Superstrike v Rodrigues landmark decision in lettings industry?

By now everyone has heard of the landmark decision of Lord Justice Lloyd on 14 June in a case that has sent shockwaves through the lettings industry. Put simply, the Court of Appeal decision in Superstrike v Rodrigues states that where an AST started before the advent of the deposit registration regulations but rolled over into a statutory periodic tenancy after 6 April 2007, any deposit should have been registered and prescribed information served. The implications of that decision are significant for the thousands of landlords and their agents who still have statutory periodic tenancies that arose in the months after April 2007. The decision is also a worry for all of those tenants who may have been evicted since then on the basis of an “unlawful” section 21 notice. After all, if the deposit was not registered and prescribed information not served, their landlord was not able to serve a valid section 21 notice to bring the AST to an end.

Since April of 2007 official sources suggest that over 1 million individuals have been forced to relocate in circumstances where, thanks to the Superstrike decision, a possession order was made on an invalid section 21 notice. The implication for landlords, managing agents and the judicial system is troubling. It is doubtless causing sleepless nights for those in the Department for Communities and Local Government charged with bringing some order out of the chaos.

Accordingly, it will come as no surprise for readers to learn that over the last few weeks there have been a number of meetings at a fairly senior level between representatives of the lettings industry, including ARLA, the principal deposit registration organisations and government officials to map out a way forward. Whether Mark Prisk, the current housing minister, will table new legislation to effectively overturn the Superstrike decision remains to be seen. However, with Parliament about to recess as I type this blog, it looks highly unlikely that there will be any significant change in the current position until October 2013 at the very earliest.

In the circumstances what should agents and landlords do if they have a pre-April 2007 AST which is still running on as a periodic tenancy?

The short answer is to refund the deposit as soon as possible to the tenant. Sadly, with the implementation of the Localism Act 2011 last year, it is no longer an option simply to register a deposit late if one wants to serve a section 21 notice. The deposit must be refunded in full.

To make matters worse, even if a deposit was registered on time – and remember time limits changed with effect from 6 April 2012 – if the prescribed information was served late, that now triggers a penalty of between 1 and 3 times the deposit plus the return of the deposit itself.

One intriguing aspect of the Superstrike decision concerns comments by Lord Justice Lloyd which suggest that when an existing AST lapses from a fixed term into a statutory periodic tenancy, it may be necessary to re-register the deposit, or at least re-serve the prescribed information. Logically this must be correct as the effect of the Housing Act 1988 is to create a “different” type of tenancy when an initial fixed term comes to an end. As a purely precautionary measure, therefore, we are now suggesting to all our clients that at the end of a fixed term, prescribed information is indeed re-served. Individual landlords and managing agents should also check with their deposit registration provider as to what else might need to be done to avoid their tenancy becoming a future test case!

One area which is being actively explored by some of the larger national chains is whether the entire problem of re-registration/re-service might be avoided by changing the definition of the fixed term. To avoid a statutory periodic tenancy arising at the end of, say, a twelve month AST, consider adding a rider to the definition of the term. This might provide that the tenancy continues “thereafter on a month by month basis until terminated by two months notice on either side”. Arguably this could prevent the tenancy changing from a contractual to statutory tenancy in the way that Lord Justice Lloyd mentioned in his judgment.

Clearly this has implications for renewal fees and flexibility. Accordingly, landlords and agents should seek professional advice both on the efficacy of adding such a clause and its exact wording.

As always, subscribers to our telephone helpline can receive “free” advice by calling the dedicated line provided. If you are not already a member of the Dutton Gregory telephone helpline service, please telephone one of our team on 01962 844333 for further details.

ROBERT J BOLWELL
Head of Landlord and Tenant Department
e-mail: r.bolwell@duttongregory.co.uk

Is it easy running your own franchise business from home?

Lots of people dream about running their own business – for reasons which range from escaping the commute, spending more time with family or to simply fulfill an ambition and earn more money.

Working from home - No Letting Go

Working from home – No Letting Go offer great franchising opportunities

And one of the best ways to begin is to become a franchisee which will help you become quickly established with a business that is tried and tested.

Having a franchise means you will get the help and support you need for your business to do well and this is where becoming a franchisee for No Letting Go becomes a win-win situation.

