Archive for the ‘Housing Benefit’ Category

The Private Rented Sector Will Not Entertain Void Periods and Local Authorities and Housing Associations Need to Understand This

Monday, November 14th, 2011

Letting agents, local authorities and housing associations must start to understand that private landlords want to let fast and won’t entertain void periods. Many council and housing association schemes with private landlords fail to meet this need.

All smart landlords (and smart letting agents who know their business) know that minimisation of the “void period” is critical to success in making money as a private landlord.

For the uninitiated, the void period is the time that the property is not occupied by rent paying tenants, and any time a property is void costs a landlord money.

But too often I see properties that are being marketed by letting agents sitting empty for weeks on end – thus soaking up landlords’ cash. Local authorities and housing associations also fail in this.

Local Authorities and Housing Associations and Voids

Local authorities, trying to procure properties from private landlords usually don’t understand that speed of letting is of the essence, which is why their bill for other, more expensive temporary accommodation such as B&B type accommodation is soaring.

For example, a few years ago, in the Dover District council area in Kent where I let a property, a government backed private lease scheme was operating.

This promised a guaranteed rent if I sublet the property to them for three years with them then subletting the property on to people who might otherwise be homeless.

This sounded potentially attractive (and socially responsible too) until I learnt that it would be another two weeks before they could even book the appointment in to inspect my property!

And then I found out that their scheme (and the guaranteed rent) wouldn’t start until one of their tenants had said they wanted the property – and even then I would need to wait until all the cumbersome LHA approval processes had happened. Oh, and of course, the rent would be paid in arrears too.

Getting Real

Today I see lots of local authorities struggling to get private landlords to engage with them – either to give them their properties under private lease schemes or to let to LHA tenants under “Direct Lets” schemes.

Many local authorities in London offer fees over £1,000 as incentives to landlords if they will do a 12 month let, so desperate are they to get landlords engaged. (The fee makes up for the fact that their tenant clients won’t usually have any cash for a dilapidation deposit.)

But according to the landing page on some councils websites, the landlord would first be expected to sign an agreement with the tenant BEFORE the tenant has even had approval from the local authority that they qualify for Local Housing Allowance.

Even with the big fee, many landlords will be put off by the delay, because in London at least, few landlords are going to wait for weeks for a council to make appointments to inspect or for the rent, (guaranteed or otherwise), to start.

Councils (and some housing associations) operating like this are really operating in a weird sort of cloud cuckoo land; demonstrating how steeped they are in slow and cumbersome processes and how they are unable to understand the perspective of the private landlord where time delays and hassles equates directly to lost revenue.

Councils Need a Private Landlord Perspective

In my consultancy work with local authority’s private rented sector departments to date I have only met two people who are actually private landlords themselves.

In both cases, the schemes they were working to set up at their councils are at least beginning to take some account of the realities of the situation – which is that in a booming private rented sector, landlords will not entertain slow council processes that mean their properties sit empty.

How We Do It

In my own property letting business, I don’t let to LHA tenants – it’s too much hassle, currently.

I do all the advertising myself via Upad (See the link in the “Offers for Landlords”  section below) and I reference check the tenant applicant very carefully, making sure to choose someone who will be a good tenant.

I start advertising in the last 40 days before the current tenants leave (which is a clause written into my tenancy agreements) – with the intention being that, unless there is a redecoration needed, the new tenants can move in within a maximum of 3 days of the old ones moving out.

My properties are competitively priced so I know that the rent level I require will not hold enquirers back. After all, there is no point holding out for an extra £50 a month, if you then have a void period for a month on a £1,000 a month property, because that will take you 20 months to make up. And, if the property is furnished this void will also cost you in council tax payments too. And of course, you still need to pay the mortgage interest and insurance premiums (and the latter may be higher if the property in unoccupied over a long period.)

I have found that showing prospective tenants around when the old tenants are still there can often help let the property faster. This is especially true of part furnished or unfurnished properties. If the current tenants keep the place clean and tidy and have nice furnishings the property should let faster than when they have gone and the property is empty – because the prospective tenants will be able to “feel” the cosiness of a home and the lifestyle they could have.

Speaking Engagement

I’m booked to speak as a private rented sector expert at a forthcoming Chartered Institute of Housing event on the private rented sector in Cambridge in December.

If you are from a local authority of a housing association and you’d like to learn a little from me (and others) about how you might be able to do things differently, you should attend. I’m sure you will find the whole event interesting.

Let me know if you intend to come along. Click here for More: http://www.cih.org/events/display/vpathDCR/templatedata/cih/events/data/PRS

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Private Rented Sector Consultancy and advice.

Services to Businesses and the Public Sector

We are consultants to 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 websites, speak at property events and we are regularly quoted by the media.

Services for Private Landlords

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

AT OUR WEBSITE LETTINGFOCUS.COM:

HOME PAGE OF THIS BLOG click here: Blog

To read blog posts on related posts use the tags and categories at the bottom of each post (after the list of links), or over to the right of this page. Here, you can click on “Select Categories” and use the pull down menu to read all the posts on any Category that interests you.

THE HOME PAGE OF OUR MAIN SITE

Click here:  http://www.LettingFocus.com

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

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

TO READ CLIENT TESTIMONIALS – from both organisations and private landlords click here: 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 at least 50 books please ask us for special rates.

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Copyright of Blog: David Lawrenson 2011. Please link to us here or quote us. We actively pursue copyright infringements. The blog is updated once a week, usually on a Monday or Tuesday (or more frequently when “hot” news items come up.)

TWITTER PAGE For my thoughts on property, personal finance, plus as well as other random things from sport, to 80s and 90s Indy Music, to tsunamis and politics please see our Twitter page.

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Universal Credit the Private Rented Sector and a Sense of Groundhog Day

Tuesday, October 18th, 2011

Summary: The government’s plan to normally pay the Local Housing Allowance part of the planned Universal Credit to tenants (not to landlords) reminds us of the film “Groundhog Day”.  Haven’t we been here before and did we not learn from what happened last time?

The Universal Credit was first announced at the Conservative Party Conference in 2010, though the idea has been floating around for while – and variants of it are highly popular on both left and right.

Indeed, I recall studying a version of this, as proposed by liberal economist, JE Meade, whilst at university, many aeons ago.

The thinking is that a Universal Credit would replace a number of other benefits, including Local Housing Allowance (LHA).

Good in Theory

It sounds good.

