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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NLA questions Right to Rent scheme
The Right To Rent immigration control scheme introduced by the government in England last February is not having the “desired effect”, the National Landlords Association says. The comments come from its head of policy Chris Norris in reaction to figures released today showing that one landlord is being fined every four days under the Right to Rent rules. Sixty-two landlords received penalties under the scheme during its first eight months of operation from February to September last year, the figures show. Fines totalling £37,000 were handed out, or £596 on average per landlord, although fines in theory can reach £3,000 for the most serious cases. Out of the 62 cases 36 were for lodgers in private houses and 26 were handed to landlords of private rented accommodation. The figures were obtained by the Press Association through a Freedom of Information request. Chris Norris, head of policy at the National Landlords Association (pictured, left), says he believes that most of the landlords involved are accidentally breaking the immigration rules rather than knowingly doing it. He also said that “ultimately this scheme should be judged on whether it tackles or prevents those who knowingly ignore the law and let to people who…
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UK to set up world’s first property register of properties owned by foreign companies
The government has announced plans to introduced a nationwide register of foreign companies that own properties in the UK in a bid to tackle corruption. In what is claimed to be a world first, the system will reveal the beneficial owners of property controlled by overseas companies and other legal entities such as partnerships. This will end the current and very common practice of foreigners owning UK property through offshore registered companies, as highlighted by Channel 4’s From Russian with Cash documentary in two years ago. Offshore trust During it one of the agents was filmed suggesting how 80% of sales at the time in central London were with international, overseas buyers and that “50 or 60%” of them were carried out in “various stages of anonymity…whether it be through a company or an offshore trust”. Police investigations looking at international corruption within the UK have identified more than £180m of property in the UK that are suspected proceeds of corruption, and that 75% of those involved were using international companies to cover their tracks. “Greater transparency of ownership brings many benefits,” says Margot James, Minister for Small Business, Consumer and Corporate Responsibility. “We know that market transparency fosters confidence…
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How much will agents lose when letting agent fees ban kicks in?
It’s a figure much discussed within the consultation document published on Friday setting out the Department of Communities and Local Government (DCLG’s) plans to introduced a letting agent fees ban. If the DCLG’s plans are implemented as they stand following the consultation period, then neither landlords nor agents will be able to charge tenants any “fees, premium or charges to facilitate the granting, renewal or continuance of a tenancy”. “The Government also proposes to ban any letting fees charged to tenants by landlords and any other third parties to ensure that letting agent fees are not paid by tenants through other routes. Tenants should only be required to pay their rent and a refundable deposit,” the consultation says. Average fee Within the document’s detail, the DCLG says the average fee taken by agents is between £200-300, based on the 2014-15 English Housing Survey, while the National Approved Letting Scheme (NALS) is reported to have indicated an average fee of £172 with a range of between £30 and £500. Campaigning group Generation Rent told DCLG that the average for a couple renting a home is £400 within range of between £40 and £780, while homelessness charity Shelter believes one in seven renters…
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Minister comes down hard on rogue letting agents and landlords with £30k fines
The government has published details of a tough new system of civil penalties to tackle rogue letting agents and landlords. From today onwards these enable local housing authorities to issues fines to both landlords and their agents of up to £30,000 for a range of housing offences. The measures are part of the promises made in last month’s Housing White Paper to “create a bigger and better private rental sector”. “These measures will give councils the additional powers they need to tackle poor-quality rental homes in their area,” says Housing Minister Garvin Barwell (pictured, left). “By driving out of business those rogue landlords that continue to flout the rules, we can raise standards, improve affordability and give tenants the protections they need.” Offences covered include: Failure to comply with an Improvement Notice; HMO offences Failure to licence houses in areas where such schemes are operating Failure to comply with management regulation for HMOs. These new powers, which were introduced by section 126 and Schedule 9 of the Housing and Planning Act 2016, are designed to offer an alternative to councils to the costly and often lengthy process of prosecuting rogue landlords and agents. The penalties will be applied through a…
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ASA rejects complaints about property buying agency flyer
A flier circulated in Manchester by a national property buying agency designed to resemble a red and white Post Office ‘missed delivery’ card can be used again following two recently complaints from the public to the Advertising Standards Authority (ASA). The cards, which the complainants said they believed was not obviously identifiable as marketing material, were designed by Property Purchased Fast to copy some design elements of a Post Office missed delivery card. This included an apparently handwritten reference number and a request to contact a named contact and mobile number, as well as the words ‘Sorry we missed you’. After being contacted by the ASA, the company said the card was marked “sufficiently clearly” with their company name, a reference number and contact details, as well as text on the front that stated “We want to offer you a FREE valuation” and a list of services. The ASA concurred. “They believed these elements made the nature of Property Purchased Fast’s business and/or the purpose of the circular clear,” the ASA says. “We considered it could be taken to mean that a caller with a business purpose had been unable to obtain an answer, rather than that it had not…
