London Assembly Calls for Longer Term Tenancies

June 11th, 2013

At LettingFocus we are pleased to see our evidence to the London Assembly on the private rented sector was accepted and made it through as a key recommendation.

The London Assembly has issued another report on the private rented sector – this time calling for the mayor to intervene in the capital’s private rented sector to “stabilise rents” and encourage longer tenancies.

In the report published yesterday, the Assembly’s Housing and Regeneration Committee calls for a series of reforms to the capital’s private rented sector.

We have had a quick look at the report and whilst I find much in the report I don’t agree with – including “rent stabilisation” (which is actually NewSpeak for the old “rent controls” chestnut) – it’s still really pleasing that one key proposal, which came from us at LettingFocus.com, managed to make the final report and list of recommendations.

LettingFocus.com was invited to give expert evidence to the Committee back in December – along with a few other landlords’ representatives. (We must give the London Assembly credit for doing this much, because so many private rented sector conferences I see being marketed by the governments of the UK, by the housing charities and by councils have no one from the private rented sector actually speaking or even invited to attend).

A key part of our submission to the Committee was that the 12 month restriction on tenancy length imposed by most mortgage lenders along with some lenders’ “no benefit tenant rules” and RBS’s “no lending in areas of selective licences” restrictions acted to badly restrict private landlords letting activities and tenants’ housing options.

Restrictions are Not Logical

I went even further and suggested that, quite apart from the bad PR,  these types of restrictions were often not actually even justified from the business point of view of the mortgage lenders themselves.

The fact that these restrictions existed at all was (somewhat surprisingly perhaps) news to the members of the Committee, to the audience watching and to the journalists who turned up to watch the proceedings.

No Dissensions

We are delighted that this has matter been picked up and ran with – and it seems with no dissensions either. (The Conservative group added a list of dissensions at the end of the report, but they did not dissent on this important matter).

So a key recommendation has gone forward from the Committee that pressure is bought to bear on the lenders to stop these restrictions. This pressure could come from the Mayor and / or others in government.

Of course, since December, the pressure has clearly told (or a more enlightened approach has dawned among lenders) and two key lenders in the buy to let space – Lloyds Banking Group and Nationwide – earlier this year stopped their restrictions and now allow landlords to let to people on housing benefit.

Maximum twelve month tenancy length restrictions are still generally in place, though, except among a few more forward thinking lenders.

Missed Point

It is just a shame that in much of the press it has been reported that the Assembly is telling landlords to issue longer term tenancies. Most journalists have just looked at the Assembly’s rather terse and misleading press release and not bothered to read the full report, thereby completely missing the point that the Assembly is actually calling for the lenders to look at this restriction and reverse it.

Tenants want the security of longer term tenancies and many private landlords would like to be able offer them too in the right circumstances. Hopefully the proposal will be supported and all lenders can be made to eliminate these often pointless restrictions.

ABOUT LETTINGFOCUS

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We advise a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors and insurers.

We help them develop and improve their services and products for private landlords.

We also write for property portals, speak at property events and we are regularly quoted by the media.

Services for Private Landlords

We help landlords and property investors by showing them how to make money in the private rented sector using ways which are fair to tenants and which involve minimal risk.

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Posted in Buy to Let Mortgage Strategy, Buy to Let Mortgages, Housing Strategy and the PRS, Lloyds Banking Group Buy to Let, Longer Tenancies, Longer Term Tenancies, Tenancy Agreement Length | Comments Off

When is a Tracker Mortgage Not Really a Tracker Mortgage and How More Lenders Are Giving Themselves Get-Out Clauses

June 3rd, 2013

David Lawrenson of private rent consultants, LettingFocus.com explains how mortgage lenders have now set up get out clauses within their tracker mortgage deals which are so wide that the industry could eventually be forced to stop marketing them as tracker deals.

He also predicts that the Bank of Ireland “rate hike” case will result in a victory for those landlords whose letting activities are small enough for them to be afforded protection under consumer protection rules.

Bank of Ireland (BOI) has partly backtracked on its decision to raise mortgage rates for thousands of customers who thought they were on Bank of England base rate trackers for life. The bank now says that about 1,200 homeowners will no longer be hit by the increase.

BOI has highlighted two groups of customers that will be excluded from the rise. The larger group consists of about 1,000 mortgage customers who were actively using the flexible facilities on their mortgage account. BOI says these borrowers “received a specific administrative letter linked to their transactions that might have caused them to believe the differential was for the term of their mortgage”. A smaller group has about another 200 cases affected. But that still leaves over 12,000 customers will still be hit with higher mortgage payments.

Landlord sites, Property118 and LandlordAction are looking to launch their own joint class action – and many affected borrowers have joined up with them.

Personally, I predict that Bank of Ireland will be found to have hidden an important clause in its mortgage contract and that this was a clear breach of the rules on fair contracts in relation to consumers.

Professional Landlords or Amateurs?

However, I also predict that the courts will probably make a distinction between “professional” full time buy to let landlords who would have been expected to have read the small print, and others, who as “consumers”, may not have been expected to have read all the bumpf.

In other words, I predict the judgement will follow the same outcome as the “Foxtons Case”. (In the Foxtons case, repeat letting fees were charged to landlords by many letting agents, despite the existence of such fees being hidden in small print or in separate documents. Foxtons and other letting agents lost and now have to make sure such important terms are flagged up clearly, especially to part time landlords, who could be deemed to be consumers and therefore covered by unfair contract rules).

The Woolwich and Nat West Get Out Clauses

But what has escaped the notice of most personal finance writers is that two big lenders in the buy to let space – Woolwich and Nat West – have always had lifetime trackers that actually follow their own Bank’s base rate, not the Bank of England base rate.