You don’t need expensive overheads such as an office, you don’t need prior experience of the property market – you just need a computer, access to the internet and a ‘can do’ attitude.

Nick Lyons is the managing director of No Letting Go and he says: “Running a business from home is tough but the upside outweighs the downside – there’s no commuting, there is lots of flexibility, it’s cheap to do and you do get to spend more time with your family.

“However, there’s no getting away from the fact that you will have to work extra hard in networking, getting out and mixing with client prospects and then you have the possible loneliness because you don’t mix with other people as you may have done previously.”

As a home-based No Letting Go franchise you may still have clients visiting so you can’t afford to be sat around in your pyjamas all day long and you still have to report to a regional office.

Nick adds: “Franchising is a great opportunity for the right people. The reward potential is enormous but it still requires energy, discipline and dedication to be successful.”

There are franchising opportunities for a wide range of industries and No Letting Go have become the leaders in what is termed inventory management. That is when an inventory is made at a property for the landlord which is independent as well as being fair and accurate.

Like many opportunities, franchising is about what you put into it. It is not a short cut to success and you will need to be professional in your outlook and establish a routine that works for you which means no slacking to watch TV or entertaining people to coffee on a regular basis.

It also means that you need an office space which, ideally, has a door so you can keep distractions and family on the other side of it. Everyone needs to understand that when the door is closed, then you are at ‘work’ and should not be disturbed.

It’s only natural that some people won’t understand the difference and think that being at home means you are available for chores or favours. You will have to be firm – relent once and it will become a common feature and will lead to working for longer trying to get the work done.

Some people will also struggle to get their ‘business head on’ which is to say they don’t commute and don’t have that time between home and work to focus from one place to the next. It helps to dress as if you are going out to work.

The next big issue is spending long periods by yourself. Let’s be honest: after years of working in hectic office environments, this is going to take some getting used to.

You will need to structure your day and allocate time to achieving a set list of tasks. You will also need regular breaks from the computer and to get some fresh air and exercise. Do not start playing computer games or over-indulging in social media such as Facebook or Twitter – turn them off and you will reap the rewards.

It may also be a great idea to start networking and joining business clubs (especially if you become a franchisee of No Letting Go because the potential contacts you make could bring money in).

Finally, working from home is a great way to earn a living but if you don’t take time to make friends and create new networks then who will you boast to about your successes?

For more information about becoming a franchisee with the fast-expanding business No Letting Go, then visit: http://www.nolettinggo.co.uk/join-our-inventory-management-team.html or call 0800 8815 366.

No Letting Go are the UK’s leading provider of inventory management services, providing check in and check out services, property inventory and condition reports and specialist on site services to landlords, lettings agents and property professionals.

What is Clean?

By Nick Lyons, Managing Director, No Letting Go

Whilst it may be of no surprise to many long time property managers, the introduction of the deposit schemes (TDS) has highlighted an area that causes a great deal of time-related cost in the industry. It seems that the most common cause of complaint is, and has been, cleanliness and from my various discussions with property managers and adjudicators over the previous few years, the most difficult element to determine is “What is Clean?

cleaning products

You’ve got the cleaning products – but what constitutes ‘clean’?

It is fair to say that what one person calls clean, is not what another person calls clean and therefore as an inventory management company, property manager, landlord or in house inventory clerk, how do you benchmark standards and determine levels of cleanliness so that we all know what we are talking about?

In the early days of the deposits schemes, the first statistics to come from all three adjudications as published by Mortgage Trust in 2009 showed that 43% of disputes were related directly to cleanliness.

The TDS scheme at the time was reporting figures in the region of 50% and recent figures released by a landlord survey carried out by mydeposits.co.uk showed that 88.5% of disputes were related to cleanliness, 53.8% were related to wear and tear and 23% related to gardening.

No Letting Go carried out an analysis of all check outs at its various UK offices in 2010/11 to ascertain which areas of the check out were causing most disputes. Cleanliness was (not surprisingly) the biggest area – registering around 78% of the negative comments, closely followed by rubbish, damage and to a lesser extent general maintenance.

To back up the No Letting Go survey on check-outs we went further and carried out an analysis of 100 inventories from various sources including inventory companies, agents and landlords.