By implementing a single, universal credit, welfare administration costs could be cut and it would ensure that people who work would always have more money than those who do not work.

Unlike some existing benefits that have a 100% withdrawal rate, the universal credit would be gradually tapered away so that people will be unafraid to take on a job, even if it is only part time, because they will still keep most of the additional money they earn.

But within the proposals that are on the table at the moment, is the idea that the Housing Benefit (Local Housing Allowance) element, which tenants can currently elect to have paid direct to landlords will normally only be paid direct to tenants (who it is hoped won’t spend the cash on something else).

Been There, Done That

The plan to normally have the LHA paid direct to the tenant (as the main default option) has been tried before under the previous Labour administration.

Labour’s idea was that by paying the tenants direct, the recipients would become better at budgeting and somehow more responsible.

Of course, these were very laudable aims and are all well and good.

But back then, landlord and tenant groups as well as housing charities like Shelter and Crisis all found that these potential benefits, whilst laudable enough, were more than outweighed by the fact that, by paying tenants’ LHA direct to the tenant, even more private landlords would become unwilling to let to tenants who were dependent on LHA.

The landlords’ fear – which was shared by many of their tenants too – was that the money would be spent on things other than the rent, which would lead to arrears and eventual eviction.

Ways and Means

And so, under Labour ways and means were again found to pay the LHA direct to private landlords. For example, one work around was that LHA could be paid to a landlord if, by doing so, a tenancy could be sustained that would otherwise be cancelled.

All Change

As we have already been here before and learnt the consequences of what happens when tenants are unable to have their LHA paid direct to the landlord, it seems odd that the Government could be thinking of making the same mistake again.

It all reminds me of the film, “Groundhog Day” where a bored American Weatherman, played by Bill Murray was trapped and forced to relive the same day again and again.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Private Rented Sector Consultancy and advice.

Services to Businesses and the Public Sector

We are consultants to 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 websites, speak at property events and we are regularly quoted by the media.

Services for Private Landlords

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

AT OUR WEBSITE LETTINGFOCUS.COM:

HOME PAGE OF THIS BLOG click here: Blog

To read blog posts on related posts use the tags and categories at the bottom of each post (after the list of links), or over to the top right. Here, you can click on “Select Categories” and use the pull down menu to read all the posts on any Category that interests you.

THE HOME PAGE OF OUR MAIN SITE

Click here:  http://www.LettingFocus.com

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

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

TO READ CLIENT TESTIMONIALS – from both organisations and private landlords click here: 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 at least 50 books please ask us for special rates.

TO JOIN OUR FREE NEWSLETTER which goes to 3,000 people just  send an email to david@LettingFocus.com – We do not spam or sell our mailing list to advertisers. Please put us on your “white list” to ensure you receive our emails.

OFFERS ON PRODUCTS FOR LANDLORDS: Landlords Resources

GET THE RSS FEED FOR THIS BLOG: Click Here

Copyright of Blog: David Lawrenson 2011. Please link to us here or quote us. We actively pursue copyright infringements. The blog is updated once a week, usually on a Monday or Tuesday (or more frequently when “hot” news items come up.)

TWITTER PAGE For my thoughts on property, personal finance, plus as well as other random things from sport, to 80s and 90s Indy Music, to tsunamis and politics please see our Twitter page.

LINK TO THIS BLOG OR TO OUR WEBSITE

Do Private Rented Sector Rents Follow LHA Rates

Tuesday, October 11th, 2011

An interesting new report from the Chartered Institute of Housing (CIH) and the British Property Federation (BPF) disputes claims from some in government that past rises in the housing benefit bill were caused by landlords increasing rents in order to take advantage of pre-determined benefit levels.

The report is called “Leading the Market” and it concluded that a more likely explanation was a change in the make-up of claimants as more families are affected by the recession in already expensive to rent in areas such as London and the South East.

The report found the amounts payable for the local housing allowance (LHA) in the private rented sector during an 18 month period following the start of the LHA scheme in 2008 actually fell in 61 percent of areas studied.

This analysis runs counter to comments made by Welfare Reform Minister Lord Freud in evidence to the Work and Pensions Inquiry on the Budget 2010 reforms.

In his submission, he quoted figures that showed housing benefit claimants’ payments went up 3 percent while the Rent Index declined by 5 percent in the period from November 2008 to February 2010.

The CIH and BPF say that whilst Lord Freud’s figures were right, his interpretation ignored other factors such as the changing geographical spread of and type of claimants, which they say were more likely to have contributed to the rising bill.

The CIH said that because LHA does not push up rents, so it logically cannot be used to bring them down again. Therefore the cuts to LHA would end up causing a great deal of hardship to a large number of households and without either the tax payer or households reaping the benefit.

At LettingFocus.com, we have been critical of past studies like this because the data sample was too small, but the data set in this particular study looks robust enough and the findings will add an interesting element to the debate about the impact of cuts in Housing Benefit levels on rents generally.

One thing we would say, though, is that in areas where enough people are on benefits (say 25% of all households and up) then the LHA rate in effect becomes the market rental rate and both influence and feed on each other.

Of course, our view is that there is a great deal more the local authorities could do to ensure that private landlords are not put off letting to people on housing benefits or to the homeless in general.

And if the useful findings in this CIH study deflect attention from the things that councils could and should be doing now, that would be a shame.

Please read the categories on “Housing Benefit” or “Private Rented Sector Access Schemes” over at the Categories or Tags section on the right to read more about what the local authorities could be doing.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Private Rented Sector Advice and consultancy.

Services to Businesses and the Public Sector

We are consultants to 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 websites, speak at property events and we are regularly quoted by the media.

Services for Private Landlords

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

AT OUR WEBSITE LETTINGFOCUS.COM:

HOME PAGE OF THIS BLOG click here: Blog

To read blog posts on related posts use the tags and categories at the bottom of each post (after the list of links), or over to the top right. Here, you can click on “Select Categories” and use the pull down menu to read all the posts on any Category that interests you.

THE HOME PAGE OF OUR MAIN SITE

Click here:  http://www.LettingFocus.com

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

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

TO READ CLIENT TESTIMONIALS – from both organisations and private landlords click here: 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 at least 50 books please ask us for special rates.

TO JOIN OUR FREE NEWSLETTER which goes to 3,000 people just  send an email to david@LettingFocus.com – We do not spam or sell our mailing list to advertisers. Please put us on your “white list” to ensure you receive our emails.

