Regulation & Law
News articles looking at national legislation and local regulation and the application of law to the residential property industry.
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Lost letting fees can be replaced by other income streams, claims referencing firm
Referencing firm Rent4Sure says agents are going to face a “challenging time” when the letting fees ban is introduced, but that there will be ways to replace the lost income. The government’s most recent English Housing Survey revealed that tenants on average pay £223 or more in fees to agents. Some 65% of private renters said they paid an admin fee, 33% a finders’ fee, 7% a non-returnable holding fee, 5% a returnable holding fee while 4% paid ‘other’ fees. “One of the key ways to replace lost fees income is for agents to increase their insurance product uptake, and we’re ready to help them do that,” says Luke Burton, Sales and Marketing Director at Rent4sure. “We want to work actively with our letting agent and landlord clients to deliver additional income streams that benefit tenants and landlords.” The government consultation on a total fees ban ended on June 2nd but the Residential Landlords’ Association recently predicted that, because it will require primary legislation, it is unlikely a ban will be introduced before Autumn 2018. Rent4Sure says it can offer agents both the opportunity to develop alternative income streams and also help them get to speed on tasks that before might…
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Mandatory three-year tenancies questioned by leading lettings agent
The UK’s largest lettings agency Belvoir has set itself against all the mainstream political party manifestos and the Association of Residential Letting Agents (ARLA) by questioning the need for mandatory three-year tenancies. The Conservative Party seeks to “encourage landlords to offer longer tenancies as standard” while Labour goes much further, saying it will “make three-year tenancies the norm with an inflation cap on rent rises”. The Liberal Democrats advocate “longer tenancies of three years or more with an inflation-linked annual rent increase built in to give tenants security”. But Belvoir’s latest lettings index shows that 43% of tenants who rent through its branches stay for between 13-18 months, 29% for between 19-24 months and only 18.2% for more than two years. ‘Question the need’ “Looking at the manifestos of all political parties it would seem that all are looking to introduce three-year mandatory tenancy agreements although [our] figures question the need for this as our tenants can already rent with confidence, and most opt to leave when they wish to do so,” Belvoir says. But not all landlords agree with Belvoir’s point of view. As we reported last week, one of London’s largest Build to Rent landlords recently scrapped deposits…
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Letting fees display rules enforcement is weak or non-existent, research reveals
The fees display regulations introduced two years ago to force agents to show how much they charge tenants remain largely unenforced, research by the National Approved Letting Scheme (NALS) has revealed. NALS made Freedom of Information requests to every local authority in England and the results make for grim reading, while also highlighting the huge challenges that cash-strapped councils will face when they begin enforcing the government’s proposed letting fees ban. An astonishing 93% % of all the Local Authorities canvassed have not issued any penalties or final warnings to agents for not displaying their fees since the new regulations were introduced in 2015. And the three local authorities who have issued financial penalties – Warwickshire, Kensington & Chelsea and Redbridge – have only mustered THREE in total. Only one of these has been paid in full. Local Authorities’ ability to issue warning letters is only marginally better. Just three local authorities have issued warning letters in significant numbers – East Sussex, Redbridge and Walsall – and in total only 83 warning letters have been issued across the UK so far. Lack of resources These figures reflect the lack of resources that most local authorities have available to police the regulation of letting agents. The NALS research shows…
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Newport landlord is first to be fined for non-compliance with Rent Smart Wales
The first fine has been issued to a landlord for not being registered or licenced under the Rent Smart Wales scheme. Landlords who rent out properties in Wales have, since November 2016, been required to register with Rent Smart Wales and must now provide information about both themselves and their properties. Also, landlords must also either have a licence to be a landlord in Wales, or use a letting or managing agent who is licenced. Rent Smart Wales The first landlord to be collared by the scheme is Robert Ivor Grovell who lives in the village of Llanfrechfa outside Newport. After being successfully prosecuted Grovell must now pay £4,400 both for failing to comply with Rent Smart Wales but also for operating a “dangerous, unlicensed house in multiple occupation”, the organisation says. He must also pay costs of £1,000 and a victim surcharge of £170. Non-compliance Grovell was prosecuted under Section 7(5) of the Housing (Wales) Act 2014 at Newport Magistrates court for his non-compliance. The offence was one of a number brought against him by Newport City Council for housing-related offences at a property on Orchard Street in Newport to which he pleaded guilty. In December last year Environmental…
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The Property Ombudsman expels agents in Essex and London
Two letting agents have been expelled from UK’s largest dispute resolution service The Property Ombudsman (TPO) scheme following shocking complaints from client tenants and landlords. The agents are London Corporate Apartments Ltd based in Aldgate in London and Letting Solutions Ltd based in Essex. Ombudsman Katrine Sporle (pictured) has revealed details of the two cases, both of which highlight the difficulties of policing agents which either refuse to cooperate with dispute resolution schemes such as TPO or which fail to keep adequate administration or financial records. London agent Cricklewood-based London Corporate Apartments (LCA) has one director – Manchester-based Khaled Abed-Alrazek – whose company was reported to TPO over a disputed deposit. The complainant disputed the deductions made from their deposit and complained it had taken a long time for the rest of the deposit to be returned to them. Complaints of a similar nature are to found online about the company, including several damming Google reviews. TPO reviewed the complaint and found that the agent fell short of the standards required of members and instructed LCA to pay an award of £340. This LCA failed to do so and the company has now been expelled from TPO for two years. “Refusing to fully cooperate with…