Over many years, these Banks’ own base rates have been exactly the same as that of the Bank of England.

Of course, if their own base rate suddenly diverged from that of the Bank of England’s, questions might be asked about what they were planning next.

Both Nat West and Woolwich owners’ Barclays will be watching the outcome of the BOI case very carefully indeed. Both issued very low lifetime tracker mortgages – many fixed at less than one percent above base rate – and therefore both will be losing a lot of fortune on these existing mortgages.

They would dearly like a way out.

If the judgement goes the way of the Bank of Ireland, I would expect Nat West and Woolwich to raise their own base rates and “financially duff up” their own borrowers who, no doubt, will have thought they were safely on a Bank of England base rate tracker deal. These borrowers will be in for a shock.

BM Solutions and Others Lenders Get Out Clauses

But they may not be the only lenders looking for a way out.

We recently saw a new BM Solutions buy to let Bank of England base rate lifetime tracker mortgage offer where, within the small print, the way appeared to be open for the lender to renege on the tracker for a host of reasons, including changed “competitive conditions” and “funding environments”.

Of course, if these myriad “get out” clauses are to be allowed (which may well depend, in part, on the eventual rulings in the BOI case), then the next question the lending industry may have to answer is how such mortgages can be allowed to be marketed as lifetime tracker rates in the first place.

In the meantime, buy to let mortgage customers – especially those who are deemed to not be consumers by dint of the extent of their landlord activities – should proceed with caution and carefully check the small print on mortgage offers very carefully.

ABOUT LETTINGFOCUS

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We advise a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors and insurers.

We help them develop and improve their services and products for private landlords.

We also write for property portals, speak at property events and we are regularly quoted by the media.

Services for Private Landlords

We help landlords and property investors by showing them how to make money in the private rented sector using ways which are fair to tenants and which involve minimal risk.

HOME PAGE OF THIS BLOG: Blog

THE HOME PAGE OF THE MAIN SITE: http://www.LettingFocus.com

For general information on our CONSULTING SERVICES and also to find a small sample of links to where our comments have been featured in the National Press: Consultancy and Seminars

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Posted in Bank of Ireland, Bristol & West, Buy to Let Mortgage Terms and Conditions, Buy to Let Mortgages | Comments Off

Private Landlords as Immigration Officers

May 20th, 2013

Landlords will now be asked to help with the Border Control Agency’s job says David Lawrenson of private rent consultants LettingFocus.com.

The latest government idea has really come out of left field.

This is the plan, contained in the Queens Speech, to make landlords responsible for checking their tenants’ immigration status. Landlords will soon have to ask for and check passports and work permits.

Of course, this is what most sensible landlords will be doing anyway, as part of their tenant referencing checks – any sensible landlord would want to know the tenant is who he says he is (hence the ID check) and can legally work (hence the check for work permits for any non-EU applicants).

But would a landlord know a fake work permit or foreign passport if he saw one?

Fake IDs

Looking online, there are no really reliable guides on how to do this, which is a thing we first noticed eleven years ago.

Around 2002, there was the first really big surge of migrants from the so called “Accession Countries” (mostly former Eastern Bloc states that had recently joined the European Union).

Letting where we do, we were very much in the vanguard of letting to this group of mostly, hard working migrants. Back then, we already knew – from the sheer weight of numbers – that the government’s various projections for the numbers of migrants were likely to be hopelessly wrong. (In the end it was out by a factor of about ten – about ten times as many migrants came to the UK each year than had been predicted).

And we also wondered if the passport and work permit documents we were being presented with by our new Lithuanian and Polish clients were genuine.

Today, there is still no real guidance on line or elsewhere.

What Help Will Landlords Get?

And so I wonder, will the government be providing training for the UK’s landlords in how to spot a fake work permit?

How will it work in practice?

Will the landlords have to pay to access some type of service with the costs being passed on, as ever, onto the tenant?

We wait for the civil servants at the CLG and for the government to fill in the detail and give us the answers.

Rogue Landlords – Situation Normal

Of course, the type of rogue “landlord” who is happy to let to someone without first doing any checks at all on them will continue doing just that.

If this type of “landlord” gets problems, the solution will be the direct one – a couple of rough lads with baseball bats who will throw the “problem tenants” out.

Some of these rogue “landlords” will have “tenants” who are “illegals” and will often also be involved in providing them with low cost work too, often in related businesses to the “landlord”.

Their clients – dependent on their “landlords” for work, to shelter them, to keep their illegal status hidden from the authorities and to give them a roof over their sheds – are hardly likely to report their “benefactors”.

Not only will these “landlords” not do checks on tenants ID, work permits or the rest, but they are hardly likely to apply for licenses either.

But I suspect this fact may be lost on the Welsh Assembly and some other local authorities in England who seem to be in a desperate race to move ahead with their own landlord licensing schemes with which the honest landlord will conform and duly pay their fees, whilst the rogues will continue to hide.

CIH Event on the Private Rented Sector

Tomorrow, I will be chairing the “Chartered Institute of Housing / National Landlords Association Conference on the Private rented Sector”. Click here for the link.

ABOUT LETTINGFOCUS

Services to Businesses and the Public Sector

We advise a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors and insurers.

We help them develop and improve their services and products for private landlords.

We also write for property portals, speak at property events and we are regularly quoted by the media.

Services for Private Landlords

We help landlords and property investors by showing them how to make money in the private rented sector using ways which are fair to tenants and which involve minimal risk.