PRODUCTS FOR LANDLORDS: Landlords Resources

GET THE RSS FEED FOR THIS BLOG: Click Here

Copyright of Blog: David Lawrenson 2011. Please link to us here or quote us. We actively pursue copyright infringements. The blog is updated once a week, usually on a Monday or Tuesday (or more frequently when “hot” news items come up.)

TWITTER PAGE For my thoughts on property, personal finance, plus as well as other random things from sport, to 80s and 90s Indy Music, to tsunamis and politics please see our Twitter page.

LINK TO THIS BLOG OR TO OUR WEBSITE

Accreditation Private Landlords and the Social Letting Agency Model

Tuesday, August 9th, 2011

Key Point: Most private landlords don’t set high value on things like membership of accreditation schemes and property inspections offered by some councils as part of Local Letting Agency schemes designed to attract landlords. They won’t pay much for these features either – especially where a good private let alternative exists. Local authorities must be realistic about what landlords want and are prepared to pay for.

In the old days before the bankers and offshore tax havens destroyed the economy and when money was still around, local authorities regularly paid incentive fees to private landlords to make their properties available to let to people on housing waiting lists.

In the new tough environment that’s pretty much a thing of the past. Also possibly slowly going (or already gone) by the wayside are things like rent deposit schemes and other sweeteners for private landlords.

Not only do local authorities have less money to throw at landlords but the cuts to the previously generous Local Housing Allowance rates have made their job very much harder, making many landlords opt instead for higher rent “private lets” to people who are not on benefits.

And to make things even worse, local authorities will soon be able to discharge the main homelessness duty into the private rented sector – meaning someone in need of housing will not be able to refuse a reasonable offer of accommodation in the private rented sector.

This change will make the job of local authorities harder still – they will have to do more with a lot less.

Response of Local Authorities – the “Local Letting Agency Model”

The response of some local authorities to some of this is to set themselves up as Local or “Social Letting Agencies” offering a range of services to private landlords as an alternative to private letting agencies. (Letting agents, in many areas, will not deal with tenants on benefits.)

It’s good that local authorities are doing something positive. But we think some may be a tad over ambitious in what they are expecting landlords to pay for.

For example, private landlords will not pay much for things like property inspections, membership of accreditation schemes, repossession assistance and the like as part of the joy of housing a previously homeless person.

Guaranteed Rent

But they might pay, if in exchange for doing so, they get from the council, some element of guaranteed rent.

The reality is that rightly or wrongly, many private landlords see tenants on benefits, and especially previously homeless ones, as coming with high risk, high maintenance and at high costs to the landlord (both in terms of real costs like increased insurance premiums but also the landlords own “time costs”)

And outside of some well publicised and properly marketed university schemes, whilst accreditation schemes for landlords are very laudable (and authorities are rightly doing their best to raise standards), most private landlords are a very parsimonious lot who have little interest in being “accredited” unless there is some real and significant financial or other incentive (e.g. guaranteed rents or other help) in becoming so.

They aren’t that bothered about property inspections either and the mere mention of “assistance with repossession” (as at least one authority proposes) will likely make them run a mile.

The reality for any landlord trying to let anything more than a “downmarket property” in London and many other large town and cities, is that there is a thriving market in private lets. And good tenants from letting agents (or via the landlords own legwork) are easy to find right now, as can be seen from the rate of increases in private sector rents.

In other words, private landlords don’t need to pay councils for the right to get access to what they see as potentially risky tenants and for things like accreditation schemes unless there is real value in it for them.

Getting Real About What Private Landlords Will Pay For

Local authorities have a very hard job to do (and possibly the government is asking too much of them) but they have to get real quickly if they are to measure up to the task that they face in the new housing environment set for them by this government!

In this market, as well as improving the way they market to landlords, they must understand what services landlords want and what they are prepared to pay for. If not, they risk setting up expensive “social letting agencies” that won’t come close to achieving the desired objectives.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Private Rented Sector Expertise and advice.

Services to Businesses and the Public Sector

We are consultants to 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 websites, speak at property shows and we are regularly quoted by the media.

Services for Private Landlords

We also find a limited amount of time to help landlords and property investors by coaching them in how to make money in the private rented sector using ways that work, which are ethical, fair to tenants and which involve minimal risk to the investor.

AT OUR WEBSITE LETTINGFOCUS.COM:

HOME PAGE OF THIS BLOG click here: Blog

To read blog posts on related posts use the tags and categories at the bottom of each post (after the list of links), or over to the top right. Here, you can click on “Select Categories” and use the pull down menu to read all the posts on any Category that interests you.

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

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

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

TO READ CLIENT TESTIMONIALS – from both organisations and private landlords click here: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING”

Our book is the highest selling property book in the UK. Click here to Find Out More and Buy the Book at Amazon. If you are from an organisation and would like to bulk buy at least 50 books please ask us for special rates.

To JOIN our Free NEWSLETTER which goes to 2,000 people and contains regular news for landlords and details of our Events simply send an email to david@LettingFocus.com – Please note we WILL NOT send spam or sell our mailing list to advertisers but please put us on your “white list” to ensure you receive our emails.

Discounted Products for Landlords: Landlords Resources

This blog is updated once a week, usually on a Monday or Tuesday (or more frequently when “hot” news items come up.)

For my random thoughts on property and personal finance, plus other random things that interest me from sports, to 80s and 90s Indy music, to tsunamis, to politics please see our TWITTER PAGE: Twitter

Copyright of Blog: David Lawrenson 2011. We pursue any copyright infringements.

LINK TO THIS BLOG OR TO OUR WEBSITE

What Type of Tenant Is Best for Landlords

Tuesday, July 12th, 2011

People often ask me “What sort of tenants should I pick?”

My answer is “Well, that depends upon what type of property you have and what the local market demand (and supply) is like.” Of course, if you are any good at this business you’ll know to check where the tenant demand is likely to come from before you buy.

As I have noted here before, some landlords do very well letting to students and some do well letting to tenants who are on Local Housing Allowance (Housing  Benefit.) Still others, usually those with suitable up-market accommodation, tend to specialise in short term lets and / or are players in the corporate lettings market, (where a company pays the rent on behalf of their tenants.)

Assuming you have a choice, the best type of tenant really does just come down to the local market.