Surprisingly we found that only a few companies stated what they determine as clean, most in fact had such a vague explanation that I was amazed that any property manager could make a decision on the level of cleanliness required for the property without having to make a visit themselves! However more companies did make a determined effort to define levels of condition.

As part of a review of No Letting Go inventories following our research we introduced a list of definitions or parameters to state what we meant by clean. We found at the time that we spend an enormous amount of time explaining how dirty or clean a property was.

Inventory companies are in the business of independently registering facts in a subjective area of the property business, thus we needed a way to say to our clients what we meant by the various states of cleanliness. And by that, we mean:

What is a professional clean?

What does cleaned to a professional standard mean?

What is the difference between a good domestic clean and average domestic clean?

What does not clean actually mean and so on.

For example, No Letting Go define Professionally Clean as:

Everything immaculate, sparkling and dust free. Appliances and sanitary ware spotless. Carpets steamed cleaned, vacuumed. Floors swept. All furniture in order and clean. Linen freshly laundered. Cleaned to a high professional standard by a professional cleaner, receipt seen. Name of the company and date carried out.

The key here is not about our own opinions and differences on what we all call clean. It is about clearly telling a property manager or landlord (or adjudicator) what the benchmark is and therefore provide detailed and clear information to be able to make decision on the levels of cleanliness required to get a property ready for the next tenancy or to make it easy to calculate a deposit deduction.

Furthermore, with the increasing importance of the check-in procedure by gaining tenants’ agreement to the inventory and the schedule of condition at the start of the tenancy, clearly defining a level of cleanliness (whether in the inventory and schedule of condition and/or in a separate check in report) is critical.

Knowing that such a high proportion of issues relate to cleanliness, explaining to your tenant what is expected of them before and at the end of the process will mean less ambiguity which in turn saves time and money.

The best inventory management condition reports are not only the most detailed, but the clearest.

For further details on the No Letting Go cleanliness parameters call us on 0800 8815 366 or simply visit our website at http://www.nolettinggo.co.uk/property-inventory-articles.html and look at any of our inventory, check in or check out reports. We define both cleanliness and condition parameters to make it easy to make a decision.

How is the shortage of new properties affecting the buy to let market?

From all the media stories, no-one is quite sure whether the property market is booming or not!

How is the shortage of new properties affecting the buy to let market?

A shortage of new properties is affecting the UK rental market

The simple answer is that the buy-to-let sector is doing very well but it would be doing even better if there were more new properties to buy. There’s an increasing market in the number of people looking to rent which means that demand is pushing up rents.

Indeed, the Council of Mortgage Lenders recently said that investing in houses and flats to rent is growing in popularity once more.

They say that the number of buy-to-let properties soared by 84,000 last year – with buy-to-let mortgages now accounting for nearly 13 per cent of the total outstanding value of home loans in the UK.

That means that investing in property to rent is a worthwhile proposition once again.

But let’s not kid ourselves about the current situation for prospective investors. While the buy-to-let market is picking up, it’s nowhere near the heady heights of the 2007 property boom. And most of the investors picking up properties for their letting portfolios are cash-rich investors.

It makes sense really: property prices are relatively low and rent prices are still fairly high which means that there’s a good return on your investment.

And the market for renting a home in the UK is continuing to grow.

Estate agents Countrywide say that last year, more than 275,000 new tenants registered for private rental accommodation – a 24 per cent increase on the previous year.

Across most of the UK there is a shortage of property to rent which means rental prices are remaining high and increasing in some areas.

Potential landlords can still buy property to enjoy the rental market using buy-to-let mortgages from many lenders. In fact, there’s so much competition for a potential landlord’s business that the average borrowing rate on a buy-to-let mortgage has fallen in recent months.

The headline of this article is: How is the shortage of new properties affecting the buy to let market? However, it would be wiser to read this as: How is the shortage of new good quality properties affecting the buy to let market?

That’s because the population of the UK is growing and it’s a relatively transient one – people are moving to where the work is and they are willing to pay for a good quality home.

Though there is no doubt that underpinning the buy-to-let market is the fact that not enough new homes are being built and people are living longer as well as the fact that there are more single person occupied homes.

