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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Conveyancing fraud – cases are on the rise
Fraudsters hacked emails to seller’s solicitor and stole £340,000 proceeds of a property sale.
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£1 billion lease extensions
UK flat owners waste tens of thousands of pounds on informal lease extensions every year completely unnecessarily...
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The Property Ombudsman expels two Southampton agencies
Consumers are being warned by the UK’s largest property redress scheme about the actions of two lettings agents based in Southampton. Both agencies, trading as ‘The Flat Agency & Michael Browns Ltd’ and ‘Property Vibe Ltd’, were expelled from lettings redress membership of The Property Ombudsman (TPO) scheme for a minimum period of three years. Without registration these companies cannot legally trade as letting agents, and other redress schemes will not allow previously expelled agents to join. Landlords who lease their property with an agent that is not registered with TPO will not be entitled to have their dispute reviewed by the Ombudsman, and nor will any tenants renting through an unregistered agent. The decision to expel The Flat Agency & Michael Browns Ltd follows complaints made against it from local landlords and tenants. The complaints were independently reviewed by the Ombudsman and all were upheld. Cases against this agent were all similar in nature, relating to delay and/or failure in paying money owed to the complainants and several flagged serious concerns with the Ombudsman, who described the agents’ practices as “dishonest and deceitful”. The Ombudsman ordered payment of the money owed together with compensation. When the agent failed to…
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Smoke and Carbon Monoxide warning
Purbeck District Council in Dorset is reminding landlords and tenants of legislation affecting the private rented sector that recently came into force. The legislation includes the power to Councils to impose heavy fines for non-compliance – £2000 for a first offence, rising to £5000 if a landlord commits more than two offences. Since October 2015, all privately rented property must be fitted with smoke detectors on every storey and carbon dioxide detectors in high risk rooms, for example where solid fuels are used. Landlords must check smoke and carbon monoxide alarms are working at the beginning of each new tenancy. Failure to comply could lead to a fixed penalty notice from the Council. At the beginning of each new tenancy, landlords must give their tenants a new information booklet produced by the Government called ‘How to rent’; an Energy Performance Certificate (EPC); and a current Gas Safety Certificate (if there are gas appliances in the property). Tenants also have rights which prevent retaliatory eviction by their landlord in the event that a tenant complains about the state of repair of their property. Letting agents representing landlords must also be registered with an official dispute resolution scheme approved by the Government.…
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Client Money Protection amendments
In the House of Lords the debate has been raging about Client Money Protection. Lord Monroe Palmer (left) who proposed the changes to the Housing Bill wrote, “The Government has back-pedalled and tenants have won.” “The Housing Bill has continued in its long worn out path through the Lords. The Liberal Democrats have been battling to make changes to a Bill which will currently only worsen the housing crisis, reducing the availability of housing and moving the first rung of the housing ladder even further out of reach. “Across the past fortnight, the Government has been forced to back pedal on a number of measures. This week they made a significant concession on protections for tenants at the hands of rogue letting agents. An amendment with my name on it had been put forward which ensured that money belonging to tenants for use as holding fees, deposits, rent, or service charges by letting agents, was protected. 20 per cent of the letting agent sector does not have protection for client money. “The amendment we put down was targeted at protecting the fifth of the industry in which tenants and landlords remain at risk. People risk losing their money if a…
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Private landlords letting without contracts
New research by Direct Line for Business reveals that one in ten private landlords has no formal tenancy agreement in place with their tenants. Even where contracts are in place, landlords may unwittingly be asking tenants to sign documents that are not legally compliant. Of the landlords who don’t use a letting agent, 58 per cent used adapted tenancy agreements from either old agent contracts or other landlords (38 per cent) or an updated template they found online (20 per cent). Direct Line said that it appears that some landlords employ letting agents when they first rent out the property, then use the old contract template when agreeing a direct rental with new tenants or upon renewal with their existing tenants. The lack of professionally reviewed tenancy agreements may explain why more than one in eight (13 per cent) landlords have experienced disputes specifically arising from tenants’ rental contracts in the last two years. Also concerning is that nine per cent of landlords have not informed their tenants that their deposit is held in a government-backed tenancy deposit protection scheme (TDP). Nick Breton (left), Head of Direct Line for Business said, “Tenants and landlords need a contract in place to…
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The Budget 2016
A mixed bag for the residential property market, with no cuddly Easter rabbits coming out of Mr Osborne’s hat and a nasty shock for larger property investors.
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Budget 2016: Housing reaction
George Osborne’s eighth Budget was another intriguing one for the property market, particularly the residential market. He confirmed that the 3 per cent higher rate of stamp duty for those acquiring a second home or buy-to-let property will come into force at the start of April 2016, but he sprung an almighty surprise by announcing that larger investors will not be exempt from the higher stamp duty, as previously thought, which will apply equally for purchases by individuals and corporate investors. Although the Government’s reversal on the exemption for large-scale investors is surprising, it is unlikely to lead to a significant dampening of interest in the build-to-rent sector, according Gráinne Gilmore, Head of UK residential research at Knight Frank. She commented, “Bulk purchases of residential units at the lower value end of the scale will be most affected by the Chancellor’s move, which seems counter to the government’s pledge to provide more affordable housing. But the rental market is an entrenched and growing part of the UK housing market, and as such, institutional investment in this asset class will likely continue to grow.” It was also announced that home movers who have a period that overlaps between buying one property…
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Landlords aim to beat tax rises
A growing number of property investors are choosing to acquire buy-to-let homes through corporate vehicles to get around paying an extra 3 per cent above existing stamp duty rates on second homes, mortgage brokers report. There has been a surge in demand for buy-to-let properties in recent months from investor landlords keen to beat the 1st April deadline for the stamp duty surcharge. But to avoid the hit, it has been reported that a growing number of landlords are setting up company structures to manage their rental properties. Mortgages for Business report that it has seen the proportion of applications acquiring property within a corporate vehicle surge from 18 per cent to more than 50 per cent in the past six months. Forming company structures to manage their rental properties will also enable many landlords to continue to deduct mortgage interest from their tax bill as it will be viewed as a business expense. This will allow higher rate taxpayers to more than halve their tax bill because they will pay corporation tax, rather than income tax, which will be 19 per cent from 2017, and will fall to 18 per cent by 2020. Similarly, the ability to take income…
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Zac Goldsmith targets ‘rogue agents’
Zac Goldsmith has pledged to tackle the mounting housing crisis in the Capital in order to curb soaring house prices and rental values, as well as clampdown on high letting fees. Figures released by Goldsmith’s opponent, Labour’s Sadiq Khan, show that the average letting fee in the Capital has surged by 48 per cent since the last London Mayoral Election in 2012, reflecting a sharp rise in rents. The Tory mayoral candidate said the problem has been compounded by letting agents asking for a deposit equivalent to six weeks of rent, or at least one month’s rent in advance. While accepting that tenancy deposits are a necessity to protect landlords, the Richmond Park MP questions whether the fees being charged by letting agents are justifiable. “The agency fees are still very high – on average across London I think it’s around £330 and I don’t think people get £330-worth from their agents – it’s almost like a scam,” he said. “There are a lot of new businesses emerging where apps are being developed which I think very soon will effectively render the agents redundant.” London’s PRS has grown significantly over recent years. A decade ago private renting was 17 per…
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