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TPO reveals its work with Law Commission into retirement leasehold fees
The Property Ombudsman (TPO) has revealed how it has been working with the Law Commission to produce a report that heavily criticises retirement property landlords for charging hidden leasehold fees when properties are sold or sub-let. The fees involved as called ‘event fees’ and over costs “buried deep” in leaseholds and then charged when there is a Transfer of Title or Change of Occupancy – and even when a spouse or carer moves into a property. Agents are also highlighted in the investigation, which has been conducted over two years and shines a light on how many retirement properties are sold. It has now been presented to parliament and the Law Commission says it is now awaiting a response from the government. Landlords criticised TPO backs the Law Commission’s stance that the fees help offset the often substantial cost of the extra on-site healthcare services many retirement home developments offer, but criticises many landlords – and agents – for not highlighting the fees at the point of sale. “Owners are not always being told about the charges, which can be up to 30% of the property price,” the Law Commission says. “Others may be hit by huge bills for changes…
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Purplebricks takes down website claims after ASA probe
Purplebricks has been reported to the Advertising Standards Authority (ASA) once more for claims made on its website and, following a probe by the watchdog, subsequently taken down. The claims under scrutiny on this occasion are that it “takes us just 14 days to find a buyer” but, after the complainant clicked an icon next to the claim, it clarified that “the average time taken from a property going live to a viewing being booked for the eventual purchaser is 14 days”. A similar claim made for the Purplebricks’ lettings operation was also contested by the complainant. Using an identical device, the company said: “6 days – on average it takes us just 6 days to find a tenant”. Upon clicking an icon next to this text the following text appeared in a pop up: “The average time taken from a property going live to a viewing being booked for the eventual tenant is 6 days.” Misleading? The ASA says the complainant suggested that both claims were misleading and could be substantiated and, after the ASA contacted Purplebricks, the company agreed to remove the claims and the case was resolved informally. This is now the fourth complaint received against Purplebricks since September 2016.…
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Total tenant fees ban will cost industry 4,000 jobs, claims ARLA research
A total tenant fee ban will cost the industry £200 million a year in turnover and 4,000 jobs according to research published today by The Association of Residential Letting Agents (ARLA). The research also suggests that landlords will lose £300 million in income while tenants will pay an extra £103 a year in rent on average. ARLA commissioned Capital Economics to look at the lettings industry, which it says turns over £4 billion a year and employs 58,000 people charging on average £206 per tenant or £412 for a pair of tenants. £700 million a year The research also reveals that tenant fees generate around £700 million a year for the industry or 20% of its turnover. In what ARLA describes as the “damning, unintended consequences” of a ban, it will benefit those who move house often, but push up rents for those who must or choose to stay put for long periods. “The letting fees ban favours those tenants who move more regularly, says ARLA Managing Director David Cox. “This is because both short term tenants and long term tenants – who move less frequently – will see a rise in rent equivalent to £103 per year under our…
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Client Money Protection to be made compulsory for all letting agents, says review
Membership of a Client Money Protection scheme must be made compulsory for all letting agents in England, a government working group has concluded following more than six months of written and spoken evidence. This has included evidence from landlords, tenants and letting agents, as well as the various industry bodies including NALS, ARLA, NLA, RLA, RICS and UKALA. The working group, which has been led by Baroness Hayter and Lord Palmer (pictured, right), has revealed in its report that 85% of respondents were in favour of making Client Money Protection compulsory for letting agents, saying that it would help drive up standards across the sector. It also says that efforts to introduce transparency into the industry by making agents publish and highlight their fees and Client Money Protection (CMP) scheme membership, have not worked. Several high profile cases of agents misplacing or spending landlord and tenants funds have come to light during the group’s work, and although it agrees that most agents already have CMP is place, “some mostly small letting agents do not”, the report says. “We heard some quite heart-rending stories from bot tenants and landlords of the losses they incurred.” The introduction of a compulsory scheme is…
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TPO and CTSI launch Phase 2 of letting fees display crackdown – in Berkshire
Agents in Reading, Basingstoke and surrounding areas are warned. The Property Ombudsman (TPO) and the Chartered Trading Standards Institute (CTSI) have today launched Phase 2 of its crack down on agents not properly displaying their letting fees. The launch follows a five-month effort by the two organisations in both Swansea and Dorset, during which 266 agents were contacted and asked to provide photographic evidence to demonstrate their compliance with the law on letting fees. Agents are required to display fees clearly both in their branch and on their website. Non-compliant Any agents that TPO and CTSI found not to compliant were then given the chance to amend and re-submit. Out of the Phase 1 agents, just two have failed to comply either by not replying or addressing problems with their compliance and will now be referred to TPO’s Disciplinary and Standards Committee for investigation and review. “We are unable to name the firms concerned at this stage – a statement will be made if any agents are expelled from the scheme, as per the normal process,” a spokesperson told The Negotiator. “99% of TPO letting agents in Swansea and Dorset are now displaying their fees correctly.” Adrian Simpson (pictured, left)…
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