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Illegal Immigrants To Be Banned From Renting Property In The UK

Illegal Immigrants To Be Banned From Renting Property In The UK

Landlords Face £3000 Fines
For Letting To Illegal Immigrants

Private rental sector landlords will be risking a fine of £3000 for breaking the law by letting rental property to illegal immigrants without doing proper background checks and comprehensive tenant referencing.

The proposal is currently undergoing a seven week consultation process and set to become part of the forthcoming Immigration Bill, launched by Immigration Minister, Mark Harper.

Under the proposed new legislation, illegal immigrants will not be entitled to free NHS treatment and will be prohibited from renting property in the UK.

Mr Harper said: “The consultation seeks views on the creation of a duty to require landlords to conduct immigration status checks on tenants before providing residential accommodation, with financial penalties for those landlords who let property to illegal migrants having failed to conduct the necessary checks. The landlord checking proposal is modelled on the existing civil penalty scheme for employers of illegal migrant workers.”

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Government want to ensure tenants in the

Private Rented Sector are not illegal Immigrants

Landlords Warned Over Illegal Immigrants

Landlords Warned Over Illegal Immigrants

Government ministers want to ensure tenants in the Private Rented Sector (PRS) are not living in the UK illegally and are already working with local authorities to tackle rogue landlords who exploit immigrants by housing them in ‘beds in sheds’.

Many private sector landlords already take the correct measures by tenant referencing all applicants to check the tenants’ identity and credit status, making it difficult for illegal immigrants to rent properties from them.

However, despite numerous calls from UK property industry specialists, not all landlords bother with tenant referencing, and a small minority of rogue landlords knowingly target illegal immigrants who would not be in a position to complain about any sub-standard rental accommodation.

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Fall in the number of tenants in severe rent arrears

Fall in the number of tenants in severe rent arrears

The number of tenants in severe rent arrears declined by 15.6% during the final quarter of 2012, according to data released by Templeton LPA, part of the LSL Property Services group.

The data indicates that in the last quarter of 2012, almost 16,000 fewer tenants faced severe rent arrears of more than 8 weeks rental costs, compared with the previous quarter of 2012.

The number of tenants in this situation has dropped for the first time in over a year and could in part be due to the development and availability of Rent Guarantee Insurance products.

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With newspaper reports of rising rent arrears and tenant rent defaults, many landlords want to protect against the loss of rent. There are a number of specialist products available for landlords to use including Rent Guarantee Insurance.

Here Legal 4 Landlords, the UK’s leading provider of specialist products and services to landlords and the lettings industry, explain the benefits of rent guarantee insurance, as well as looking at some of the smaller print.

How it works

The Truth About Rent Guarantee Insurance

The Truth About Rent Guarantee Insurance

In theory, rent guarantee insurance can be a landlord’s proverbial best friend: if your tenant fails to pay their rent, the insurer will pay you instead.

The outstanding amount is then recovered by the insurance company from the tenants directly.

Of course, in some instances you may agree with your tenant to accept a delayed payment because of financial problems or other extenuating circumstances, and therefore would not need to make an insurance claim.

On the other hand, landlords may face difficulties of their own some months, and for around £120 a year rent guarantee insurance offers you piece of mind that your rent will be paid on time and in full when you most need it.

Relief for legal costs and void periods

Most good insurance policies will also include legal cover for the eviction of the tenant. Landlords should note that the eviction process can be a lengthy and costly period of time, the legal cover provides landlords relief in terms of time and money.

What’s more, as long as the eviction process started within the policy period, the insurance company will continue to pay your legal costs up to the policy limit even once the policy has ended.

In addition, most policies will pay 50% of the rent for up to 3 months after eviction whilst you find a new tenant. However, if policy ends during the eviction process you will of course have to renew the policy in order to receive this and your monthly rental payment.

The small print

Tenants need to be thoroughly referenced and credit checked in order to be granted the policy. Landlords should have had these checks done before the tenant moved in so there should be no additional costs.

Some insurers won’t allow claims for the first 3 months of the policy, and there may be an excess to pay that is equivalent to one months’ rent and landlords won’t receive anything without renewing if you are in the last month of an active policy.

It also means that there is little point in claiming for rent that is a month late unless you are sure the tenant will continue to not pay and/or you want to evict the tenant.

With only 30 days to claim after the rent became overdue, this can be a difficult judgement to make as your tenant may well intend to pay.

If you do agree to delay payment by more than 30 days, make sure you keep all your correspondence otherwise you won’t be able to backdate the claim if the tenant doesn’t end up paying.

Not only do you then lose another month’s rent on the excess, but it could void your policy altogether in some instances.

Policy renewals are not guaranteed. Unless eviction proceedings begin immediately, any tenant defaulting towards the end of a policy could stop you from being able to renew and so the eviction costs could have to be met by the landlord

The way that some other rent guarantee policies are set up means that the odds are stacked in favour of the insurance company.

