’ action plan on its website, saying that the housing minister should stop talking about stamping out rogue landlords and start taking action.

Shelter says its 5 point plan is based on 86,000 complaints by tenants about landlords.

Below are the bullet points Shelter would like to see, with The RLA’s response below:

Tougher sentencing for criminal landlords: increasing the maximum penalty for ignoring a court order to improve conditions from £5,000 to £20,000.
The RLA prefers the word criminal to rogue which has Del-Boy overtones of sympathy. Penalties need to be proportionate to the crime but without better prosecution they are just window-dressing.
The RLA calls for better training and resourcing of enforcement officials in council housing department without charging the good landlords through spurious regulation.

A rogue landlord prosecution fund: earmarking money to help councils get tough on landlords blighting their area
The RLA says, throwing more money at the problem does not produce solutions. It is about priorities. The cost of successful cases can be recovered.

New protection for brave tenants: safeguard tenants from being evicted in retaliation for whistleblowing.
Shelter must not weaken landlords’ rights to evict non-paying or anti-social tenants. Speedy resolution of tenant problems is in everyone’s interests but neither Court procedures nor Council departments work in their favour. RLA says there is scope for fast track procedures such as Alternative Dispute Resolution as used in tenancy deposit schemes.

An online landlord conviction database: a new website listing all convicted landlords to help tenants avoid criminal landlords.
RLA says this is playing to the gallery with all the risks of “Trip Advisor” sites. There is need for tenants to be aware of poor quality property which can often be detected on inspection of the property before signing a tenancy agreement and to examine appropriate certificates for gas and electrical safety and energy performance.
Better landlords are members of associations and local accreditation schemes which set property and management standards. Some councils and university schemes include property inspections. Tenants have little knowledge of their responsibilities for example to reduce humidity and stop condensation.

A rogue landlord summit convened by the Housing Minister to create a clear action plan to protect tenants.
The RLA says landlords must also retain rights to defend themselves from tenants from hell – including cases of malicious damage, false allegations and anti-social behaviour.
But action to protect tenants must be proportionate to the problem. The vast majority of good landlords must be protected from the hassle-factor just to provide statistics which look as though action is being taken. More than 70 laws and regulations exist to control the PRS – they must be used better to protect tenants and good landlords from the criminal minority.

In a statement, the RLA said: “The problem is that local authorities have failed to focus on tracking down bad landlords because of seeking to meet central Government targets to license landlords. With limited resources, they put their effort into the easy-to-check landlords who are the most visible and compliant and do not concentrate instead on those who deliberately seek to evade inspection. That’s why councils brought only 270 prosecutions of landlords last year.”

Instead, the RLA said they would welcome dialogue to produce solutions but condemn spurious regulation that would hurt good landlords but not criminal ones. The idea of a rogue landlord prosecution fund would merely throw money at the problem without producing solutions. In cases where landlords are prosecuted the costs can be recovered.

While supporting safeguards for tenants against retaliatory evictions, the RLA said Shelter must not weaken the landlords’ right to evict non-paying or anti-social tenants. The speedy resolution of tenant problems is in everyone’s interests but neither Court procedures nor Council departments work in their favour. The RLA says there is scope for fast track procedures such as Alternative Dispute Resolution as used in tenancy deposit schemes.

The RLA are calling for constructive dialogue to produce solutions including:

1. A culture change in Town Halls to work with the Private Rented Sector, (PRS), as a responsible supplier of housing. The PRS provides housing for tenants evicted by social housing, yet gets little or no support when problems arise.
2. Wider use of landlord accreditation schemes to promote self-regulation allowing councils to focus on criminal landlords.
3. Fast-track dispute resolution – 135,000 re-possession cases come to the courts a year. The average time for repossession is over 4 months after the tenant has not paid rent for two months.
4. Fair-play for landlords: direct payment of Local Housing Allowance (LHA) through tenant choice. Over 7% of LHA rents (90,000 tenancies ) are not received by landlords within 8 weeks.