But in some places there is no choice anyway. For example, in parts of college towns dominated by big universities, families and working professionals just won’t be interested in renting a property where all the neighbours are party loving students and the area dies for 5 months of the year (during the college long vacations.) Equally, in economically depressed towns, tenants on Housing Benefit are the only tenant type there may be.

Hard Work

Without doubt though, some tenant groups can be harder work (though again, not always, and it very much depends upon the specific tenant you get.)

There are certainly many landlords who will steer clear of letting to students or letting to people on housing benefits or both groups. There will be a number of reasons why they might do this.

In the student market, the perception among many landlords is that students can take up a lot of management time and tend to not look after properties very well.

In the direct let to housing benefit tenants end of the lettings market, landlords are wary of the paperwork and fearful of the management time connected with sorting out rent payments that may start and stop if the tenant moves in and out of work.

There are other reasons that landlords may have to reject the options of letting to tenant groups such as these. Some of these are valid reasons, others are myths.

But the various difficulties can be overcome.

For example, for Housing Benefit tenants it’s always possible to get rent paid direct and some local authorities have supportive Housing Benefit staff who will sort out non payment problems fast. And once you have done the Housing Benefit paperwork once, you tend to get better at it plus you will learn to discern a good tenant applicant when you see one. In student lets, a good independent inventory and a chunky deposit will protect your asset if the students don’t look after the property properly.

Range of Tenant Types

In the markets where I operate, there is fortunately a wide range of tenant types to choose from. I tend to specialise in 2 bed freehold houses with gardens. And since there are plenty of working people in work, I don’t need to look at the student or Housing Benefit markets.

My applicants will be typically two sharers or a couple. Now, I know from experience that couples (either with or without kids) tend to look after the property better when they are living there than the sharing singles, though all my tenants have left all my properties in a tidy condition when they came to leave. (They do this because I do a thorough inventory and make it clear what I expect them to do in terms of cleaning in order to get their deposit back!)

The only disadvantage of two sharing singles (and women are as bad as men here) is that the place will be a bit more messy when they live there (compared to a couple) which makes it harder when you are doing viewings.

Empty pizza boxes left lying on the floor will tend to put off potential new tenants when they come to view. I know from experience that two sharing men will tend to stay a long time and generally much longer than two sharing women (who seem far more likely to fall out with each other than two sharing men do.)

Boyfriends will also tend to hang round and stay over at their girlfriends places more (than the other way round) which leads to more wear and tear too at the girlfriends’ house.

And the further from home the tenants are,  the longer they may have friends coming to stay for.This is particularly the case when letting to young singles whose country of origin (and mates) are several continents away. In these cases you may find your place being occupied by more than just the tenants, for most of the time.

Of course, these are generalities.

The key thing you must do is to select people who have a history of paying their rent in the past. You can only find this out if you do proper reference checks on the applicants.

If they always pay their rent on time, you will find you can live with empty pizza boxes left on the floor though you may, however, just have to wait until they have gone before you can start marketing it again.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Private Rented Sector Experts and advice.

Services to Businesses and the Public Sector

Primarily, we are consultants to 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 websites, speak at property shows and we are regularly quoted by the media.

Services for Private Landlords

We also find a limited amount of time to help landlords and property investors by coaching them in how to make money in the private rented sector using ways that work, which are ethical, fair to tenants and which involve minimal risk to the investor.

AT OUR WEBSITE LETTINGFOCUS.COM:

HOME PAGE OF THIS BLOG click here: Blog

To read blog posts on related posts use the tags and categories at the bottom of each post (after the list of links), or over to the top right. Here, you can click on “Select Categories” and use the pull down menu to read all the posts on any Category that interests you.

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

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

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

TO READ CLIENT TESTIMONIALS – from both organisations and private landlords click here: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING”

Our book is the highest selling property book in the UK. Click here to Find Out More and Buy the Book at Amazon. If you are from an organisation and would like to bulk buy at least 50 books please ask us for special rates.

To JOIN our Free NEWSLETTER containing regular news for landlords and details of our Events simply send an email to david@LettingFocus.com – Please note we WILL NOT send spam or sell our mailing list to advertisers but please put us on your “white list” to ensure you receive our emails.

Discounted Products for Landlords: Landlords Resources

This blog is updated once a week, usually on a Monday or Tuesday (or more frequently when “hot” news items come up.)

For my random thoughts on property and personal finance, plus other random things that interest me from sports, to 80s and 90s Indy music, to tsunamis, to politics please see our TWITTER PAGE: Twitter

Copyright of Blog: David Lawrenson 2011. We pursue any copyright infringements.

LINK TO THIS BLOG OR TO OUR WEBSITE

Discharging Homelessness Duty to the Private Rented Sector – but where is the Property in the PRS

Tuesday, July 5th, 2011

Key Point:  We are concerned that whilst local authorities will, in theory, be able to discharge the homelessness duty into the private rented sector, the reality is that many councils may not have done enough to convince private landlords to make their property available to this end of the lettings market.

On Monday, I featured with a clutch of housing luminaries at the Guardian Housing Network Q&A session, which was all about “working with the private rented sector.”

This really boiled down to trying to figure out what local authorities and housing associations could do to better engage with the private rented sector.

I put my views forward online and the whole debate proved very useful. Followers of our work – whether landlords or organisations – will find the debate enlightening. You can read it in full at the bottom of this post.

At the end of the debate, Chairlady Kate McCann, asked us to summarise the key issues facing councils and other bodies in relation to engaging with the private rented sector.

I wrote some brief notes which you can see near the end of the Q&A and I have now expanded upon these here – as eight key points.

1.      Local authorities and housing associations must start to recognise the central role that government now has for the private rented sector (PRS). Action: Give the PRS more prominence in local housing strategy papers.

2.      Large numbers of private landlords are (1) confused by the huge number of changes to local housing allowance (LHA) rules and rates that have come in over the past two to three years, (2) do not realise they can be paid LHA direct in many cases and, (3) do not understand the difference between private sector Lease Schemes and Direct Let schemes. Action: Design clear communications to try to overcome the misunderstandings that private landlords have.

3.      Even within a single region, neighbouring local authorities, housing associations and other providers often compete with each other by offering different versions of similar products or the same product but with different incentives. This can confuse landlords (as well as being potentially wasteful of resources as the more savvy landlords play one provider off against another.) Action: Harmonise products and services unless you are convinced the benefits of competition outweigh the cost savings and simplicity gains from single products.