Despite this, in a recessionary environment with decreased job stability even tenants with a good credit history may face financial difficulties, so it is very worthwhile for landlords to take action protecting against rent default.

Tenant Referencing Is Crucial For Landlords

Tenant Referencing Is Crucial For Landlords

Most tenants are complete strangers, who as a landlord, you may meet once or twice before granting a tenancy agreement to or handing over the keys to the rental property.

If using a good letting agent, the landlord may not even meet the tenant until after they have moved in.

This leaves the landlord with a few questions, including:

  • What are the tenants like?
  • Have they rented previously?
  • Have they always paid their rent on time?
  • Why do they need the property?
  • Do they look after their home?

As a landlord, if you were approached by a person on the street and asked for the keys to your rental property on the promise that a stranger would look after it, would you hand over the keys?

Surely the answer from experienced landlords and clued up property investors should be a resounding NO!

But the scary thing is some inexperienced landlords are not far off doing this exact thing when renting out property to tenants.

Tenants can potentially cause expensive problems that can cost even more to put right and the risk of this increases if landlords haven’t vetted them properly.

As much as everyone would like to live in a world where people can be taken at their word, in terms of their character and reliability, unfortunately the truth is somewhat different. The unfortunate reality is that no-one can be taken at face value and it’s advisable to have a reputable tenant referencing company carry out checks on all potential applicants, which will include credit checks, employer references and previous landlords’ references.

Tenant referencing should be completed before offering a tenancy agreement or allowing tenant’s to move in.

The credit check will detail the tenant’s credit profile via credit reference agencies to determine any adverse history such as missed payments or CCJs (County Court Judgements).

A tenant with a low credit score may not be all bad! They may have had problems in the past making payments on finance, or they may have been assessed by the credit reference agency as a risk because of difficulty making payments.

A low credit score doesn’t necessarily mean that you are dealing with a bad or unreliable tenant – an example would be students who have little or no credit history and as such may possess a bad score.

Legal4Landlords offer specialist services for landlords and letting agents

Legal4Landlords offer specialist services for landlords and letting agents

In situations like this, as long as the other aspects of the tenant reference are adequate, a guarantor can be sought for the tenant. However, the guarantor will have to undergo the same referencing procedure.

The tenant reference should detail

  • The performance of the tenant during the course of their previous tenancy.
  • Payment history
  • The condition of their previous rental property at exit
  • Whether their previous landlord would rent property to them again

This should help the new landlord get a good indication of the applying tenant’s track record.

The employment reference determines

  • Tenant’s employment status
  • How long they have been employed
  • Salary.

This information will enable the landlord to determine if their wages are enough to cover the rent, bills and associated living costs and also the stability of their employment, i.e. whether they are permanent or temporary employees.

Even tenants in long-term employment could be at risk of redundancy in the current economic climate, and landlords should take advantage of rent guarantee insurance, which protects the landlord should the tenant default on their rent.

It is advisable for landlords to offer a 12 month contract (AST) with a 6 month break clause to allow for flexibility in case things do go wrong during the tenancy.

One month’s rent should be taken in advance from the tenant along with a damage deposit equivalent to 6 weeks of rent.

This allows for a financial buffer in case the tenant fails to pay the last month’s rent at the end of the tenancy or if there is damage to the rental property.

Tenant Referencing by Legal4Landlords

Tenant Referencing by Legal4Landlords

Massive rise in tenant eviction orders as landlords are forced to get tough causing outcry from homelessness charity Crisis.

Over the last three years there has been a 70% rise in court orders for the eviction of tenants in the UK Private Rented Sector (PRS).

12% Rise in Tenant Evictions over last 3 years

12% Rise in Tenant Evictions over last 3 years

Homeless charity Crisis set about analysing figures released by the Ministry of Justice that revealed in the last 12 months some 36,211 PRS landlords have been granted a court order for the eviction of tenants, a rise of 12% on the previous year, and 70% higher than the 21,351 court orders for tenant eviction granted in 2009.

The data shows that between 2009 and 2011, almost 10,000 individuals approached their local authority claiming to be homeless due to the end of an Assured Shorthold Tenancy (AST) or because of rent arrears. A rise of 42% on previously released figures.

Duncan Shrubsole, Policy Director at Crisis, said: “Sadly it is no surprise that we are seeing tens of thousands of private tenants facing eviction. They face a dreadful combination of high unemployment and underemployment, draconian cuts to housing benefit and soaring rents. Our concern is that many of these people will have nowhere to turn, and end up falling victim to homelessness. In fact the Government’s own statistics point to this already happening. We are calling on the Government to rethink cuts to housing benefit that will inevitably leave increasing numbers of people unable to pay the rent. We are also in desperate need of more social and affordable housing in order to rein in the soaring rental market.”