Don't become a rogue landlord

Don't cut corners when renting out property

The downturn in UK property valuations has lead many existing homeowners, some of whom are desperate to sell up, to consider alternative ways to cash in on their current property, without having to sell it below their expected valuations.

A fairly noticeable proportion of these vendors are choosing to become first-time landlords, rather than settling for a below market offer.

The prospect of more reluctant or accidental landlords entering the private rental sector (PRS) is not such welcome news for the UK rental property market. Ill advised or inexperienced landlords often make mistakes or cut corners in order to preserve cash flow or increase rental yield.

Any bad business practices can be perceived by some to be the actions of a rogue landlord, prompting Legal 4 Landlords to issue some general guidance advice for new, first-time and inexperienced landlords

All landlords need to comply with the current UK regulations and the following points are highlighted as essential:

• All prospective tenants should be thoroughly referenced and credit checked by a reputable agent, to ensure financial ability to pay the rent and gain an insight into the suitability and character of the tenant.
• Provide a proper Assured Shorthold Tenancy agreement (AST) signed by both Landlord and the tenant, outlining the length of the tenancy, amount of rent, date rent is due, and details of which government deposit protection scheme is to be used.
• At the start of the tenancy walk round with the tenant and conduct a detailed inventory describing the condition of all the fixtures and fittings of the property in detail, along with the furnishings.
• Gas appliances must be checked annually by a registered Gas Safe engineer and the landlord must provide the tenant with a copy of the Gas Safety Certificate (CP12).
• The landlord should take out comprehensive Buy-To-Let or Landlord insurance to protect their property asset.
• All repairs should be fixed promptly and only use reputable tradesmen that you know and trust to tend to the property, this is extremely important if emergency repairs must be done at short notice.
• If using a lettings or property management agent remember to conduct Due Diligence on them thoroughly and make sure as a landlord that you are happy with their terms and conditions before appointing them.

There are currently a record number of people searching for suitable rental properties in the UK, meaning that would-be landlords should have no problem finding a willing tenant, providing their properties are fit to rent.

New and first-time landlords should note that letting a property can be stressful and time consuming, as well as a very financially and personally rewarding experience, and is an effective way of providing an additional income.

Prospective landlords will need to remember they are effectively starting a business that centres on property and must remember to treat it as such.

Legal 4 Landlords are the UK’s fastest growing Tenant Eviction specialists who also offer a wide range of useful services for landlords including Tenant Referencing, Landlord and Tenant Insurance policies and Rent Guarantee insurance.

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UK PRS set for big changes as inexperienced landlords sell up

UK PRS Set For Big Changes

There could be big changes in store for the UK private rental sector should there be an exodus of inexperienced or accidental landlords from the market.

The rental market in the UK could be significantly impacted in the event of a mass departure of inexperienced and accidental landlords from the sector.

This is the suggestion of Chairman of the Residential Landlords Association, (RLA), Alan Ward, who noted the proprietors forced into this position as a result of their inability to sell property.

Mr Ward said: “Some people say there are over 100,000 properties in the Private Rented Sector and, if they come back on the UK market, then that is quite a big change. Confidence among landlords regarding 2012 is likely to be dependent on the equity position of borrowers, as proprietors continue to demand substantial deposits”.

Accidental and inexperienced landlords are likely to begin offloading their residential properties as UK house prices begin to escalate.

Recent findings by UK website Zoopla showed that buying property is still a more cost-effective option than renting in 47 of the 50 biggest towns across the UK.