For more information and advice on the current state of the buy-to-let market, contact the UK’s premium provider of landlord services NoLettingGo.co.uk or call 0800 8815 366.

No Letting Go are the UK’s leading provider of inventory management services, providing check in and check out services, property inventory and condition reports and specialist on site services to landlords, lettings agents and property professionals.

How should we deal with one tenant leaving during a tenancy?

It’s always a situation you hope, as a landlord, you don’t have to deal with – when a tenant leaves early.

What to do when a tenant leaves a tenancy early

Handing back the keys: What to do when a tenant leaves a tenancy early

Not only do you have the issues of finding another tenant you also have the potential legal issues to deal with surrounding the tenant’s leaving.

First things first: you should have in your tenancy agreement a clause that covers such an occurrence.  This is vital – especially if the tenant’s leaving turns into a legal dispute.

When a tenant puts in a request to terminate and leave early from a fixed term tenancy it is essentially a negotiation between them and the landlord. (The issue is clouded if there is one tenant leaving, leaving others behind and this would be covered by ‘Surrender in Part’ and is a slightly different issue).

A landlord is not obliged to let a tenant break the terms of the tenancy but it’s often common sense to negotiate. You need to calculate any loss of fees you may incur – which in itself may be disputed -  or whether your clause for early termination has an actual penalty value to cover the costs you will have to carry and is one agreed by the tenant when s/he signs the contract.

A leaving tenant may also find the landlord a replacement tenant. Do not at any point say yes to the new tenant without carrying out your usual vetting procedures. They may be a perfectly good tenant but they aren’t taking over the tenancy as theirs will be a fresh contract.

This situation is going to occur so it’s more of a situation of how you handle the transition. By working with the leaving tenant you will part on good terms and avoid any missed rent payments.

It’s always wise to talk since any costs you incur funding a replacement will have to be borne by the leaving tenant (or, if you have a penalty clause, the costs will be covered by that).

When a tenant decides to leave a property is something of a legal grey area.

There is no legislation covering this eventuality and landlords need to set the terms for early termination, notice of termination and how the notice is served. This is purely a contractual matter between landlord and tenant.

This termination date needs to be agreed. You should get a proper ‘Surrender of Tenancy Letter’ which will act as a written document and which will then be proof that the tenant has given up possession of the property to the landlord.

If the tenancy agreement between landlord and tenant does not have a break clause and the landlord refuses to accept the termination notice then the tenant is contractually liable to pay the remaining rent balance for the fixed term tenancy.

This is where the art of negotiation is necessary. If there are seven months remaining on the tenancy then you could both settle on four months rent as a settlement to quit.

For more information and advice about how to deal with one tenant leaving during a tenancy, contact the UK’s premium provider of landlord services NoLettingGo.co.uk or call 0800 8815 366.

No Letting Go are the UK’s leading provider of inventory management services, providing check in and check out services, property inventory and condition reports and specialist on site services to landlords, lettings agents and property professionals.

Buying is cheaper than renting in most U.S. cities

I am always interested in great property stories around the world and read an interesting article on CNN World about how it is now cheaper to buy than rent in most US cities ( http://money.cnn.com/2011/08/16/real_estate/buy_rent/ ) – if only that were the case in the UK.

Nick

New Landlord Emergency Cover Launched

Leading providers of let property cover, Total Landlord Insurance, have just added Total Landlord Emergency Cover to their portfolio of insurance products
designed specifically for landlords.
Total Landlord Emergency Cover is a cost-effective insurance product that provides immediate assistance in the event of a domestic emergency at a rental
property.
The policy provides cover 24 hours a day 365 days a year for call out charges, labour and repairs for emergencies such as the breakdown of the heating system, plumbing and drainage problems.
Broking Manager, Steve Barnes, said: “Domestic emergencies at landlord’s rental properties can be inconvenient and sometimes difficult to resolve. It is not just boilers that go wrong, plumbing, drains and lost keys can cause inconvenience for landlords. At just £70 per property we feel that this policy represents excellent value for money and provides reassurance for both landlords and tenants that emergency assistance is only a phone call away. Introductory discounts are also available for limited period”.
Total Landlord Insurance will also be extending their range of landlord focussed products to include Rent Guarantee insurance and Tenant Referencing soon.