Sim Sekhon from the UK’s leading tenant eviction specialists, Legal 4 Landlords commented: “In these austere times UK landlords are being forced to take action with bad tenants or tenants with rent arrears as they simply cannot afford to go without the rent. We have seen a significant rise in tenant evictions in the last 12 months and unfortunately this trend is set to worsen due to the raft of benefit cuts and welfare reforms being pushed through parliament. Landlords are finding their own finances stretched and are having to take legal action for the eviction of non paying tenants before their entire rental businesses go bust. There are ways for landlords to avoid being in this situation but it does require action to be taken before the start of a tenancy, all applicants should be thoroughly tenant referenced and landlords can utilise Rent Guarantee Insurance to keep the monthly rent flowing.”

Legal 4 Landlords the UK No.1 specialist landlord service provider

Legal 4 Landlords the UK No.1 specialist landlord service provider

To find out more about the specialist products and services

offered by Legal 4 Landlords please visit their comprehensive website

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.

Tenants attempt to negotiate PRS rental prices

Tenants attempt to negotiate PRS rental prices

More working tenants are attempting to renegotiate with their landlords to try to get their property rents reduced. Many tenants are increasingly struggling to pay their rents on time due to mounting financial pressures, leading to calls from specialists within the lettings industry for more Rent Guarantee insurance products.

41.2% of members surveyed by the Association of Letting Agents (ARLA), reported an increase in the number of tenants struggling to meet their rent payments to their landlords in the six months up to March 2012.

Legal 4 Landlords Spokesman Sim Sekhon, said: “With financial pressures mounting on both tenants and landlords, there has never been a greater need for landlords to thoroughly tenant reference all prospective applicants and attempt to secure their rental income, that’s why we developed our market leading Rent Guarantee Insurance for Buy To Let landlords”.

ARLA operations manager, Ian Potter, said: “With unemployment predicted to rise and average rents also increasing in some parts of the country, it seems more and more tenants are finding it impossible to make ends meet. It is likely that the same is happening for landlords, who may find their mortgage rate is rising. At worst, this double whammy may result in landlords defaulting on mortgages and tenants being forced to move out of a property.”

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.

Fraudulent tenancies on the increase in the UK

Are Tenant Applicants Really Who They Claim To Be?

UK Landlords and letting agents are being warned about an increase in bogus tenant applications.

Fraudulent applicants have been filling out tenancy application forms provided by honest landlords and agents, giving inaccurate or misleading information, in a bid to secure the rental of the property.

It is not unknown for the fraudsters to move from property to property, with no intention of keeping up with the rent, even within the same small town.

Fraudulent tenants often give false information on where they have been living previously to throw referencing companies and letting agents off the trail.

They are also very difficult to evict as the more professional bad tenants appear to know their way round the legal system. Eviction of these “professional bad tenants” is better left to an eviction specialist such as Legal 4 Landlords.

Tenant fraud has been problem for letting agents and landlords alike for a number of years and is apparently on the increase in some parts of the UK.

It is essential that landlords and their agents have a checklist for new tenants that include obtaining ID documents and proof of current residency at the earliest stages of a tenancy application.

Landlords and their agents need to be alert for anything unusual that could increase the risk for the landlord.

Comprehensive tenant referencing services are a vital tool for landlords and letting agents to spot anomalies, oddities and the potential for fraud in all tenancy applications.

Tips for landlords and letting agents to help reduce Tenant Fraud.

  • Request photo ID
  • Obtain a credit check – individuals with good credit histories are generally good tenants.
  • Use a professional company, such as Legal 4 Landlords for thorough tenant referencing
  • Get references from employers – Obtain written references and where possible speak to the employer personally
  • Get references from all previous landlords – although references from landlords may need to be taken with a pinch of salt as some landlords just want to get rid of problem tenants and will give good references.
  • Obtain copies of payslips and bank statements
  • Compare addresses shown on the application with those shown on ID documents
  • Look at what kind of car the prospective tenant drives
  • Trust your gut instinct
  • Do not take anything at face value

Landlords are urged to double check everything and if they have any reasonable suspicion that things are not quite what they seem, then they should refuse the tenancy, no matter how desperate they are to get someone in their property. Letting to a dishonest tenant will cost the landlord even more financial heartache in the long term.

Landlords should also beware of another common practice employed by dishonest tenants – subletting!

Sub-letting is an illegal practice that the UK Government are trying to stamp out, however it has become a common practice among fraudsters in the private rented sector, (PRS).

When tenants have accepted the landlord’s terms and conditions regarding the tenancy, signed the AST and apparently appear to have moved in. Only to rent the property out again to another unsuspecting dupe at a profit. Often in cases where this happens the bogus tenant will abscond with everyones money, leaving the sub-letting tenant homeless and the poor, unsuspecting landlord high and dry.

When a landlord carries out regular periodic property maintenance, they should check that the occupier is still the same person named on the assured shorthold tenancy agreement, (AST).

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