4.      Improve the marketing of what’s available for landlords. Even with simplified products it can be hard for landlords to find out exactly what it is that councils offer, especially on the internet. Action: Improve “findability” online. Utilise appropriate search engine optimisation techniques and communicate products clearly and in the online channels where landlords “shop” for their tenants or where they look for information.

5.      Action: Work much harder to counter any negative, misreported news and myths about the behaviour of tenants who are homeless or on Local Housing Allowance. Also, think carefully before signing up to campaigns which highlight the numbers of landlords who may exit the LHA market as these end up being read by landlords too and tend to generate their own momentum, leading to the feared result!

6.    Many mortgage lenders have mortgage terms and conditions which do not allow landlords to let properties to local authorities or housing associations under lease schemes. Some will not allow landlords to let to people on LHA either. Action: Request central government puts pressure on the Council of Mortgage Lenders to change this.

7.   Schemes to access the private rented sector must utilise some experience and perspectives from the landlord community outside of borough Housing Departments. Action: Widen recruitment pool to gain PRS experience and perspective.

8. Action: Understand that failure in delivery of the “back end service” to private landlords can act as a stab in the back for the best designed and best communicated products. For example, not communicating with landlords over why LHA payments have suddenly stopped, trying to claim overpaid LHA when a landlord could not possibly know that tenant’s circumstances have changed, telling a non paying tenant on LHA to ignore court orders and stay until the bailiffs come etc, will undo the best marketing and most innovative of schemes.

But Are Councils Doing Enough Now?

Local authorities will soon have the ability to “discharge the main homelessness duty into the private rented sector.”

This is a huge change and it means an applicant will no longer be able to reject a suitable offer of accommodation in the private rented sector.

The trouble for local authorities is the vast majority of private landlords (for the reasons I have highlighted above) are simply not prepared to make their properties available to this end of the market because they don’t think it’s worth the risk or, more often, because they simply don’t know what’s on offer.

In other words, whilst local authorities may, in theory, be able to discharge their duty, the reality is that there may not be enough PRS accommodation available to discharge it to.

Local authorities must urgently take action to address this issue. At present, we think not enough have grasped the nettle. They know that change is coming and they need to make urgent plans now.

The link to the debate is here: http://www.guardian.co.uk/housing-network/2011/jul/01/live-discussion-working-with-the-private-rented-sector

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Private Rented Sector Experts and advice.

Services to Businesses and the Public Sector

Primarily, we are consultants to 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 websites, speak at property shows and we are regularly quoted by the media.

Services for Private Landlords

We also find a limited amount of time to help landlords and property investors by coaching them in how to make money in the private rented sector using ways that work, which are ethical, fair to tenants and which involve minimal risk to the investor.

AT OUR WEBSITE LETTINGFOCUS.COM:

HOME PAGE OF THIS BLOG click here: Blog

To read blog posts on related posts use the tags and categories at the bottom of each post (after the list of links), or over to the top right. Here, you can click on “Select Categories” and use the pull down menu to read all the posts on any Category that interests you.

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

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

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

TO READ CLIENT TESTIMONIALS – from both organisations and private landlords click here: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING”

Our book is the highest selling property book in the UK. Click here to Find Out More and Buy the Book at Amazon. If you are from an organisation and would like to bulk buy at least 50 books please ask us for special rates.

To JOIN our Free NEWSLETTER containing regular news for landlords and details of our Events simply send an email to david@LettingFocus.com – Please note we WILL NOT send spam or sell our mailing list to advertisers but please put us on your “white list” to ensure you receive our emails.

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This blog is updated once a week, usually on a Monday or Tuesday (or more frequently when “hot” news items come up.)

For my random thoughts on property and personal finance, plus other random things that interest me from sports, to 80s and 90s Indy music, to tsunamis, to politics please see our TWITTER PAGE: Twitter

Copyright of Blog: David Lawrenson 2011. We pursue any copyright infringements.

LINK TO THIS BLOG OR TO OUR WEBSITE

Less Rent for Landlords Under LHA if they Agree to be Paid Direct

Tuesday, May 31st, 2011

The forthcoming Local Housing Allowance (LHA) caps and reductions have brought with them a range of technical and practical issues, including also impacts on landlords who never let to LHA tenants.

Statutory instruments SI #2835 2010 (which came into force 1 April 2011) allow local authorities slightly more discretion about whether to pay LHA directly to landlords. It states that direct payment may be used when: “the relevant authority considers that it will assist the claimant in securing or retaining a tenancy.”

The National Landlords Association (NLA) says, “This obviously implies that a local authority may choose to offer direct payment as an incentive to encourage landlords to accept the new lower rates of LHA. The policy has ‘discretion’ very much at its core – it is not a blanket declaration that landlords can have direct payment if they accept lower rents.”

The NLA seems cautiously optimistic that this measure will help to prevent some landlords exiting the market because of the immediate impact of the cuts. However, they add that it’s too early to assess the impact of the various LHA changes, not least because most tenants will not be affected until the end of this year.

Impact Will Be Different in Different Areas

Of course, the impact of the cuts to LHA is likely to vary considerably from market to market. As we have noted before at this blog, there are some areas across the country where the effect of the cuts will be relatively minor.

However, in others, most notably for some properties in the more-expensive-to-rent-in parts of London, the capped rate levels may not represent viable rents for landlords irrespective of the option to go for direct payments.

The net effect of the changes to LHA will likely see some landlords exit the LHA market, where other non-LHA-reliant potential tenants exist. Others will be able to make small cuts and may feel more confident about accepting smaller margins if payments can be made direct. And others may even be compelled to leave the PRS altogether if the figures don’t add up.

Whilst it is still too early to assess how great the effect will be, there is now lots of evidence of activity by some more central London boroughs who are trying to find accommodation for LHA dependent tenants in cheaper neighbouring boroughs.

We have suggested that the effect of moves like this will be to increase rents slightly in these neighbouring boroughs.

British Property Federation and “Del Boy”

Whilst the NLA has taken a fairly pragmatic view of this latest move the British Property Federation (BPF), have taken a very much more robust view.

At their website, the BPF has questioned the move, which according to them “Would see council staff having to wheel and deal with local landlords to reduce their rent in return for the comfort of (landlords) getting paid directly.”

Ian Fletcher, Director at the British Property Federation, said: “This is Del-Boy benefit policy. Seeking to trade a landlord’s right to be paid with the Government’s desire to reduce its expenditure. Landlords should expect to get paid for the housing they provide. That shouldn’t be contingent on lowering rents, or having to wait eight weeks (for arrears to build up) under the current system.”