Steve continued: “Our customers are at the heart of our business and we will be adding more products and services to our website to provide landlords with a one stop solution for their insurance needs”.

For more information on Total Landlord Emergency Cover go to www.totallandlordinsurance.co.uk or call on 0800 63 43 880.

Large deposits make inventories more important than ever

This article up from Property Drum by Operations Manager for ARLA, Ian Potter, further highlights how critical inventories with schedule of condition report have become.

With such large sums of money at stake, ARLA has called on tenants and landlords to consider the benefits of establishing a comprehensive property inventory check upon the commencement of a new let.

Ian Potter, Operations Manager of ARLA, said, “Deposit disputes can be one of the biggest problems for both parties involved in any rental property, and many potential issues can be avoided if a professional inventory is prepared.

“A licensed letting agent will offer you the best advice on checking to see if an existing inventory is available or whether any extra charges are invoked in drawing up a new document. A true inventory is not simply a list of items in a property – it also includes a description of the condition and cleanliness at the start and finish of the tenancy, enabling one to be compared against the other with clarity and accuracy.

“Photographs are a good support for comments made in a written inventory but should not be considered a replacement for the written word. Photographs which are unsigned and undated generally are not worth the effort, so make sure they are accepted at the outset and again at the check-out stage.”

Ian Potter said, “A well put-together inventory can give both landlords and tenants peace of mind throughout the occupation period. The inventory is not designed to catch tenants out, but rather to ensure both parties are in agreement over the quality of the property being rented.

“If conducted correctly, and agreed by both tenant and landlord, an inventory should form a key point of reference for any deposit-return queries or issues over reported damage. In recognition of the importance of inventories ARLA has its own sub division, the Association of Professional Inventory Providers, whose members have passed an accreditation exam as well as having a Code of Practice to follow.”

For Professional Inventory Management Services throughout the UK talk to No Letting Go, APIP members, who can provide all inventory management services including Inventory, Check In, Propert Visits and Check Outs with full dilapidations reports. Contact us on 0800 8815 366 or contact one of our local offices at www.nolettinggo.co.uk/contact

Unpaid rent and filthy tenants – Latest Student Landlord Survey 2011

With student market nearly upon us, New Student Publications carried out an interesting straw survey on Student Landlord Problems

Different categories were addressed covering areas from unpaid rent to cleanliness issues.

Unpaid rent, filthy tenants and panicking about filling your properties for next year?

The results were astounding, with over 14% of landlords saying that their current biggest problem is just finding tenants to take their properties and fill in any gaps should someone drop out during a contract, with more than 2% feeling like they are struggling just to get viewings. One agent simply said “we have unlet properties remaining for July 2011, the situation is worse than in previous years” In a similar 2009 survey finding tenants was also the biggest problem raised by landlords.

Dirty Tenants

Landlords cited dirty tenants as their second biggest problem, with 16% left to pick up massive cleaning bills, or called out at 4am to change a lightbulb. The general consensus was “students don’t take care of the property or make any effort to keep the house clean.” 3.5% of agents thought that students demanded a much higher standard of accommodation than ever before, although it seems that tenants are unwilling to take out contracts for a full twelve months, with one landlord struggling to get even shorter terms “the majority of people contact me to rent for one or two months.”

Pressure From Pupose Built Halls

Many of the landlords surveyed said that they felt increased pressure from new purpose built student villages found in many city centres; more than 8% of those surveyed would eradicate those villages if we gave them one wish! 2% of landlords are afraid that their properties were not close enough to ‘hotspots’ and so would soon be abandoned in favour of more central locations.

Unpaid Rent

11% of businesses struggle with unpaid rent, while 2% note that this messes with their cash flow and although some are sympathetic to the issues caused by the Student Loans Company, most are fixed on the bigger picture; “a lot of time is spent chasing payment. Students seem to think that it is not always necessary for them to pay their rent.” This coupled with tenants excessively using all inclusive utilities means that businesses are less profitable. One landlord’s wish was simply that we could ‘undo the recession’ as 8 different landlords complained of increases to the cost of maintaining their properties to a decent standard.

