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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TPO to report agents who don’t display letting fees
Agents who cannot provide photographic evidence that they are displaying their letting fees both in their branch and on their company website will be referred to Trading Standards for further action by The Property Ombudsman (TPO), it has been revealed. The initiative has been launched jointly by TPO and the Chartered Trading Standards Institute (CTSI) both to improve industry compliance with the 2015 Consumer Rights Act, and also raise awareness among tenants and landlords about fees and create competition between agents. TPO members, who make up 85% of all UK letting agents, are bound to comply with its CTSI-approved lettings Code of Practice, which clearly states that agents must display their fees in accordance with the act. The joint campaign is to kick off in Dorset and Swansea before being rolled out across the UK and to enforce compliance, Property Ombudsman Katrina Sporle (pictured, above) says she will be working closely with Trading Standards Officers. Those found not to be displaying their fees can be fined up to £5,000. “Any agent that has failed to display their fees up until now must act,” says Adrian Simpson from the CTSI. “We are aware of Trading Standards Officers taking serious action against those…
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Advertising watchdog tackles three companies for misleading ads
Three different property firms including two agents and a developer have made it on to today’s Advertising Standards Authority (ASA) naughty step after complaints were made against them for publishing misleading ads. The most serious is against London-based agent Harper Brooks, whose website for a 98 unit, £18m new-homes development in Manchester called Grove House was investigated by the ASA following a complaint. Its website for the development, www.grovehousemanchester.co.uk, claimed to offer two-bedroom properties for rent from £650pcm but the complainant said no properties were available at that price, and that no “manned concierge desk” was available, as claimed. The ASA upheld the complaint but also heavily criticises Harper Brooks – which trades as Cambourne Properties Ltd – for not responding to the ASA’s enquiries quickly or adequately enough, which itself is a breach of the ASA’s code. When The Negotiator visited the website earlier today the advert had yet to be amended. The other complaints about misleading ads were less serious and were informally resolved. Hybrid agent YOPA was reported for failing to make it clear that VAT was not included within its ‘savings’ calculator, which shows potential clients how much less they might pay using YOPA compared to a traditional high street agent. YOPA…
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Has Ryanair’s legal win weakened Right to Rent?
National estate agent chain Carter Jonas says a recent landmark ruling won by budget airline Ryanair has a direct bearing on the recently-introduced Right to Rent scheme. Earlier this year Ryanair won a case against the government when the airline was fined £4,000 after it flew two Albanians into Edinburgh from Spain who were subsequently found by UK Border Agency staff to have false passports. Ryanair argued successfully that it’s not fair to fine airlines when illegal immigrants arrive at UK airports because most airline staff are not experienced enough to spot fake passports. During the appeal hearing the court heard that Ryanair has been paying out more than £400,000 a year in fines for flying illegal immigrants into UK airports. Lisa Simon, Head of Residential Lettings at Carter Jonas (pictured), says there are “clear parallels” for landlords and agents under the Right to Rent scheme, which requires those renting out property to check a potential tenant’s documentation to prove they have the right rent in the UK. Where the regulations are vague, Lisa says, is when they set out the ‘reasonable steps’ that agents should take when checking a document’s validity. “The difficulty comes in knowing what a good forgery is,” says Lisa. “But…
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Government consults on Leicester To Let board ban in student areas
The government is consulting the citizens of Leicester on whether to enable their local authority to gain formal control of To Let boards in four key student roads surrounding its two universities. This will, in effect, introduce a To Let board ban in these areas. Earlier this year the council applied to the Secretary of State for Communities and Local Government to introduce formal controls for To Let boards and, after the consultation is over, a decision will be made. The bid by Leicester City Council under the Town and Country Planning (Control of Advertisements) Regulations comes after a voluntary code of conduct introduced three years ago failed to control the large number of boards visible in these areas “for large parts of the year – almost permanently”, the council says. The voluntary code followed local concerns about the number of boards used by agents in the city’s highly competitive central rental market, which is dominated by Leicester’s 40,000 students. The city ran a consultation last year which received 238 replies, 88 from local landlords opposing the measure, although 96 people requested an outright band. A quick stroll down one of the main student roads in the city, Clarendon Street, reveals 21…
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NLA takes Housing Minister to task over buy-to-let tax “tosh”
Changes due to be made to the UK’s buy-to-let tax rules will push over 400,000 basic-rate landlords into a higher tax bracket, says the National Landlords Association (NLA). This is more than the ‘small’ number the government said would be affected by the changes, which severely reduce the mortgage interest payments and other finance related costs landlords have been able, until recently, to deduct from their business costs before declaring their taxable income. NLA chief executive Richard Lambert has described the government’s claims that the changes will have a low impact as “complete tosh” and has met with Housing Minister Gavin Barwell to discuss the problem. Lambert urged the minister to consider amending the rules to reduce the impact on landlords and that this could be “easily achieved by applying the rules to only new loans written after April 2017”. “Unless this happens, landlords will face an impossible decision of whether to increase rents and cause misery for their tenants, or to sell-up, and force their tenants to find a new home,” he says. Landlords operating on only small profit margins are likely to be the ones most worried by the tax changes, which the NLA estimates will increase the…
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London Rental Standard faces Khan ‘review’
Boris Johnson’s flagship London Rental Standard (LRS) scheme has a less certain future after Sadiq Khan’s team confirmed to The Negotiator that it is now ‘under review’ with a decision on its future likely ‘very soon’. The LRS is already on shaky ground. Soon after coming to office Khan released papers revealing that City Hall officials warned Boris Johnson back in 2013 that the scheme’s target to sign up 100,000 landlords was “unrealistic and unachievable”. Launched in May 2014 it is supposed to enable tenants to ‘rent with confidence’ and give landlords ‘peace of mind’ and has the strong support of the industry including the Association of Residential Letting Agents, whose parent organisation NFoPP runs the accreditation programme for ARLA agents wanting to join. The LRS originally brought seven landlord accreditation schemes across London under one roof but was a voluntary scheme for letting agents and so far, only 338 have signed up to it via their membership of either ARLA, the National Approved Letting Scheme or the UK Association of Letting Agents. It’s invisible on the main portals and for example Zoopla doesn’t use the logo on the details pages for LRS members such as Foxtons, and agents are left to…
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Cherie Blair says: axe the tenant tax!