Landlords with rental properties are urged not to give in too easily and persevere to make their property rental business a success in 2012.
<a href=”http://www.legal4landlords.com”>Legal 4 Landlords</a> spokesman Sim Sekhon said: ” As landlords ourselves we know things can get tough sometimes, that’s one of the reasons why Legal 4 Landlords has expanded its <a href=”http://www.legal4landlords.com/landlord-services/”>wide range of services for UK landlords</a>. We have been working hard with our partners to deliver an excellent <a href=”http://www.legal4landlords.com/rent-guarantee/”>Rent Guarantee Insurance product</a> for UK BTL Landlords, now, keeping the cash flowing in has never been easier”.

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Controversy has been ignited after Labour’s mayoral hopeful Ken Livingstone declared all-out war on letting agents and rogue landlords in London, whilst calling for rent caps.

Critics said his plans to intervene in the market, and cut rents to no more than one-third of a tenant’s wage, would result in landlords having to lower rents, leaving their yields in tatters and acting as a deterrent to further buy-to-let investment.

If elected in May, Livingstone will establish a London-wide, not-for-profit lettings agency, paid for by the public purse, and to be run by the Mayor’s office. Although  handful of local authorities do run lettings agencies, none begins to be on the scale proposed by Livingstone. There is speculation that other large metropolitan authorities could decide on a similar path.

Castigating letting agents across London, he called for rent controls and widespread intervention in the sector, including licensing.

Speaking to the Institute for Policy Research, Livingstone said: “We must actually intervene into the private rented sector.”

Livingstone said: “No tenant in the private rented sector should have to pay more than one third of their wage in rent. What London needs is a London-wide non-profit lettings agency. So I can announce today that I will work with other stakeholders to establish one that can start to make a change in the private rented sector for the better. It will put good tenants in touch with good landlords across the spectrum of private renting so that both can benefit from security of tenure and reduce the costs of letting. The new agency would get to grips with the problem of rogue landlords and tackle a series of issues on accreditation, inspection and enforcement, licensing and energy efficiency, as well as tenants’ deposits protection. Through this work we will challenge the scandal of rip-off agency fees, horrific standards and the daily experience of disputes over deposits in the private rented sector. In the coming weeks I will set out more detail of how this new arm of the Mayor’s role will work.”

The response from the current mayor of London, Boris Johnson, reckons rent controls would be devastating and he would tackle things much differently.

Mr Johnson has said as London Mayor he would introduce a new London-wide accreditation scheme for all landlords.

A new London Rental Standard, which would accredit private landlords. He would also introduce a ‘rent map’ to give tenants more information on fair rents in their local area.

But he will not countenance rent controls, hitting back at election rival Ken Livingstone’s plans and saying they would be ‘devastating’ for the sector.

A spokesperson for the Mayor said: “The proposal of rent controls would be devastating for the sector. Rent controls were ended in the UK because they were counter-productive. Whatever the ideological appeal, the mayor does not have the power to introduce them, and even if he did, they would be devastating for the construction industry. It would result in fewer homes being built and lead landlords to invest less in stock. Other major international cities such as New York are removing rent controls for precisely these reasons.”

But, chairman of the Residential Landlords Association, (RLA), Alan Ward was severely critical of both Livingstone’s and Johnson’s proposals. He said: “Livingstone’s call for rent controls is an old idea that never worked in the past. Until 1988, rent controls resulted in a shortage of supply and poorer conditions for tenants. Hardly a remedy for 2012. There is no doubt that rents in the capital remain far higher than anywhere else in the country, but the answer lies in improved supply.”

Mr Ward said of Johnson’s ideas: “With over 10,000 landlords in London already members of the London boroughs’ accreditation scheme, it would seem a waste of time and money re-inventing the wheel in this way. The Mayor should focus on supporting and encouraging existing accreditation schemes, freeing his office up better to target the minority of landlords who bring the sector into disrepute. This should be matched by a programme of serious tenant education, providing tenants with all the information needed to better hold their landlords to account for the service they provide. It beggars belief that some people spend more time assessing the state of a car they wish to buy than the homes they seek to rent.”