Relax Regulations

Bogged down with HMO paperwork and expense? Over 18% of those surveyed would love to change or relax the regulations and the council powers to control them. One landlord stated; “there should be a national guide for HMO legislation.” Some landlords feel so strongly about HMO licensing that they named specific city councils or even actual councillors as their biggest fear for the future. 3 landlords said they had qualms about council schemes to shift populations from one area of a city to another, and how it would affect their business.

Worries Over Tuition Fee Increase

Landlords are worried about the tuition fee increase, with more than 14% saying that if they had one wish, they would fight the fees and leave the system as it stands, a worry which probably contributes to 13% of them saying that they feel the future of the market is uncertain, as some students may choose to stay at home to study. Competition from the university owned housing is a headache too, with 4% saying an increase in that sort of accommodation would be detrimental to their ability to let.

Problems With Advertising

Landlords raised the issue of advertising, when to do it and how the culture of marketing lets so early can damage the business, with nearly 5% of landlords thinking there should be a guideline that means property is marketed in January and not before. 4% thought university accommodation offices charged them too much for advertising, and 5% would like to see cheaper, and more effective advertising available to them.

Deposit Protection Unfair

Some landlords were concerned that the existing Deposit Protection Scheme did not offer them enough scope to reclaim money for damage to their properties. Eight separate landlords would like to see the entire system revised, with 1% of those surveyed listing it as their biggest problem. A case from the survey highlights the DPS’s flaws; “£1500 worth of damage but ex tenants refuse to give consent to DPS to pay the landlord.” And some feel that from a legal standpoint the law does not protect them, 3% of landlords would like to see more legislation to protect the financial interests of the landlord.

Worries Over The Potential Drop In Student Numbers

And what of the future of the student property market? More than half of those surveyed were very worried about the potential drop in student numbers next year, with one landlord summing up the problems this will create; “if student numbers drop because of the £9,000 a year course fees then we might see empty houses, lower rents or both.” A worry shared by 3% of those surveyed, who fear the contraction in the market will mean a forced reduction of rents, while other suggested offering shorter term contracts or starting to appeal to the housing benefit market was the only way to keep the business afloat.

No Problems At All

But this isn’t the full picture. Almost 9% of those surveyed have no major problems with the lettings market, their tenants or filling their properties. One landlord is more than happy with his tenants; “we enjoy our students. We pride ourselves in helping them learn how to care for and run the house. We regard them as ‘professionals-in-training’ and teach them what they should reasonably expect from a landlord and what they should reasonably do as a tenant.” One respondent would use a magic wand to change the public’s attitude towards students; “they tend to live in larger houses that are too big for modern families and therefore almost act as guardians for some of our most impressive architecture. They should be seen as a positive part of any community.”

 

Top 5 biggest fears for the future Number of responses Percentage
Fewer students in the future 101 54%
Student villages 15 8%
Legislation increasing workload 15 8%
Unpaid rent due to fees 10 5%
Universities moving into market 8 4%
Top 5 current biggest problems Number of responses Percentage
Bad tenants 51 13.6%
Uncertainty for the future 49 13.1%
Finding tenants 48 12%
Unpaid rent 41 11%
HMOs 17 4.5%

No Letting Go are working with a number of student letting agents and bodies around the UK to help protect both landlords and tenants from many of the issues arising from cleanliness and deposit protection. Better use of Inventory services, checking tenants in, property visits and managing the check out is critical to ensuring that potential problems are dealt with in advance and issues arising from check outs are dealt with quickly and efficiently. Contact No Letting Go on 0800 881 5366 or find your nearest office at www.nolettinggo.co.uk

Compiled by Emma Parker New Student – Student Housing Magazines – www.newstudent.co.uk

Latest Guide on Deposits, Disputes and Damages

 

Read the Latest Guide on Deposits, Disputes and Damages from all 3 Deposit Schemes
By Nick Lyons, Managing Director No Letting Go

All three deposit schemes have released an information document on managing your deposits, with advice on what is required (or not as the case may be) and clarifying some of the many questions that arise with regards protecting your or your clients properties.

http://www.nolettinggo.co.uk/A-guide-to-deposits-disputes-and-damages.pdf

If you need any advice or wish to get an inventory with detailed schedule of condition, check in, property visit or check out carried out please contact one of the No Letting Go offices throughout the UK at www.nolettinggo.co.uk/find-your-local-office