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Still “too many” cases of rogue letting agents says SAFEagent
Despite recent regulatory changes and industry initiatives there are still “too many” cases of criminal letting agents stealing landlord and tenant cash, says membership-based campaigning group SAFEagent. The comments come as the organisation kicks off SAFEagent Awareness Week from 15th to 19th May which is designed to highlight to consumers the “importance of choosing a professional agent who is part of a Client Money Protection (CMP) Scheme run by a regulatory organisation”. SAFEagent, which has 3,000 member agents across the UK and has been running for six years, recently won official backing for its ongoing client money protection campaign when in March this year the government said CMP would be made mandatory for all agents. Mandatory CMP “While SAFEagent is delighted that the campaign has finally achieved its goal of mandatory CMP, it is not yet law,” a statement from the organisation says. “This still leaves consumers at risk if their chosen agent does not have client money protection.” John Midgley, Chair of the SAFEagent Steering Group (pictured), says: “Choosing a letting agent without CMP in place therefore remains a massive risk for both landlords and tenants. We’ll continue to campaign, raising awareness among consumers of the importance of only using…
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Savills wins Appeal Court case over unpaid £150,000 commission
It has been revealed that Savills has won an Appeal Court case and is now due a commission of some £150,000 for the sale of Mill Ride Estate near Ascot in Berkshire, which sold for early £7 million in 2012. The estate used to be land and stables but during the 1990s was laid out as a golf course with a clubhouse (pictured). It was bought by Sidemanor Ltd in 2003, a company owned by London and Argyll-based businessman Peter Blacker (pictured, left) Savills were instructed to sell the property in 2012 and produced several valuations ranging from £2.5m to £10m, the higher of which assumed that planning permission could be gained for a large detached residence within the estate’s grounds, and vacant possession of a cottage. Savills also produced a document outlining what was to be sold including how, should the property sell, they would be due to a fee. This included the recommendation that the estate be sold via “private treaty” and that “we suggest that the estate is offered for sale as soon as planning consent has been granted and we advise that the marketing is initially carried out on a very private basis,” said Savills director…
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US homeowner sues portal over online valuation. Could it happen here?
One of the best-known property portals in the US is being sued by a vendor over its online valuation of her home in a suit filed at an Illinois court. Real estate lawyer Barbara Andersen alleges that the sale of her townhouse, which she has been trying to sell in the town of Glenville and that’s listed on Zillow overlooking a golf course for $626,000 (pictured, right), has faced a ‘major roadblock’ because property portal Zillow’s automated valuation system puts her townhouse at considerably less – $562,000. The lawyer is not seeking damages but instead is asking the portal to amend her property’s ‘Zestimate’. But the portal told The Washing Post that it believed her claim was “without merit”. Like Zoopla, Rightmove, Mouseprice and others in the UK, Zillow has been offering ‘appraisals’ of properties for over a decade and has always put home valuations across the US at the core of its business. Critical And as in the UK, many agents and homeowners in the US have been critical of these estimates. “If you could commoditise property and price it accurately per square foot [via an online tool] then I would be out of a job,” says property expert…
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City firms bid to replace tenant deposits with insurance passport
A tenant deposits platform backed by two major City firma has launched with the aim of competing with the current cash deposit schemes. Backed by both Hiscox insurance and credit score provider Experian and accessed via an iPhone app, InsureStreet says it will issue renters with a digital ‘RentPassport’ that validates their profile and then provides them with an instant insurance quote to cover their deposit. Tenant deposits Instead of paying a cash deposit, renters make a one-off payment for an insurance policy that covers them for the duration of the rental contract. InsureStreet claims that in most cases, this insurance premium will be less than a tenth of the cost of a deposit, and that the system will reward good tenant behaviour by offering lower premiums at renewal. The app is free for agents, landlords and renters to download and use, the company says. But what’s not clear is whether the premiums paid by renters for the insurance will be included in the looming letting fees ban. The Negotiator asked CEO Tahir Farooqui (pictured, below) about this. He replied that: “We absolutely support the letting fees ban and so do many of the property partners we are engaging with” which would indicate…
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EasyProperty withdraws advertising claims after ASA probe
Online agent easyProperty.com has agreed to withdraw several claims about its service from any future advertising following a complaint to the Advertising Standards Authority (ASA). The complaint was made by a member of the public who had clicked on a link within a Google-sponsored search result to an ad that included: “Get an offer within 20 weeks”, “Save £2809 on estate agent fees”, “No commission fees” and “Save with low fixed fees”. After contacting easyProperty, the complainant was quoted a saving of less than £2,809 and “was not given an explanation of how the advertiser could get them offers within 20 weeks”, the ASA says, and then challenged whether the claims in the ad were misleading and could be substantiated. Claims removed EasyProperty has now removed “Get an offer within 20 weeks” and “Save £2809 on estate agent fees” from its advertising. It also agreed in future ads to use less definitive savings claims – such as ‘You could save’ and that they would make it clear that the ‘offer within 20 weeks claim’ actually referred to their money back guarantee offer, whereby consumers would receive a refund if their property wasn’t sold within 20 weeks. On this basis and…
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