HOME PAGE OF THIS BLOG: Blog

THE HOME PAGE OF THE MAIN SITE: http://www.LettingFocus.com

For general information on our CONSULTING SERVICES and also to find a small sample of links to where our comments have been featured in the National Press: Consultancy and Seminars

For ONE TO ONE PRIVATE CONSULTANCY FOR PRIVATE LANDLORDS: Property Advice

CLIENT TESTIMONIALS – from both organisations and private landlords: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING”

Our book is the highest selling personal finance and property book in the UK. Click here to Find Out More and Buy it at Amazon.

If you are from an organisation and would like to bulk buy, please ask us for special rates.

TO JOIN OUR FREE NEWSLETTER Mailing which goes to over 3,500 people (as at Jan 2013) just send an email to david@LettingFocus.com

We do not spam or sell our mailing list to advertisers, though we occasionally mail landlords about good products from third parties. Please put us on your “white list” to ensure you receive our emails.

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The Carbon Saving Community Obligation Mythical Beast

May 3rd, 2013

David Lawrenson of www.LettingFocus.com remains unimpressed by the reality of the Green Deal

Any decent private landlord is like anyone else, we like free stuff.

We like it a lot.

Not the kind of “free stuff” advertised by the likes of the Telecom and Pay to Watch TV firms. Example: “Get this great Sky TV Package free for 6 months”……. whilst in the small print it says that you have to sign a 36 month contract worth £100 per month to get the free 6 months thing.

Not, that’s not free, that’s just sly marketing. And the type of marketing that I have always thought should be made illegal.

No, what we all like is really free stuff. Genuine free stuff where someone else pays! I could earn millions as a consultant but I will still always like free stuff.

So, over the course of the last three weeks I have been looking into what might be genuinely free (not “Sky free”!) within the Green Deal.

Green Deal

Yes, the Green Deal is, of course, much trumpeted by the government – and we all have to do our bit to save the planet disappearing under ice melt water and getting fried by rising temperatures (whilst meanwhile confusingly continuing to endure a succession of cool wet UK summers and freezing winters.)

So, what do I think of the Green Deal?

Well, I have to say, I’m not that impressed, so far. Mainly the problems for me start and end with the high interest rates tagged onto the improvements. Yes, I know, it is supposed to meet the “Golden Rule” but it still doesn’t sound such a great deal.

This being the government, of course – and never being ones to make anything simple – there are naturally a myriad of providers, many pots of funding and different funding bodies, none of whom seem to talk to each other.

But one special little fund rather caught my eye.

CSCO

I had read about it in the National Landlords Association (NLA) magazine. It is the Carbon Saving Community Obligation or CSCO. I like it because it does not require my tenants to be on a low income (most of mine aren’t) and it does not require a high interest loan to be attached leechlike to the electricity bill.

Instead, it simply appears to be a pot of money made available by government to reduce carbon footprint on my houses and it comes without any strings (and without me having to spend any of my own money).

The CSCO is only available to be applied to houses that are in relatively low income areas – areas meeting some “index of deprivation”.

Postcode Look Up

But is it possible to easily find out exactly which areas?

Is there a simple look up postcode table I could use – one where I simply enter in the postcode and it says, “Yes, this area qualifies” or “No, it does not.” *

Well, that would be too easy. After spending two days looking for one, I needed help.

Did the NLA’s own Green Deal people know if my places were in areas that qualified?

“No – you could ask your local authority or energy provider” they said.

Did the Energy Savings Trust (EST) know?

“Er no. Um, we are not sure it is running. Oh, it is, is it? Ah well, ask your council or your energy company. Oh, you already have and got nowhere? Er, then your council will come knocking on your door and you will have to just wait for that to happen. No, Sir, you cannot find out which areas and if your places qualify proactively in advance. Wait for the man from the council to knock your tenants’ door. That’s how it works, Sir.”

Did Scottish Electric know?

“No, we don’t get involved in that. Ask the EST or your council”

And what of the councils in the areas where I have let properties?

Bexley Council?

“We don’t know. Will get back to you in 5 days” (That was 15 days ago)

Dover Council?

“We don’t know. Will get back to you in 5 days” (That was 12 days ago)

I think you can see where this is going – round in circles.

Lewisham Council and Southwark Councils?

Preferring to not get too dizzy, I have to admit I pulled some strings at Southwark, and to a lesser extent at Lewisham. (LettingFocus as worked with both local authorities, so we have some connections higher up. Sometimes it pays to be a consultant in the private rented sector, having a well read blog here and in publications online and just being an ongoing pain to get what you want).

And anyway, I was getting fed up by now.

So what finally happened was that a nice civil servant at Lewisham and another nice one fron Southwark spent a long time digging around and were able to tell me that one of my places in Lewisham qualifies but neither of my two in Southwark did.

So, there we are. I now know that one of my places in Lewisham qualifies, though I still am unsure about how to get the thing implemented.

And I am still waiting to hear from Bexley and Dover councils who clearly fail miserably on their own response time promises.

Previous Experience in East Kent

But what a duff experience, which very much chimes with the last experience I had of getting energy improvements some three years ago in which me and one of my tenants had our time comprehensively wasted by an utterly stupid fund delivered by some quasi-local-government chaps calling themselves the East Kent Housing Project. I won’t bore you with the details but “the sell” was I could have a free brand new condensing boiler as long as my tenant was on a low income.

Only at the last minute and after endless meetings with my tenant and much form filling did they tell me we did not qualify because the tenant did not have a “repairing obligation for the boiler.” (As any landlord knows no tenant has such an obligation apart from in a few tied cottages. Doh!).

