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Scotland Leads Way On PRS Regulation

Scotland Leads Way On PRS Regulation

Better Regulation Of Scottish Private rented Sector On Way

As we reported on Wednesday, the Scottish government reviewed its strategy on PRS regulation on the 30th May and more new legislation will definitely be on the way, however, landlords and letting agents will be an important part of the consultation

The Scottish Government said that it “does not have a monopoly on good ideas. In order to deliver on the vision for the sector, we will engage with all of our partners on their innovative ideas.”

The Scottish Government PRS regulation strategy intends to improve the quality of the private rented sector in Scotland, including redefining the landlord registration scheme in order to target the worst offenders.

In 2011 it was estimated that some 11% of all households were within the PRS and the Scottish Government predict that this number will increase as there are already 500+ letting agencies north of the border who are managing over 150,000 rental properties, estimated to be about half the actual number.

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ARLA Calls For Rental Regulation In England

ARLA Calls For Rental Regulation In England

Government Urged To Rethink PRS Regulation

The Association of Residential Letting Agents (ARLA) wants the Government to bring England in line with the rest of the UK by calling for greater regulation of the private rental sector to better protect tenants.

ARLA argues that tenants in England could soon be less well protected than their Scottish and Welsh counterparts, due to the delay by the Government to introduce laws allowing for better regulation of the lettings industry.

According to data released by ARLA, 36% of all households in England are in private sector rented accommodation and the lack of regulation of the Private Rental Sector (PRS) is fast becoming an issue that affects more of the population than ever before.

The Scottish government reviewed its strategy for the PRS on the 30th May, while the Welsh government is set to introduce a Housing Bill legislating for a compulsory licensing scheme for all letting agents in Wales, as well as a code of practice, before the end of the 2012/13 Assembly term.

The announcements by Scottish and Welsh parliaments are in stark contrast with the current UK Government’s stance of opposition to regulation of the Private Rental Sector because of an apparent fear that landlords will become bogged down and put off by having to wade through a mountain of red tape.

On the surface this seems incredibly thoughtful of the Government, however, it is not to be forgotten that they also intend for all landlords to become unpaid agents for the UK Border Agency policing the immigration status of all tenants. No matter how watered down that proposal becomes the intent of those in power was made clear – to tap into powerful resources to save themselves money. It does make you wonder if the reluctance for regulation is simply because the Government can’t find a way to financially benefit from introducing new regulatory legislation at this current time.

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For the first time in UK history the Government have decided to regulate the UK lettings and property management industry

UK Lettings & Property Management Agents are to be regulated for the first time

UK Lettings & Property Management Agents are to be regulated for the first time

Lettings and property management agents in the UK are set to face government regulation, after decisions were made in the House of Commons to take action to clamp down on unscrupulous behaviour, according to reports.

The new rules will see amendments to the Enterprise and Regulatory Reform Bill, will mean that all lettings and management agents will be required to sign up to a redress scheme allowing consumers to report unresolved disputes to an ombudsman, who will have the authority to ensure that agents repay any tenants and landlords they may have deceived.

The changes have come as welcome news to many property professionals, after calls from many corners for letting agents to be monitored and checked.

The Royal Institute of Chartered Surveyors (RICS) extremely happy with the regulation changes, because they were at the forefront of the campaign for regulation.

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Letting Agents Face More Regulation And Red Tape

Will UK Letting Agents Face Further Regulation?

Will UK Letting Agents Face Further Regulation?

Letting and property managing agents face the increasing likelihood of mandatory licensing following the Government’s cabinet reshuffle and the appointment of Mark Prisk as UK Housing minister.

The recent appointment of Mr Prisk as housing minister is hoped to mark a new beginning for the UK property market and it is hoped that he will be more receptive to the idea of mandatory licensing of the UK lettings industry as he first tried to introduce mandatory licensing for letting agents into a Bill back in 2007.