Landlords fight back over The Tenant Tax: Cherie Blair QC is to represent the organisation called, ‘Axe the Tenant Tax’ at a permission hearing for judicial review of section 24 of the Finance Act 2015 on Thursday 6th October 2016 at the Administrative Court, Royal Courts of Justice, WC2A 2LL The organisation says that changes proposed in Section 24 of the Finance (No.2) Act 2015 will stop buy-to-let finance costs (largely mortgage interest) being a claimable business expense. This means, they say, that most landlords with mortgages will now have to pay tax – The Tenant Tax –on their turnover rather than their profit and no other business in the UK is treated in the same manner. Many landlords will have to pay extra tax of 20 per cent or more of their mortgage interest payments. The tax they pay might be greater than their real profit, leaving them with a rental loss and a cash shortfall. This tax will only affect individuals who own rental properties in their own names, like the millions of smaller landlords in the UK. Companies owning buy-to-let property and wealthy cash investors are excluded from the tax. Co-claimants Steve Bolton, Founder of Platinum Property Partners, and…
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Trading Standards backs TPO stance on portal juggling
The National Trading Standards Agency Estate Agency Team (NTSEAT) has waded into the issue of portal juggling with a resounding thumbs up for The Property Ombudsman’s imminent changes to its guidance. James Munro, who leads the NTSEAT, today said that he welcomed the TPO’s new guidance, which will be published on Saturday. It is likely to prevent TPO member agents from misleading consumers by removing and re-listing homes on property portals, enabling them to hide price cuts and make properties appear new to the market when they are not. Munro said he believes many agents do this to “manipulate sales figures” and that the new TPO guidelines could, he says, “lead to a ruling by the Ombudsman and also referral to enforcement agencies such as NTSEAT and local trading standards authorities”. “Such referrals could lead to prohibition orders or prosecution,” he added, and that “we will continue to work closely with industries bodies to stop this unfair practice, which misleads prospective homebuyers and harms honest estate agents who conduct their business in a fair and professional way.” One agent The Negotiator spoke to, who wished to remain anonymous, pointed out that although “unscrupulous”, it was a practice created in part…
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Online rental fraud: scams create landlord nightmares
Rental fraud is on the rise, fuelled by a highly competitive rental market and low cost, or free-to-list platforms for advertising property. Research conducted by YouGov in 2013 estimated that over 1 million people had fallen victim to rental fraud, with at least a further 315,000 new victims each year, showing just how widespread the problem has become. Reported incidents increased by 44 per cent from 2014 to 2015, from 2216 reported incidents in the year ending March 2014, to 3193 in the year ending March 2015. However, it is likely that these figures underestimate the real scale of the problem – the Local Government Association claims that only 5 per cent of fraud incidents are reported. Classified advertising sites have become breeding grounds for scammers to post fake or misleading adverts at little cost and with few security measures. It is estimated that bogus landlords are making £775 million per year through rental scams, with an average cost per victim of roughly £2400. Now, the property classifieds site TheHouseShop.com has implemented a unique ownership verification process, using Land Registry databases, which, they say, combined with their numerous other security and safety checks, sets a new standard for security in…
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Local tragedy sparks campaign against letting fees
A councillor in Southend, Essex has vowed to do battle with local agents who charge tenants high letting fees after his son killed himself over the cost of renting a flat. Southend independent councillor Tino Callaghan says the council has supported his motion to ‘name and shame’ local agents charging tenants high administration costs. Mr Callaghan, who launched the initiative with fellow councillor Laurence Davis, says his son was worried because he couldn’t afford the cost of a deposit for a flat to house his family. “Registration fees can be astronomical and we have spoken to many tenants who been caught out with fees,” Mr Davis told the Halstead Gazette. “The council can’t enforce anything but they can name and shame those who are not acting in the best interests of the public.” This tragedy played out in Southend is the latest development in a growing campaign by several media outlets, councils and politicians to highlight what they see as the excessive administration fees charged by some agents. This includes The Guardian newspaper which recently called fees a ‘great letting agency rip-off’ while in May this year the London Borough of Tower Hamlets gave six local agents 28 days to display…
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