He adds, “The Government would not dare treat other small businesses in such a way, but seems to think it is acceptable to allow people to rack up huge debts and treat landlords so badly.”

We would be interested in hearing what landlords who are reading this think and to what extent they agree with the BPF’s harder line or the NLA’s more pragmatic and participative approach.

Write to us at david@lettingfocus.com

There will be no blog nex week.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Private Rented Sector Expertise and expertise and I’m David Lawrenson, a landlord and property investor myself for over 26 years and best known as the author of “Successful Property Letting” – the UK’s top selling commercially published property book for the last 3 years. 26,000 copies sold (up to Feb 2011).

Services to Businesses and the Public Sector

Primarily we are consultants to a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors and insurers. We help them develop and improve their landlord, private rented sector and buy to let product strategies, marketing and services.

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

Services for Private Landlords

We also find a limited amount of time to help landlords and property investors by coaching them in how to make money in the private rented sector using ways that work, which are ethical, fair to tenants and which involve minimal risk to the investor.

AT OUR WEBSITE LETTINGFOCUS.COM:

TO GO TO THE HOME PAGE OF THIS BLOG click here: Blog

To read blog posts on related posts, use the tags and categories at the bottom of each post (after the list of links), or over to the top right. Here, you can click on “Select Categories” and use the pull down menu to read all the posts on any specific topic.

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

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

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

TO READ CLIENT TESTIMONIALS – from both organisations and private landlords click here: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING” Click here to Find Out More and Buy the Book at Amazon. If you are from an organisation and would like to bulk buy at least 50 books please ask us for special rates.

To JOIN our Free NEWSLETTER containing regular news for landlords and details of our Events simply send an email to david@LettingFocus.com – Please note we WILL NOT send spam or sell our mailing list to advertisers but please put us on your “white list” to ensure you receive our emails.

Discounted Products for Landlords: Landlords Resources

This blog is updated once a week, usually on a Monday or Tuesday (or more frequently when “hot” news items come up.)

For my random thoughts on property and personal finance, plus a host of other random things that interest me from football, to 80s and 90s Indy music, to tsunamis, to politics please see our TWITTER PAGE: Twitter

Copyright of Blog: David Lawrenson 2011.

LINK TO THIS BLOG OR TO OUR WEBSITE

Social Letting Agency An approach for Local Letting Agency Models that works for Landlords

Monday, May 23rd, 2011

Some of our work at LettingFocus involves working with local authorities on setting up local or “social letting agencies” and “private rented sector access schemes.”

The aim of the various schemes is to try to encourage landlords to consider letting to tenants who are on housing benefits, who are vulnerably housed or who “present” to the local authority seeking a roof over their heads.

With the decline of the social housing sector, the housing solution (usually the only solution) the councils can offer will often be the private rented sector. But, the trouble for the councils is that so far the bulk of private landlords have been reluctant to engage with this end of the market, and especially with tenants on housing benefit (or Local Housing Allowance as it’s called.)

There are a variety of reasons for this, some of which we have discussed in previous blog posts here and at various public speaking events.

I don’t propose to go into the reasons why so many landlords don’t like this part of the market again here. Suffice to say that because of landlord antipathy towards the sector, the councils have been trying to come up with attractive incentives to get landlords interested.

Direct Lets and Lease Schemes

In the case of “Direct Lets” to tenants on housing benefit, incentives include payment of deposits, bonds to guarantee the state and condition of the property, the setting up of fast track systems to pay landlords direct and so on.

Also, there are the “Lease Schemes” in which a landlord can get a guaranteed, often fixed, rent for a period of 2, 3 or sometimes even more years.

It’s all designed to get landlords to make their properties available to this part of the population.

But I always explain to councils that there are seven reasons why this job will prove hard. These are as follows:

1 For too long borough’s strategies for using the private rented sector for housing have been tucked away on page 94 of their Housing Strategy papers, as an afterthought (though this is changing)

2. Even when they have a good product for private landlords, the landlords cannot easily find out exactly what it is the councils offer on the Net. Strategies to improve findability online are essential.

3. Even within a single borough, housing associations, council and other providers often compete with each other to offer the best product. This confuses landlords (and can be wasteful of resources too.)

4. The products offered are not communicated clearly and not reaching landlords in the places where landlords “shop” for their tenants or where they look for information.

5. The constant stream of news, much of it negative and misreported on Local Housing Allowance, especially in the last 2 years, has left landlords confused. (Some of the negative media originates with the councils’ own  representative bodies who have unfortunately exacerbated the “worry factor” in a valiant but failed bid to get the Coalition government at Westminster to “think again.”)

6. Recruitment policies for private rented sector access schemes too often look to recruit from borough Housing Departments when what’s needed is a private rented sector perspective.

7. Failure in delivery of the back end service to landlords can act as a stab in the back for the best designed and best communicated products.

The last point is worth dwelling on with some real life examples.

Real Life Examples

Recently I attended a council ran landlords event outside London. It was all going well until near the end when a number of landlords, on hearing the councils plan for the private rented sector, said things along the lines of, “That’s all very well, but why is the council telling my LHA tenant to stay put and wait for the bailiffs” and “Why has the council lost my tenants’ application forms?”

And just two weeks ago, a landlord wrote to me to complain that his East of England local authority was trying to reclaim overpaid rent to him because the tenant had left the property. As he said, “How am I to know this?” (Thanks to CT for the info on that one.)

Another landlord, from Surrey wrote to ask me if I knew a way around Lloyds Banking Group’s bizarre strategy to not allow landlords with mortgages with them to let under the Lease Scheme arrangements. Apparently, his council was no help at all in trying to resolve the problem.

Local authorities need to fix these back end issues too because a landlord who is failed will tell ten other people and destroy any other good work that the council has done.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Private Rented Sector Expertise and expertise and I’m David Lawrenson, a landlord and property investor myself for over 26 years and best known as the author of “Successful Property Letting” – the UK’s top selling commercially published property book for the last 3 years. 26,000 copies sold (up to Feb 2011).

Services to Businesses and the Public Sector

Primarily we are consultants to a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors and insurers. We help them develop and improve their landlord, private rented sector and buy to let product strategies, marketing and services.

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

Services for Private Landlords

We also find a limited amount of time to help landlords and property investors by coaching them in how to make money in the private rented sector using ways that work, which are ethical, fair to tenants and which involve minimal risk to the investor.