Carbon Reduction. Much Hot Air!

So, it seems to me that the whole carbon saving idea is full of much pomp and big words but in reality the delivery is poor, confusing and to find out if you qualify for stuff or get a sensible answer is nigh on impossible unless you can pull strings like I did.

The CSCO itself could still be a mythical beast – as rare as a non-public school educated Minister in the Conservative party.

I won’t be wasting my time again, but I will be sending this blog post to the Energy Minister, no doubt to get the usual vague response that dodges my questions and which is emailed over by a bored junior civil servant 4 weeks later.

And I will be feeding back my thoughts to the National Landlords Assocn. too.

* Note: Before any smart folk some back to me with a link showing a complex way of doing it, sorry, but unless you are an IT expert in interrogating datasets, sorry it just does not wash!

**One of the senior execs at the NLA has now responded and he very much shares my frustrations with how the schemes operate.

ABOUT LETTINGFOCUS

Services to Businesses and the Public Sector

We advise a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors and insurers. We help them develop and improve their services and products for private landlords. We also write for property portals, speak at property events and we are regularly quoted by the media.

Services for Private Landlords

We help landlords and property investors by showing them how to make money in the private rented sector using ways which are fair to tenants and which involve minimal risk.

HOME PAGE OF THIS BLOG: Blog

THE HOME PAGE OF THE MAIN SITE: http://www.LettingFocus.com

For general information on our CONSULTING SERVICES and also to find a small sample of links to where our comments have been featured in the National Press: Consultancy and Seminars

For ONE TO ONE PRIVATE CONSULTANCY FOR PRIVATE LANDLORDS: Property Advice

CLIENT TESTIMONIALS – from both organisations and private landlords: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING”

Our book is the highest selling property book in the UK. Click here to Find Out More and Buy it at Amazon. If you are from an organisation and would like to bulk buy, please ask us for special rates.

TO JOIN OUR FREE NEWSLETTER Mailing which goes to over 3,500 people (as at Jan 2013) just send an email to david@LettingFocus.com

We do not spam or sell our mailing list to advertisers, though we occasionally mail landlords about good products from third parties. Please put us on your “white list” to ensure you receive our emails.

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About Turn on Universal Credit Payments is Coming

April 23rd, 2013

David Lawrenson of www.LettingFocus.com says that among the mandarins at the DWP, the penny may be finally dropping about Universal Credit Housing Benefit payments. Here, he proposes a more sensible alternative.

It’s Groundhog Day all over again. You may remember the famous film starring Bill Murray about a TV weatherman who was forced to relive a single day until he learned to be a nicer human being.

Well in 2008 the Department and Work and Pensions and the Councils made much effort to ensure that paying Local Housing Allowance (LHA) to the tenant as the normal default option (instead of to the landlord) would work. (The idea back then, as now, was to inculcate financial management and budgeting to people, so as to better prepare the out of work recipients for the salaried “manage your own budget” world of work).

We now know that the “demonstration projects” in 2007 and 2008 found that this concept did not work too well for many cases, and eventually a lot of “safeguards” (or as we call them “sticking plasters and exceptions”) were put in place enabling landlords to be paid direct either from the start of a claim or in the event of any arrears appearing.

Learning from the Past

But it seems the government, rather like a goldfish in a bowl, does not seem to learn from the past because the Coalition embarked on exactly the same course in 2012 for its soon-to-be-rolled out Universal Credit (UC). Again, the idea was that all payments, including the LHA Housing Benefit element within UC would be paid direct to the tenant in nearly all cases.

More trials were started in 2012 and 2013 and surprise, surprise, they found a high level of arrears once again (and more landlords who could not come up with clunky workarounds using, for example, the likes of local Credit Unions exiting this end of the market in droves).

Independent housing benefit advice expert, Bill Irvine, of HBAdvice.co.uk, writing in the “Property Investors News” magazine says that the truth is “that half of tenants originally identified [by the projects] refused to participate in the trials and in four out of six projects, rent arrears increased” – this despite much effort and resource being provided within the trials.

U Turn Coming

It now seems from reports we are getting and have seen that the government may finally do a similar turn around to the one they did four years ago, because it has made the following encouraging comments in a recent paper (House of Commons Work and Pensions Select Cttee Third Report of Session 2013-13):

1. UC payments will be switched to landlords where claimants are in arrears for fall into arrears

2. Full guidance will be provided on both the financial and vulnerability factors that will trigger direct payment to the landlord

3. We are clear that UC must be designed in a way that protects the financial position of landlords

Bill Irvine goes on to say that he has heard from senior civil servants that they now expect the number of “exceptions” (i.e. to pay landlords direct) will be around 30% – in other words, about the same as with the previous attempts at direct payments to tenants, once the penny dropped and safeguards were put in place by 2009.

We are still awaiting the details of how the “Safeguards Mark 2013” will work in practice.

Still, I guess it is good that the government listened, in the end. But why pursue a scheme and an idea that has been shown wanting in the past – and we wonder how much this aspect of the trials costed – when one could already guess what the result of the 2012/13 trials would be from what happened back in 2008.

A Pragmatic Alternative

So what should they have done?

No, not making direct payment to landlords dependent on those landlords issuing longer term tenancies. That’s a really silly idea (espoused by one of the smaller political parties) that is impossible to make work, not least because most mortgage lenders are still not allowing longer term tenancies. So landlords cannot do this even if they want to.

A far more sensible alternative would be to incentivise the scheme by making it financially worthwhile for the tenants to be paid direct.

In other words, you pay the tenant more if they agree to be paid direct but on the proviso that they don’t go into arrears on their rent payments. At the same time you could even possibly pay landlords a bit less where they end up being paid direct (as the risk to them is less also).