It is widely speculated that Mr Prisk’s views on the subject remain the same now and it is hoped that he will be more amenable to the mandatory licensing than former housing minister Grant Shapps was.

With the support of the new Housing minister it is thought that the licensing scheme is much closer to becoming a reality, although not a certainty, as the Government have previously stated that pursuing further regulation would be a waste of time and effort.

Mr Prisk’s support of the idea of mandatory licensing for the letting agent industry became public knowledge last week when during a House of Commons debate on housing, Labour MP Ian Mearns, speaking to shadow housing minister Jack Dromey, is reported to have said “Is my Hon. Friend aware that he has an ally in the new minister for housing on the regulation of the private sector? In 2007, he tried to introduce a clause into a Bill that would have regulated private letting agents.”

Mr Dromey replied: “It is welcome that the new minister for housing has taken that position. Perhaps he will follow that through in government.”

Award Winning Property Management Services

Award Winning Property Management Services

John Paul, Managing Director of award winning Castledene Property Management said “Good letting and property management agents should have nothing to fear, as they operate within the guidelines set by ARLA (Association of Residential Letting Agents), the Property Ombudsman and The National Association of Letting Agents (NALS). Further regulation of the lettings industry coupled with the Government’s welfare reforms could have an adverse effect on the UK Buy-To-Let market as a whole and unless landlords are using agents who are clued up on the proposed changes to housing benefit then we could see thousands of landlords going out of business before the end of 2013”.

Ian Potter, operations manager at ARLA, said: “It’s vital that consumers have full confidence in lettings agents, and the industry must respond to their concerns about bad practice. That’s why in the absence of regulation, we developed our own licensing scheme. All licensed ARLA member letting agents must be covered by a client money protection scheme and hold professional indemnity insurance – which means consumers are protected against negligence. They must follow our strict codes of conduct and have a certain level of training. Ultimately this means that, should something go wrong, there are protection mechanisms in place. We would therefore always advise that consumers use an ARLA-licensed lettings agent. This means that, should a landlord or tenant feel the fees were unclear, they can lodge a complaint with ARLA or utilise the Ombudsman Scheme membership, which all ARLA licensed agents are required to hold.”

Previously, the former Housing Minister Grant Shapps, had promised that landlords and letting agents would not be subject to greater regulation because it would introduce too much additional red tape. Speaking in parliament in September 2010, Mr Shapps rejected the regulations proposed by the Rugg Review, stating: “With the vast majority of England’s 3 million private tenants happy with the service they receive, I am satisfied that the current system strikes the right balance between the rights and responsibilities of tenants and landlords. So I make a promise to good landlords across the country: the government has no plans to create any burdensome red tape and bureaucracy, so you are able to continue providing a service to your tenants.”

However, now that Mr Shapps has been made Conservative party chairman and the subsequent appointment of Mr Prisk as UK Housing minister, further regulation of the industry has become widely feared, with some property professionals voicing concerns about the amount of red tape they would have to get through just to get a tenancy to commence.

The recent landmark decision to licence all private landlords made by Newham Council could damage the UK’s Private Rental Sector (PRS) if other local authorities adopt the same initiative, according to a number of the UK’s leading property professionals and landlord associations.

The mandatory licensing scheme, which will affect some 35,000 PRS tenancies within the borough of Newham, is intended to reduce the letting of sub-standard rental accommodation and remove rogue landlords from the local lettings market.

All landlords will have to sign up to the scheme, with landlords who fail to obtain a licence facing prosecution and fines of up to £20,000 (GBP).

However, with all UK local authorities subject to financial reforms many of whom will be facing budget and staffing cuts there is some doubt as to exactly how the new regulation will be implemented.

Local authorities across the UK who may now be considering adopting a similar mandatory licensing scheme for landlords are urged to take into account the financial and economic risks to their own local lettings market, by the property professionals operating within areas that may be considering such a move.

It is widely believed by many property professionals that blanket licensing of landlords only penalises good landlords while rogue operators remain off the radar.