AT OUR WEBSITE LETTINGFOCUS.COM:

TO GO TO THE HOME PAGE OF THIS BLOG click here: Blog

To read blog posts on related posts, use the tags and categories at the bottom of each post (after the list of links), or over to the top right. Here, you can click on “Select Categories” and use the pull down menu to read all the posts on any specific topic.

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

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

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

TO READ CLIENT TESTIMONIALS – from both organisations and private landlords click here: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING” Click here to Find Out More and Buy the Book at Amazon. If you are from an organisation and would like to bulk buy at least 50 books please ask us for special rates.

To JOIN our Free NEWSLETTER containing regular news for landlords and details of our Events simply send an email to david@LettingFocus.com – Please note we WILL NOT send spam or sell our mailing list to advertisers but please put us on your “white list” to ensure you receive our emails.

Discounted Products for Landlords: Landlords Resources

This blog is updated once a week, usually on a Monday or Tuesday (or more frequently when “hot” news items come up.)

For my random thoughts on property and personal finance, plus a host of other random things that interest me from football, to 80s and 90s Indy music, to tsunamis, to politics please see our TWITTER PAGE: Twitter

Copyright of Blog: David Lawrenson 2011.

LINK TO THIS BLOG OR TO OUR WEBSITE

Local Housing Allowance and Housing Benefit not of interest for Majority of Private Landlords

Wednesday, April 13th, 2011

Many local authorities, housing associations and charities designing strategies to try to get private landlords to let to tenants on Local Housing Allowance are very fond of doing surveys of landlords.

(Readers of this blog will know how critical I was of one particular survey of landlords that, last year, was used to make some astonishing claims for the impact on homelessness in London of the current changes to Housing Benefit / Local Housing Allowance .)

Doing surveys is better than doing no surveys at all (usually!) but these surveys can be limited in value.

Typically the surveys I have seen solicit the views of landlords who the authority already has a relationship with, those few landlords who are accredited with the council (which is usually not many) and perhaps those members of landlords associations who live in the local area.

From the base of responses from these groups, strategies and initiatives are sometimes devised.

Again, all well and good, but the trouble with this approach is that it misses out the views of the majority of landlords who, right now, want nothing to do with tenants on benefits or the town halls.

For most landords, “tenants on benefits” and the various incentives the council provides for landlords are simply “off their radars.”

To illustrate this, a landlord “tenant find” website I know has 100 live properties listed in the London area – all uploaded by landlords.

When uploading properties to the site, the landlords are presented with a box to tick if they accept tenant of benefits. Not one landlord ticked the box. In Greater Manchester there were 20 live properties. Again, it is the same story – no one has ticked the box to say they accepted tenants on benefits.

Well Meaning but Wrong Strategies

Until local authorities understand how to reach landlords like these and find out what they are thinking and why they are so suspicious of the whole Housing Benefit / Local Housing Allowance system, they will be missing out on the big picture.

And if they believe the survey results unquestioningly and even worse – use them as a base to construct strategies for their local private rented sector, “local letting agency models”, social letting agencies and PRS Access Schemes etc – they will undoubtedly devise bad strategies.

Bad strategies for the private rented sector are not a small matter. It is wasteful and bad for society, not least because the PRS is now so big – indeed, as I explain below, it is probably already bigger than the social housing sector.

Given the size of the PRS, it is time strategies for the private rented sector stopped being a footnote on local authority planning documents.

Private Rented Sector Bigger than Social Housing Sector Now

The English Housing Survey, which is published by the Department for Communities and Local Government, indicates that for the first time since the mid 1960s the private rented sector (PRS) is now larger than the local authority / housing association sector.

The latest survey is for 2009/10. At that time there were 3.7 million households in social housing, compared to 3.4 million in the private rented sector – a difference of just 300,000.

A year earlier, the same source found the respective figures were 3.8 million (social housing) and 3.1 million in the PRS – a difference of 700,000.

So, it’s a fair bet to say that if the trend of those years continued into 2010/11 – and there is no reason to think that it hasn’t – we must have already reached the point where the PRS is the larger.

Private companies selling to the private landlord should also afford the private rented sector more space for the development of robust strategies that meet customer needs. In particular, we think this is true of mortgage lending banks and building societies where provision of buy to let mortgages is still so heavily concentrated among a few players.

Next week we will look at the reasons why the PRS has grown so big and why social housing (and owner occupation) continues to decline.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Private Rented Sector Consultancy and expertise and I’m David Lawrenson, a landlord and property investor myself for over 25 years and best known as the author of “Successful Property Letting” – the UK’s top selling commercially published property book for the last 3 years. 26,000 copies sold (up to Feb 2011).

Services to Businesses and the Public Sector

Primarily we are consultants to a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors and insurers. We help them develop and improve their landlord facing or buy to let product strategies, marketing and services.

We also write for property websites and we are regularly quoted by the media.

Services for Private Landlords

We also find a limited amount of time to help landlords and property investors by coaching them in how to make money in the private rented sector using ways that work, which are ethical, fair to tenants and which involve minimal risk to the investor. We pride ourselves on giving independent unbiased advice on a one to one basis.

AT OUR WEBSITE LETTINGFOCUS.COM:

TO GO TO THE HOME PAGE OF THIS BLOG click here: Blog

To read blog posts on related posts, use the tags and categories at the bottom of each post (after the list of links), or over to the top right. Here, you can click on “Select Categories” and use the pull down menu to read all the posts on any specific topic.

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

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

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

TO READ CLIENT TESTIMONIALS – from both organisations and private landlords click here: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING” Click here to Find Out More and Buy the Book at Amazon. If you are from an organisation and would like to bulk buy at least 50 books please ask us for special rates.

To JOIN our Free NEWSLETTER containing regular news for landlords and details of our Events simply send an email to david@LettingFocus.com – Please note we WILL NOT send spam or sell our mailing list to advertisers but please put us on your “white list” to ensure you receive our emails.

Discounted Products for Landlords: Landlords Resources

This blog is updated once a week, usually on a Monday or Tuesday (or more frequently when “hot” news items come up.

For my random thoughts on property plus a host of other random things,  please see our TWITTER PAGE: Twitter

Copyright of Blog: David Lawrenson 2011.