This would be a sensible pragmatic approach that has an additional built in incentive for the tenant recipients to manage their own budgets.

The Coalition, especially the part of it which is in the blue corner, is usually all for incentives to make things work – the more incentives the better. So, let’s see some in action on Universal Credit. Let’s see them adopt my idea.

ABOUT LETTINGFOCUS

Services to Businesses and the Public Sector

We advise a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors and insurers. We help them develop and improve their services and products for private landlords. We also write for property portals, speak at property events and we are regularly quoted by the media.

Services for Private Landlords

We help landlords and property investors by showing them how to make money in the private rented sector using ways which are fair to tenants and which involve minimal risk.

HOME PAGE OF THIS BLOG: Blog

THE HOME PAGE OF THE MAIN SITE: http://www.LettingFocus.com

For general information on our CONSULTING SERVICES and also to find a small sample of links to where our comments have been featured in the National Press: Consultancy and Seminars

For ONE TO ONE PRIVATE CONSULTANCY FOR PRIVATE LANDLORDS: Property Advice

CLIENT TESTIMONIALS – from both organisations and private landlords: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING”

Our book is the highest selling property book in the UK. Click here to Find Out More and Buy it at Amazon. If you are from an organisation and would like to bulk buy, please ask us for special rates.

TO JOIN OUR FREE NEWSLETTER Mailing which goes to over 3,500 people (as at Jan 2013) just send an email to david@LettingFocus.com

We do not spam or sell our mailing list to advertisers, though we occasionally mail landlords about good products from third parties. Please put us on your “white list” to ensure you receive our emails.

OFFERS ON PRODUCTS FOR LANDLORDS and TO ADVERTISE YOUR PRODUCTS to LANDLORDS: Landlords Resources

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NEXT SEMINAR EVENTS FOR LANDLORDS: Landlord and Property Letting Seminar

Copyright of Blog: David Lawrenson 2013. Please link to us here or quote us. We actively pursue copyright infringements. The blog is updated roughly once a week.

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Posted in Housing Benefit, Housing Strategy, Housing Strategy and the PRS, Local Housing Allowance | Comments Off

London Local Authorities and the Private Rented Sector

April 15th, 2013

LettingFocus despairs of the approach adopted by one London Council in dealing with its private rented sector.

We have just been sent an invitation to tender from a London local authority.

In the invitation they identify that they need to do some work to improve their local private rented sector, which now forms a substantial 30% plus of all housing stock in this borough.

They go onto identify a series of very real problems that impact on local people in their borough – e.g. some sheds with beds, examples of poor management by some rogue “landlords” etc.

So far, so good.

But they then appear to come straight to the conclusion that the way to tackle the problems is potentially either with a licensing scheme and / or via setting up a “social” letting agency to be ran by the council and which would work to get private landlords letting to people on housing benefit.

However, they fail to ask whether a licensing scheme or a social letting agency is actually the best way to tackle the issues in the first place.

This is fundamentally wrong, in our opinion.

Monitoring and Enforcement

All the evidence I have seen, including from talking to practioners on the “front line” of housing and homelessness, is that the local authorities know very well who the rogue landlords are and they also know where the offending properties are.

The problems councils really face are these:

  1. lack of resources to go after the rogues,
  2. poorly joined up monitoring and enforcement by various arms of the councils and other agencies and
  3. sometimes insufficient fines levied once a successful prosecution is obtained.

Policy should be built around these facts first – and the tender should be about looking at a wider range of measures the council could implement right now – and for very little expenditure.

If it can be shown that a licensing scheme is the best way to achieve this, then fine. However, councils must be mindful that rogue operators are hardly likely to sign up and they should also be mindful of the Scottish registration scheme experience, reported elsewhere at this site: http://www.lettingfocus.com/blogs/index.php/tag/scottish-landlords-register/

Evidence

As to social letting agencies, yes this could potentially work, but we have yet to see sufficient evidence that any previous similar type of venture has proved cost effective.

It appears that past experiments in setting up social lettings agencies have achieved mixed results, at least in part, because they do not attract private landlords in any significant numbers to the schemes.

This is usually due to a failure to adequately address how to get landlords signed up., which is because most past social letting agency ventures tend to have no “online strategy” relying instead on accreditation schemes / council records which are far too small in numbers to generate volumes.

Back to Base

This council really needs to go back to first base and ask whether a landlords licensing scheme / social letting agency really is required or are there other potentially more efficient and effective alternatives.

Finally, we checked the council’s website. We found it had almost no information for tenants or landlords in the private rented sector.

Fixing this first would be a far better place to start than spending even an hour sending invitations for tenders to adjudge complex and overarching schemes which may very well not address the real issues that this council is facing.

ABOUT LETTINGFOCUS

Services to Businesses and the Public Sector

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Services for Private Landlords

We help landlords and property investors by showing them how to make money in the private rented sector using ways which are fair to tenants and which involve minimal risk.

HOME PAGE OF THIS BLOG: Blog

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Letting Agent Regulation and Avoiding the Void Periods

March 26th, 2013

Letting agency regulation is looking more likely and why private landlords need to ensure they let properties fast by David Lawrenson of www.LettingFocus.com

In last weeks’ blog I talked about trust and how one mortgage lender’s recent move could destroy trust in all lenders – or at the very least ensure all people taking out a mortgage and their brokers now read the small print very carefully indeed.