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Landlords See Rental Profits Fall

UK PRS Rent is Now More Affordable

Rents have fallen for the first time in 10 months as landlords look to keep homes occupied over Christmas, but rents in some parts of the UK have bucked the downward month-on-month trend.

The typical rent in England and Wales dropped by 0.4% to £717 a month in November, the first month-on-month fall since January.

But despite the seasonal decline, the average rent for a property is still £25 a month more expensive than it was this time last year.

Rents have risen in all regions over the last 12 months, with London and the South East experiencing the fastest rises annually at a rate of 4.2%.

The typical monthly rent in London stands at £1,033 and in the South East it is £741.

Landlords are looking to avoid having properties vacant over the Christmas period, and are being less aggressive with rental pricing as tenant activity slows in the run up to the New Year.

Across the UK, the limited supply of rental accommodation means there will still be strong upward pressure on rents in the early part of 2012.

Rental demand has remained high as would-be buyers have been unable to get onto the property ladder, faced with having to raise large deposits or finding the terms of mortgage deals too restrictive.

Rents in some parts of the UK bucked the downward month-on-month trend

• London – Rents up 0.3%
• Wales – Rents up 1.2%
• Yorkshire & Humber – Rents up 1.2%
• West Midlands – Rents up 1%

The East Midlands saw the biggest drop over the month, as PRS rents fell by 2.2%

The monthly index, based on analysis of more than 18,000 properties across England and Wales, also showed that tenant finances improved slightly in November despite the squeeze on household incomes, with 9.3% of all rent late or unpaid, compared with 10.1% in October.

Even though a large proportion of current renters would be credit-worthy buyers were they able to provide a big enough deposit to satisfy tight mortgage lending criteria. These tenants are typically financially sound, and less likely to experience payment issues.

UK landlords without Rent Guarantee insurance can expect rental arrears to creep back up next year due to challenges to the economy generally, the threat of the Eurozone crisis and unemployment.

With the cost of moving into a home set to increase for first-time buyers (FTB) when the stamp duty holiday ends in March 2012, the strain on the UK Private Rented Sector (PRS) will be greater than ever, and the cost of renting will continue to increase as the new year progresses.

Legal 4 Landlords spokesman Sim Sekhon said: “UK landlords are in a strong position right now, however unless they take the appropriate steps to protect their rental properties and the income that they provide, that position will change as more regulation is introduced and the tightening of Government Fiscal policies begin to take effect in 2012.

Legal 4 Landlords know how important it is for landlords to protect their property assets. They have worked closely with providers to develop comprehensive Rent Guarantee and Insurance products for UK landlords.

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Politicians resume work today

Tenant Choice debate resumes in Parliament

A bold initiative and constant lobbying by the RLA, has resulted in the setting up of an All Party Parliamentary Group for the Private Rented Sector , with 50 members from all UK political parties.

The inaugural meeting in July this year saw 17 members agree on the issues they would like to see the group considering, including student accommodation, REITS and energy efficiency in the Private Rented Sector.

One of the main objectives of the parliamentary group is to enable interaction between politicians, landlords and tenants.

The next meeting is scheduled for November 2011 with housing expert Professor Michael Ball invited to present his paper, commissioned by the Residential Landlords Association, on the economics of the PRS.

The Residential Landlords Association wants tenants to be able to choose to have their Local Housing Allowance paid direct to their landlords if they wish.

Prior to the summer Parliamentary recess, at the end of July, the RLA was working with social housing organisations and charities to unite behind an amendment to the Welfare Reform Bill to enshrine ‘tenant choice’ for the payment of benefits in the legislation.

The Bill is due to be debated in the House of Lords in October, and if agreement is reached on the wording of an amendment, peers will be encouraged to support it to ensure that it is debated. Work on the bill is continuing and will be taken up again when Parliament returns from its summer break on September 5th.

Support for “Tenant Choice” has also been received from the leader of the Liberal Democrat Group on the Local Government Association who has offered to help raise the issue.

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