LINK TO THIS BLOG OR TO OUR WEBSITE

Government Policy on the Private Rented Sector is Not Joined Up

Tuesday, March 1st, 2011

Sometimes government policy doesn’t seem to join up too well – with different policies apparently conflicting with each other.

Two good examples are (1) the lending activities of state owned banks which appear to hamper what local councils are trying to do with their private rented sector access schemes, especially lease schemes and (2) policies on HMOs which appear to be working against the recent change to the rate of LHA for single people under 35.

Let’s look at the first example first.

State Owned Banks Not Exactly Helping Those in Housing Need

Someone working in temporary housing in Exeter emailed me to complain that a state owned bank, Northern Rock, would not allow her private landlord client (whose buy to let mortgage is with Northern Rock) to let his property under a 3 year lease scheme to the council. And could I help?

First, for non-housing people reading this blog, we will briefly explain what a private lease scheme is.

Under long lease schemes a private landlord can get a guaranteed rent (albeit a little below market rents) from letting to the council or housing association. The council in turn lets the property to people in housing need. The landlord gets no voids for 3 years and the property back at the end or however long the lease term is and everyone should be happy.

But this mortgage lender apparently insists that lettings are only on a standard assured shorthold tenancy or lease of less than a year. Never mind that landlords who have entered into long leases are getting a guaranteed rent (courtesy of the taxpayer ultimately), suffering no voids and won’t have to pay letting fees and are therefore presumably less likely to default on their buy to let mortgages as a result.

As Northern Rock mortgages are now owned by the state, readers of this blog might like to consider the irony that a state owned bank won’t consider these schemes which, of course, are meant to house those in housing need.

According to James Ball at www.LannerCapital.co.uk other part state owned banks who also “Like to say No” to lease schemes of this type and length are Lloyds Banking Group (BM Solutions and HBOS) and Nat West (part of RBS.)

BM Solutions and Northern Rock go further and are among the state owned banks who will also not lend to landlords who wish to let to people on Local Housing Allowance.

Not Joined Up

At the same time, local councils that we advise and many others across the land are very busy trying to attract landlords to their private rented sector schemes (including lease schemes) as a home in the private rented sector is often the only housing option they can offer.

Much money and effort is spent on local councils’ endeavours on this kind of work only to be thwarted by state owned banks that won’t let their landlord customers let to these same people that the councils are trying to help.

Perhaps someone senior in Housing at the government or in local authorities ought to have a word with whomever controls lending at these state owned banks.

HMO Article 4 Directions Seem at Odds with Policy on Local Housing Allowance

Now let’s look at HMOs.

For the uninitiated an HMO is a House in Multiple Occupation – basically a house shared by people who form more than two “households.”

First some background. (Journalists with short attention spans should skip the next two paragraphs.)

The Coalition Government allowed the creation of HMOs without the need for planning permission. But at the same time, they made it easier for local authorities to use planning laws to restrict HMOs locally – through a mechanism called an “Article 4 Direction.”

These Article 4 Directions, where implemented, remove “permitted development rights” in a specific geographical area and require planning permission for the creation of all new HMOs. The Directions are commonly likely only to be applied for and implemented in towns and cities that have a high proportion of shared housing, such as university towns or areas with a large number of low income households.

For those with short attention spans it simply boils down to local councils being able to apply to restrict HMOs in their area.

NLA Objections

Landlords’ groups like the National Landlords Association (the NLA) have expressed concern that the Article 4 Directions are likely to displace students from the streets around universities and push them to other areas where HMOs are currently occupied by tenants dependent on Local Housing Allowance (LHA) to pay their rent and other low income households.

The result, they say could be fewer properties available for those on low incomes – potentially increasing housing waiting lists and costing local authorities significant amounts of money for temporary B&B accommodation.

We think this is possible too.

Worse Still

But at LettingFocus, we think the situation could be made worse still from April 2012 when the shared room rate (room in a shared house) is extended from age 25 up to age 35 – meaning that single people under 35 who are on Local Housing Allowance will be paid a shared room rate rather than a rate for a flat.

This move can only further increase the demand for just this type of HMO at the same time as local Article 4 Directions reduces its supply. Again, this does not seem like joined up policy to us.

MORE ABOUT LETTINGFOCUS AND WHAT WE DO

LettingFocus.com is the home of Private Rented Sector Information and expertise and I’m David Lawrenson, a landlord and property investor myself for over 25 years and best known as the author of “Successful Property Letting” – the UK’s top selling commercially published property book for the last 3 years. 26,000 copies sold (to Feb 2011).

Services to Businesses and the Public Sector

Primarily we are consultants to a range of organisations including banks, building societies, local authorities, social housing providers, institutional investors and insurers. We help them develop and improve their landlord facing or buy to let product strategies, marketing and services.

We also write for property websites and we are regularly quoted by the media.

Services for Private Landlords

We also find a limited amount of time to help landlords and property investors by coaching them in how to make money in the private rented sector using ways that work, which are ethical, fair to tenants and which involve minimal risk to the investor. We pride ourselves on giving independent unbiased Buy to Let Advice on a one to one basis.

AT OUR WEBSITE LETTINGFOCUS.COM:

TO GO TO THE HOME PAGE OF THIS BLOG click here: Blog

To read blog posts on related posts, use the tags and categories at the bottom of each post (after the list of links), or over to the top right, you can click on “Select Categories” and use the pull down menu to read all the posts on any specific topic.

If you want to reply:

If you are on the URL for this specific post, at the bottom of the post, you should see a space to “Leave a Reply.” (If you are on the Blog Home Page, click on the title of this blog first to get to the URL.)

Please note, we delete all spam.

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

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

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

TO READ CLIENT TESTIMONIALS – from both organisations and private landlords click here: Testimonials

BUY “SUCCESSFUL PROPERTY LETTING”Click here to Find Out More and Buy the Book at Amazon. If you are from an organisation and would like to bulk buy at least 50 books please ask us for special rates.

To JOIN our Free NEWSLETTER containing regular news for landlords and details of our Events simply send an email to david@LettingFocus.com – Please note we WILL NOT send spam or sell our mailing list to advertisers but please put us on your “white list” to ensure you receive our emails.

Discounted Products for Landlords: Landlords Resources

This blog is updated once a week, usually on a Monday or Tuesday (or more frequently when “hot” news items come up.

For my random thoughts on property plus a host of other random streams of consciousness, please see our TWITTER PAGE: Twitter

Copyright of Blog: David Lawrenson 2011.

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