Of course, trust is a thing that the people of Cyprus are also waking up to over the last few weeks. And also, perhaps, they are learning to adopt a more enquiring mindset – the kind of mindset that questions how safe and reliable their banking system could really be when banking formed such an elephantine proportion of the country’s GDP. It’s not as if there are not precedents here: Iceland also had a ludicrously bloated banking sector, and we know what happened to that (though some local authority finance bosses in the UK did not seem to have learned the lessons that time as they happily invested council monies in Icelandic banks right up to when the wheels came off, seemingly oblivious to the risks).

Letting Agency Regulation

Closer to home and still on the subject of trust, we seem to be moving closer to more regulation of the letting agencies. Lots of people have long called for this but the Coalition government rejected more regulation when they were elected. Finally, at last, they seem to have realised that more regulation is indeed needed.

The fact is that lots of tenants and their landlords don’t trust letting agents. There are many excellent letting agents (about 50% of my 1,000 and counting tweeter followers are letting agents), but there are some rogues too – and at present about 40% of letting agents do not have access to any form of redress system for their clients.

One specific recurring issue is the question of letting agency fees. Years after Foxtons lost the High Court case over unfair repeat letting agency fees charged to landlords, there are still issues about transparency of charges.

In a “Guardian” piece in October 2012 “London Councils Failing Private Tenants and Landlords” (look it up online) I showed how most London councils provided no information at their websites to advise tenants and landlords in the private rented sector to ask letting agents about letting fees and to get a clear statement about what those fees are.

This has not changed.

As I have said many times at this blog, it is no good the government lecturing the private rented sector and introducing a myriad of new laws and regulations, if at the same time they fail to provide even the most basic information at council level. They simply have to do better.

Council Tax and Avoiding the Void

One thing that local government is always very good at is collecting tax. No sooner have you completed on a purchase of a property and the local council will already have issued a Council tax demand. Indeed, this will be one of the first items of post you will see when you get the keys, open the front door for the first time and finish clearing away the usual tonne of pizza flyers.

Unfortunately, for landlords, we are now seeing most local authorities rapidly moving to get rid of the usual 6 month council tax exemption for unfurnished and unoccupied properties – this in an attempt to collect more tax, following central government’s squeeze of local finances.

Landlords should be acutely aware of this – the cost of having a property empty between tenants, has just got (or is about to get) a lot more expensive in most boroughs, so landlords really need to “avoid the voids” and get properties let fast and the council tax put in the new tenants name.

Landlords using letting agents should ensure they are not slow at getting properties let. If they are, they will need to get another agent who can act with more speed.

ABOUT LETTINGFOCUS

Services to Businesses and the Public Sector

We advise a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors and insurers. We help them develop and improve their services and products for private landlords. We also write for property portals, speak at property events and we are regularly quoted by the media.

Services for Private Landlords

We help landlords and property investors by showing them how to make money in the private rented sector using ways which are fair to tenants and which involve minimal risk.

HOME PAGE OF THIS BLOG: Blog

THE HOME PAGE OF THE MAIN SITE: http://www.LettingFocus.com

For general information on our CONSULTING SERVICES and also to find a small sample of links to where our comments have been featured in the National Press: Consultancy and Seminars

For ONE TO ONE PRIVATE CONSULTANCY FOR PRIVATE LANDLORDS: Property Advice

CLIENT TESTIMONIALS – from both organisations and private landlords: Testimonials

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Bank of Ireland Mortgage Move Destroys Trust

March 20th, 2013

David Lawrenson of www.LettingFocus.com says the move to hike rates on some Bristol and West Tracker Mortgages looks wrong – and destroys confidence in all lenders.

When I speak to people who want to sell services to private landlords (which includes organisations like local authorities and housing associations that desperately need private rented sector landlords to make their houses available to people who have few housing options) the suppliers sometimes ask me “What do private landlords really want from us, the suppliers to the sector”

Well, two things always come to mind.

Communicate What You Offer

First, private landlords need to know what products and services are out there – what do you, the supplier offer? In the case of local authorities, most landlords do not know what the councils can offer them because most have failed to adopt a proper marketing programme online to tell them.

Be Fair

Second, they want fairness in the products and services that are being sold. They do not want to feel they have been misled or confused, whether deliberately by a supplier, or because of poor communication.

Bank of Ireland (BOI) is a good case study of the latter. Private landlords who took out Bristol and West Bank of England base rate tracker mortgage products thought they were getting a base tracker for life.

But alas, it seems there was a clause in the small print that allowed BOI to significantly up the rate in the event of special circumstances (e.g. in the general economy) applying. They have now applied this clause.

Much discussion is now taking place about whether they can do this – including whether doing so is a breach of Unfair Consumer Contract Terms rules and whether it is allowable if such an important clause was not clearly bought to the attention of landlords when they signed up for these mortgages. (Landlords, or at least, most of them are still consumers who are taxed like consumers, and who already won a similar case when Lord Justice Mann ruled in the high court against Foxtons and the unfairness of their repeat letting fees which were hidden in small print).

Class Action

A class action to fight BOIs move has been launched – check online for details.

I guess BOI will have consulted its lawyers about whether their move would stand up in court and they would have been encouraged that another lender, Skipton got away with a similar kind of move some years ago.

However, whatever the outcome, it reeks of unfairness and private landlords and those brokers who advise them will not easily forget this.

In the short term, all landlords should now carefully check the small print in their mortgage terms for both current and future mortgages.

I have always opted for Bank of England base rate trackers, and so have most of my associates. A quick check of the T&Cs in these reveals that, for our loans at least, The Woolwich, C&G, BM Solutions, Mortgage Express and Bank of China, are all stuck with continuing to lend to us on low Bank of England Tracker rates. They have no wriggle room at all and no special clauses to invoke. Thank goodness for that.