Whilst there are bad landlords in every region of the UK, they are a tiny proportion of the overall PRS landlord network. Over regulation of the private-rented sector can stifle good business practices and deter tenants from seeking out rental properties managed by compliant landlords due to unnecessary red tape.

Any reform of the UK PRS should be sector led and funded, maintained and enforced by the Government. By imposing this poorly conceived micro regulation, Newham council could force landlords to leave the borough all together, reducing the available rental housing stock

The news of Newham councils decision came shortly after the Welsh assembly announced proposals for a scheme similar to that in Newham – a registration and licensing scheme for all private sector landlords in Wales.

The Private Rental Sector plays an invaluable role in reducing the national housing deficit, homelessness and creates business opportunities. It is crucial to keeping tenants that could be potential first time buyers with a roof over their head whilst they save for a deposit to purchase their own homes and extra bureaucracy will deter even the most diligent of landlords.

UK PRS Landlords Are Still Worried About EPC Compliance

UK PRS Landlords Still Worried About EPC Compliance

More than 17% (1 in 6) of UK PRS landlords reckon that some or all of the properties in their rental portfolio’s fall into the lowest Energy Performance Certificate categories, with an F or G rating, meaning that they could end up being banned from the rental market.

From 2018 under the Government’s Green Deal proposals, properties with F and G EPC ratings will not be allowed to be let.

The latest poll of 1,500 landlords by the Association of Residential Letting Agents, (ARLA) also discovered that over 35% of landlords do not even know the energy rating of their properties with regard to EPCs.

ARLA have called for the Government to help landlords to achieve minimum energy efficiency standards, asking for the Landlords Energy Savings Allowance to be extended.

The call has been echoed by Alan Ward, Chairman of the Residential Landlords Association (RLA), who called for the annual energy savings tax allowance to be raised from £1,500 to £14,000.

The allowance is due to be scrapped altogether in April 2015

ARLA Operations Manager Ian Potter, said: “The clock is ticking for the private rented sector to improve its environmental performance but the investment just isn’t there to ensure that this change takes place in the Government’s timeframe. ARLA have campaigned for the Government to incentivise, through tax relief, the improvement of rental properties. Otherwise it is going to be exceedingly difficult for the majority of landlords to find the funds to improve stock.”

While the Green Deal will offer landlords upfront access to funds, it is tenants, as users of the properties, who will have to repay the loan.

Landlords who comprehensively tenant reference applicants can ensure regular income with Rent Guarantee Insurance, easing the financial burden and worry for tenants as loans are repaid.

The Housing Minister Grant Shapps has again dropped another broad hint that the Government plan to step in and regulate the UK Private Rental sector affecting the rights of both Landlords and Tenants.

A proposed new bill of rights for Buy-To-Let (BTL) landlords and tenants in the UK private rental sector could be introduced by the Government in an attempt to make the PRS market easier to operate in.

The Housing minister said that the plan was to take all the separate housing regulation for both parties and group them in an umbrella-style document, covering all bases. The plans are thought to include regulation covering fire safety and anti-social behaviour.

Mr Shapps said: “One way of reducing the regulatory burden on landlords but also improving the safety and security for tenants would be to provide a central, standardised document, containing all landlord and tenant responsibilities from fire safety to anti-social behaviour.”

Lib Dem MP, Adrian Sanders, is also in favour of the proposed changes, stating that it would “simplify” the private rental sector, in the same way that the planning sector has benefited from a similar scheme.

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Landlords Should Be Aware Of Their Responsibilities and Legal Obligations

Landlords Should Be Aware Of Their Responsibilities and Legal Obligations

A large 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.

In fact, according to the Association of Residential Letting Agents (ARLA), many people are choosing to rent out homes they cannot sell.

This has led to an influx of reluctant or “accidental” landlords to the Private Rented Sector, who just want to have enough income coming in from the property to be able to afford the mortgage payments.