Nevertheless, this move by BOI lessens trust in all mortgage lenders at a time when trust in financial services organisations is very low – something that the Council of Mortgage Lenders ought to be concerned about.

Budget

Finally, there was not much in the budget today except for “Help to Buy” and a new mortgage guarantee that will help some people get onto the housing ladder or move up on it, but will likely just push up house prices even more. Sadly, apart from this, there was nothing much new on unlocking housing supply.

ABOUT LETTINGFOCUS

Services to Businesses and the Public Sector

We advise a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors and insurers. We help them develop and improve their services and products for private landlords. We also write for property portals, speak at property events and we are regularly quoted by the media.

Services for Private Landlords

We help landlords and property investors by showing them how to make money in the private rented sector using ways which are fair to tenants and which involve minimal risk.

HOME PAGE OF THIS BLOG: Blog

THE HOME PAGE OF THE MAIN SITE: http://www.LettingFocus.com

For general information on our CONSULTING SERVICES and also to find a small sample of links to where our comments have been featured in the National Press: Consultancy and Seminars

For ONE TO ONE PRIVATE CONSULTANCY FOR PRIVATE LANDLORDS: Property Advice

CLIENT TESTIMONIALS – from both organisations and private landlords: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING”

Our book is the highest selling property book in the UK. Click here to Find Out More and Buy it at Amazon. If you are from an organisation and would like to bulk buy, please ask us for special rates.

TO JOIN OUR FREE NEWSLETTER Mailing which goes to over 3,500 people (as at Jan 2013) just send an email to david@LettingFocus.com

We do not spam or sell our mailing list to advertisers, though we occasionally mail landlords about good products from third parties. Please put us on your “white list” to ensure you receive our emails.

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Posted in Bank of Ireland, Bristol & West, Buy to Let Mortgages, Foxtons Judgement | Comments Off

Mortgage Loans and Housing Benefit and Why a Selective Approach is the Better Option

March 13th, 2013

David Lawrenson of www.LettingFocus.com observes the latest mortgage lender U turn on allowing landlords to let to housing benefit tenants, but says that rather than a “blanket” approach of either allowing or not allowing landlords to do this, a better way would be if lenders “selectively” allowed it – with the decision linked to other variables such as landlord experience and loan to value level. Lenders should also provide more information to landlords.

In last weeks blog, I reported how Nationwide had removed their somewhat short-lived restriction preventing landlords letting their properties to tenants on housing benefit.

The Nationwide move was quickly followed by Lloyds Bank who also abandoned their identical (and rather more long standing) restrictions on those landlords who have loans from their BM Solutions buy to let unit.

Following these lender moves, I received quite a few emails from people in government, housing associations, tenants groups and the media congratulating me on making this restriction more widely known publicly – and leading to these two lenders abandoning the restriction.

One said, “People at the bottom of the housing ladder who find very few landlords will let to them anyway, will today have more housing options, thanks to you.”

It’s quite likely that my talk to the Council of Mortgage Lender’s conference some 14 months ago (as well as my appearance and evidence to the members of the London Assembly’s PRS committee) will have had a part to play in these lenders’ decisions. The media, especially “The Guardian” newspaper and the “Mortgage Strategy” magazine may have done the rest.

A little clarification is required though – because I did not set out to be a kind of “hero of the people” on this issue. Indeed, my work often involves advising mortgage lenders on how to make more of a success (in other words make more profit) from their buy to let mortgage products.

Profitable Market

My position has always been that mortgage lenders should have always allowed some landlords to let to people who are on housing benefit, not just because it is good PR to do so, but because not to do so eliminates a profitable niche market from the landlord and lender.

However, the government’s changes to welfare entitlements over the last 2 years and especially, the looming roll out of the Universal Credit system has made letting to people on housing benefits a lot more risky for landlords than it was before (and hence also for their lenders).

That is why my advice to lenders is yes, you should still allow landlords to let to people on housing benefit (and naturally you will get some good press and hopefully also, even some kudos from government from allowing this). But given the welfare changes that are happening, and the consequential increased risk, it might be better if your underwriting approach allowed only more experienced landlords to do such lets or linked the ability to do HB lets with only those mortgages where the loan to value was lower than the normal level. This would allow lenders to control the risk.  Another way would be to require landlords to have a guarantor for some housing benefit lets.

By allowing all landlords to let to any benefit tenant, these lenders have possibly gone from the frying pan into the fire a little.

Going forward, our view is that as long as the government continues with its current plans for Universal Credit, we would recommend that lenders pursue a more selective approach.

Lenders Lack Control Over What Landlords Do

Of course, the reality is that lenders don’t have much control on what landlords do. Every day hundreds of tenants in the private rented sector will suffer changed circumstances, need to go onto housing benefit and most won’t tell the landlord – most don’t have to and most won’t anyway. And of course a lender will never ask a landlord to end a tenancy where this has happened (for the very practical reason that the PR impact would be dreadful – and rightly so).

So lender control is rather limited anyway, which is why we say that lenders should also provide more helpful advice online to landlords to allow them to manage their lets better or point them to where they could get this advice. Few do this.

David Lawrenson’s book “Successful Property Letting – How to Make Money in Buy to Let” is the UK’s highest selling personal finance book and is a practical guide for landlords.

ABOUT LETTINGFOCUS

Services to Businesses and the Public Sector

We advise a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors and insurers. We help them develop and improve their services and products for private landlords. We also write for property portals, speak at property events and we are regularly quoted by the media.

Services for Private Landlords

We help landlords and property investors by showing them how to make money in the private rented sector using ways which are fair to tenants and which involve minimal risk.

HOME PAGE OF THIS BLOG: Blog

THE HOME PAGE OF THE MAIN SITE: http://www.LettingFocus.com

For general information on our CONSULTING SERVICES and also to find a small sample of links to where our comments have been featured in the National Press: Consultancy and Seminars

For ONE TO ONE PRIVATE CONSULTANCY FOR PRIVATE LANDLORDS: Property Advice

CLIENT TESTIMONIALS – from both organisations and private landlords: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING”

Our book is the highest selling property book in the UK. Click here to Find Out More and Buy it at Amazon. If you are from an organisation and would like to bulk buy, please ask us for special rates.

TO JOIN OUR FREE NEWSLETTER Mailing which goes to over 3,500 people (as at Jan 2013) just send an email to david@LettingFocus.com

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Nationwide Mortgage Works Housing Benefit U Turn

March 6th, 2013

David Lawrenson of Private Rented Sector Consultants LettingFocus.com looks at why some mortgage lenders don’t want to allow landlords to let to tenants who are dependent on housing benefit to pay their rent.

Last week, at this blog, I looked at Nationwide’s new policy (for the Mortgage Works) to not allow landlords taking out mortgages or remortgages with them to let their properties to tenants who are on housing benefit.

The story also appeared in a lot of the specialist and mainstream press last week, where the policy was criticised by some.

Then, on Friday, Nationwide did a sudden about turn and said it was allowing landlords to do theses types of lets after all.

We cannot speculate on the reasons behind the change of policy, though we think it unlikely that the government put any pressure on Nationwide. After all, part state owned Lloyds Banking Group and Yorkshire Building Society still have similar restrictions in place. (In my blog piece I had said that Nationwide’s move could be seen as an indictment of the government’s welfare changes, specifically the numerous changes around Housing Benefit/ Local Housing Allowance).

Lenders Concerns

So, why are lenders worried about landlords doing these sorts of lets?

One of the issues some lenders say they have is around a receivership / recovery situation (i.e. where a landlord has defaulted on the mortgage loan and a receiver of rent has been appointed) and where a tenant on housing benefit is still in situ.

The issues the lenders have in such situations are these:

1) establishing what rent is due (if any) and from whom
2) getting that rent paid direct to them (if over 2 months arrears) or immediately if other relevant tenant vulnerabilities exist and
3) concerns that Housing Benefit depts can claim back overpayments of Housing Benefit years later.

At LettingFocus, we think a sensible level of co-operation between lenders, their appointed receivers of rent and the department that pays out housing benefit would solve a lot of these issues. But the mortgage lenders do not seem to be talking to the government to try to solve these issues, and the government seems confused and unable to take the lead either.

This is why we said there seems to be something of a “lack of grip” on the private rented sector by government agencies at present.

Over-reaction

Are the lenders overreacting with such blanket restrictions?

We think they may be.

For example, one would question where is the real risk of a financial hit to the lender in cases of loans where the landlords’ loan to value was low, say at less than 60%.

If lenders have concerns about the three issues highlighted here and if there is a lack of will to solve them, then, in the interim, they could always look to selectively restrict loan to values on buy to let loans for housing benefit lets or make them dependent on other more “positive” variables.

But a blanket restriction such as YBS and state owned Lloyds Bank’s BM Solutions have on new landlords letting to HB tenants seems, to us at least, to be not necessary and clearly not ideal in the current housing crisis, where those dependent on housing benefit are already finding very few landlords will accept them.

ABOUT LETTINGFOCUS

Services to Businesses and the Public Sector

We advise a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors and insurers. We help them develop and improve their services and products for private landlords. We also write for property portals, speak at property events and we are regularly quoted by the media.

Services for Private Landlords

We help landlords and property investors by showing them how to make money in the private rented sector using ways which are fair to tenants and which involve minimal risk.

HOME PAGE OF THIS BLOG: Blog

THE HOME PAGE OF THE MAIN SITE: http://www.LettingFocus.com

For general information on our CONSULTING SERVICES and also to find a small sample of links to where our comments have been featured in the National Press: Consultancy and Seminars

For ONE TO ONE PRIVATE CONSULTANCY FOR PRIVATE LANDLORDS: Property Advice

CLIENT TESTIMONIALS – from both organisations and private landlords: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING”

Our book is the highest selling property book in the UK. Click here to Find Out More and Buy it at Amazon. If you are from an organisation and would like to bulk buy, please ask us for special rates.

TO JOIN OUR FREE NEWSLETTER Mailing which goes to over 3,500 people (as at Jan 2013) just send an email to david@LettingFocus.com

We do not spam or sell our mailing list to advertisers, though we occasionally mail landlords about good products from third parties. Please put us on your “white list” to ensure you receive our emails.

OFFERS ON PRODUCTS FOR LANDLORDS and TO ADVERTISE YOUR PRODUCTS to LANDLORDS: Landlords Resources

PERUSE LAST TEN BLOGS BY GETTING THE RSS FEED: Click Here

NEXT SEMINAR EVENTS FOR LANDLORDS: Landlord and Property Letting Seminar

Copyright of Blog: David Lawrenson 2013. Please link to us here or quote us. We actively pursue copyright infringements. The blog is updated once a week.

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Posted in Buy to Let Mortgage Strategy, Buy to Let Mortgage Terms and Conditions, Buy to Let Mortgages, Housing Benefit, Housing Strategy, Housing Strategy and the PRS, Local Housing Allowance, Yorkshire Building Society and Buy to Let | Comments Off

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