These reluctant landlords have little or no knowledge or understanding of the PRS, the legislation or regulations governing safety and often don’t know how to get the best out of the asset they have.

Ignorance is no defence in the eyes of the law and landlords who do not comply with the 70+ pieces of legislation currently in force in the UK can face large fines and even imprisonment. Even reluctant landlords have duties, responsibilities and obligations and the law demands that these are not ignored.

Legal 4 Landlords offers reluctant landlords the following advice:

All Landlords need to protect their property investment and along with regular maintenance should always take out comprehensive landlord insurance for the good of both the property and the tenants living in it.

The Gas Safety Regulations 1998 requires landlords to have all gas appliances checked annually by a Gas Safe registered engineer and attain an annual CP12 certificate. Failure to comply will lead to a heavy fine.
• Gas safety compliance is vital and a lack of a valid safety certificate could mean the property is left empty for a prolonged period of time, rather than occupied by paying tenants.

Smoke alarms also need to be fitted to ensure the safety of tenants and should be installed on every floor and tested regularly.
• Contact your local fire service to enquire if they are involved in any fire safety incentive schemes and it may not cost anything – some well resourced fire services do fit smoke alarms for free in properties occupied by tenants claiming certain types of benefit.

Protection against thieves is paramount to preserving a no claims bonus on landlord insurance.
• Locks ought to be fitted on every door, with door chains for extra security. Padlocks are also recommended for sheds, garages and gates.
• Double glazing and burglar alarms also add to the safety of a property

To get the best out of short-term lettings landlords should always thoroughly tenant reference all would be tenants on application.
• Landlords need to ensure that the tenant are who they claim to be, have a sound financial history, no undisclosed criminal convictions, are employed at where they state they are employed and are solvent enough to be able to afford the rent and associated bills that come with a home.

Making sure the rent comes in on time every month is a real concern for many landlords and could cause them financial stress paying the mortgage on the rental property if rental payments are either late or not forthcoming.
• Many landlords are now using Rent Guarantee insurance to ensure their rental cashflow remains uninterrupted, insurance cover is subject to terms and conditions.

Get educated and learn how to be a better landlord
• Find out what other successful landlords in your area are doing and copy them.
• Attend local landlord groups or property networking events and learn from like minded people who can help with problems or share knowledge that could take a reluctant landlord and turn them into professionals who profit from property whilst providing quality homes for tenants.

UK Landlords have been warned not to become complacent by the Tenancy Deposit Scheme (TDS) ahead of the deposit regulation changes due at the beginning of April.

The new legal requirements for deposit protection allow a 30-day period to supply proof of deposit registration to the tenant instead of 14 days as from 6th April 2012.

The new tenancy deposit regulations state that the landlord can be sued on Day 31 for up to three times the value of the deposit provided by the tenant at the start of their tenancy, if the deposit has not been registered with one of the three official Government run deposit schemes or if the prescribed information has not been provided.

The TDS have summarised the changes and have also issued plain English answers to all the important questions brought forward by the changes due when the new Localism Act comes into force, including retrospective changes, penalties for missing the new deadlines, renewals, relevant persons and what happens with running tenancies.

Steve Harriott, TDS chief executive said: “The new provisions for tenancy deposit protection are welcome. But the extra time for registration is not a licence for landlords and agents to ignore the law. It means that the anomalies in the original Act have now been straightened out to everyone’s benefit.”

The TDS plain English answers to the new provisions for deposit protection can be found at: www.tds.gb.com

With only 2 weeks to go, the UK coalition Government have finally produced guidance on the changes to Energy Performance Certificates, (EPC’s) for residential properties, complete with a contradictory anomaly.

The UK Government’s department for Communities and Local Government (CLG) are now under pressure to clear this up and have indicated that they may release further guidance in certain areas.

Currently, letting and estate agents have 7 days from the commencement of marketing a property for an EPC to be obtained, followed by 21-day period of grace should it have proved impossible to obtain one.

However, the guidance then contradicts itself, by then saying that the EPC must be made available to prospective buyers and tenants when they request information, or when a viewing takes place.

The guidance underlines that the EPC must not be provided later than either of those two events.

By definition, it means that all letting and estate agents might not be able to conduct viewings on the first day of marketing – or even within the first week, or at a push, the first 28 days, whilst awaiting an EPC, if the CLG department stick to the new rule.

Nick Salmon said that the requirement to produce an EPC on a viewing sets every alarm bell ringing: “Does it means that if I take a property on the market and the EPC is ordered, that I cannot do viewings on the property unless the EPC is actually at hand? Have they just killed off first-day marketing again.”

The requirement to have an EPC ready for viewings is repeated on both pages 3 and 4 of the guidance.

On page 4, it says:

Q. When should the EPC be made available under the new regulations?


A. The EPC should be made available as early as possible and in particular, when a prospective buyer or tenant requests information in writing or views the property in question. In addition, the seller or landlord must ensure that an EPC has been given to the person who ultimately becomes the buyer or tenant.

Salmon said: “We need an urgent answer to this. Unless CLG make it clear that viewings can be made while the EPC is ordered but awaited, we are back in the dark days of their mega-stupidity with HIPs.”

The guidance, which cites an industry survey which found that 36% of estate agents believed EPCs were only needed at the point of sale as one of the reasons for introducing the changes, answers a number of outstanding issues, although it does suggest that agents needing further clarification take their own legal advice.

It makes it clear that the ultimate responsibility to make an EPC available to potential buyers and tenants rests with sellers and landlords. However, under a new duty, an agent must be satisfied that an EPC has been commissioned before marketing can start. Trading Standards officers can ask for evidence of this.

The seller, landlord or their agent must use all reasonable efforts to obtain the EPC within seven days of the start of marketing. A further 21 days is allowed if necessary. “The effect of this is to provide an absolute duty to obtain an EPC within 28 days of the property going on the market,” says the guidance.

If the property remains on the market after 28 days without an EPC, Trading Standards officers may serve a £200 (GBP) penalty notice ‘even if there is a legitimate reason for the delay’.

The guidance also defines ‘written particulars’ and what the ‘giving’ of written particulars is.

“The giving of written particulars includes making them available electronically, such as in an email or as information on a website.” In other words, agents will have to retrieve the EPC from the central Register and attach it to online written particulars.

However, newspaper adverts and estate agents’ window cards appear to be let off the hook. This also needs further clarification as the guidance actually specifies ‘lets’.

Q. Do newspaper adverts or window cards for property lets meet the definition of written particulars?

A. No. The requirement to attach a copy of the front page of the EPC to written particulars is where an agent provides written particulars to a person (i.e. a specific individual) who may be interested in buying or renting the building.

This implies that a copy of the front page of the EPC does not need to be attached to advertising material, i.e. a newspaper or window card.

The guidance also clarifies what attached means: The first page of the EPC can be incorporated into the property details, or attached.

In an apparent swipe at NFoPP and RICS, who both wanted redactions, CLG has stuck to its guns about not allowing addresses to be redacted from residential EPCs, although redactions are allowed from commercial EPCs.

It says addresses cannot be removed from domestic EPCs, “Following discussions with property agents’ representatives it was agreed there was no requirement to extend this service to domestic sales and rentals.”

One issue which is not specifically addressed in the Q & A concerns lists of available rental properties which are sent or emailed to applicants.

However, as the guidance suggests that properties listed would meet the criteria of ‘written particulars’, a list could hypothetically list 15 rental properties on an A4 sheet of paper, and then have individual EPCs attached.

The changes kick in on April 6th 2012. Any letting or estate agent who has not seen the Q & A guidance can email EPC.Enquiry@communities.gsi.gov.uk

Source: Estate Agent Today

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