Landlords – enter at your own risk!

As a landlord, do you know when you have the right to enter a leaseholder’s flat? Most residential leases include a clause that allows a landlord access to a flat, if it is for a specified reason listed in the lease. Simple enough you might think. Well, not necessarily as the recent case of New Crane Wharf Freehold Limited v Dovener shows. The question raised here is whether or not a leaseholder who does not give prior permission for the landlord to enter their flat for a legitimate reason, is in breach of their lease.

Access denied – or is it?

The lease in question allowed the landlord access for a number of reasons as long as the flat owner had at least 48 hours’ notice. But when the landlord gave a time and date to inspect the leaseholder’s flat, he heard nothing – apart from an email from the leaseholder stating that he wasn’t happy about the landlord entering his property. A second letter was sent, including a new date for entry to the property. Again, no reply.

The landlord took the case to the First Tier Tribunal, arguing that the leaseholder’s failure to respond to his letters was a breach of covenant. However, the FTT ruled against the landlord, saying that the lease did not specify that access was only possible after hearing that the time and date given was acceptable.

The landlord appealed but lost. Again, there was no evidence that the leaseholder refused entry at the date and time specified by the landlord and so the leaseholder was not found to be in breach of the lease. This is a technical point but an important one for landlords.

There are two lessons to learn here. First, when landlords want to access a property, they must think hard about the way they word the notice to the leaseholder. And second, this ruling suggests that landlords should go ahead and try to gain entry on the time and date specified in any notice,  whether or not the leaseholder has replied. This could be both time consuming and costly –  but any other approach may end up being even more so, as this landlord found out.

If you are unsure about serving notices on leaseholders, or have a query about any other legal aspect of residential leasehold, contact our property law specialists at Ringley Law. Our experienced team can help.

Luxury amenities – what gets your vote?

Today we thought we’d have a bit of fun. What added extras would persuade you to sign on the dotted line if you were buying or renting a new flat?

Developers are busy trying to attract buyers and renters to their blocks by offering a whole range of residential amenities. But some of them are frankly a bit dull, especially if you live in the middle of a town or city. Who needs a gym or a coffee shop when there are plenty to choose from just around the corner? And how many of us will use those treadmills anyway?  When you have the whole of London, Manchester, Brighton or Bradford to eat, drink and be merry in, your block operator is going to have to work a bit harder.

So what gives one block a genuine edge over another? A recent survey by CBRE put concierge services at the top of the list. Practical help with everyday tasks such as laundry, car hire and parcel pick-up and drop off is always popular. So are health-based amenities such as an on-site spa – with health treatments and nutritional advice ramping up more points than just providing a few rowing machines.

Some developers really are going the extra mile, so we did a bit of research to see if we could find some genuinely innovative amenities that would make any residential block really stand out from the rest.

It turns out the Americans really know how to live! Green space and healthy living are on offer at Staten Island Urby in New York via social spaces that encourage residents to get to know each other. The development features an urban farm, a communal gourmet kitchen and a rooftop apiary. The chef-in-residence (yes you heard that right) even hosts gourmet cooking classes and cocktail tastings.

If you prefer animals to people, another New York development features doggy daycare, a grooming spa, cat sitting and a visiting vet for poorly pets.

And in Miami Beach, a sharing room at the Ritz-Carlton Residences gives flat owners the chance to offload their pre-loved good quality items such as handbags, golf clubs and bicycles and ‘shop’ the room, taking what they want in exchange. Great for them, even better for the environment.

Sky Gardens at Wardian, London

Other innovative ideas we came across included an on-site aquarium; providing recording studios and other music-based amenities to allow residents to share their creative ideas; the ‘sky gardens’ and in-house gardening specialists on offer at Wardian in London’s Docklands look spectacular; and we even heard of one block featuring an adult treehouse. That’s certainly not for everyone.

The lesson here, is for block operators to use their imagination and deliver purposeful amenities that enhance living spaces and create community  – not just the same tired old gym.

Fees ban – the unintended consequences

The Tenant Fees Act came into effect in England on Saturday and there are already big question marks hanging over the new legislation. Both the government and the lettings industry want to make renting fair for tenants but agents are not convinced the new Act will work in the way that was intended.

What’s the impact?

Glynis Frew, the CEO of letting agent Hunters, said this week that good intentions could easily result in unintended consequences. We agree that a small number of rogue agents and landlords have charged what she describes as “mind-boggling” fees, but this isn’t representative of the industry as a whole. Instead of government opting to cap fees, they have been scrapped altogether. The likely results are rent increases, landlords leaving the sector in even greater numbers than they are already and letting agents shutting up shop – which as well as reducing consumer choice, also has a negative impact on our beleaguered high streets.

Our view is that the Act will mean agents looking closely at their all-inclusive management fees and having to pass on disbursements such as deposit registration costs to landlords. The industry will be looking to push extra products such as insurances, on which agents can take commissions to cover the shortfall in income. 

New fines for ‘prohibited’ payments

Local authorities, charged with enforcing the legislation, can fine landlords and agents up to £5,000 for levying a payment that is now prohibited (see yesterday’s blog at https://blog.planetrent.co.uk/tenant-fees-act-now-in-force/ for a list of allowable fees) and they can prosecute or impose a fine of up to £30,000 if an ‘offence’ under the Act has been committed. This is where a landlord or agent has been fined or convicted for a breach within the last five years and commits a further different breach.

Being a landlord has never been more precarious.  Reducing deposits from 6 weeks to 5 is no real protection against tenants not paying their last month’s rent and the Deposit Alternative products that are now springing up may offer landlords more protection but are of course optional, and cannot be forced on tenants.   Flexibility as to how tenants make payments is also diminishing as many landlords refuse to take rent or deposit payments by credit card as, understandably, they don’t want to pay the fees.

Future challenge

The challenge for agents will be to ensure they are providing an added-value service to landlords by having effective tenant referencing, contractual and deposit systems in place as well as ensuring compliance with the new Act.

Access all areas?

Most residential leases include a clause that allows landlords access to flats, if it is for one of the reasons laid down in the lease. Simple enough you might think. Well, not necessarily, as the recent case of New Crane Wharf Freehold Limited v Dovener shows. The question raised here is whether or not a leaseholder who does not give prior permission for the landlord to enter their flat for a legitimate reason, is in breach of their lease.

The terms of the lease in question allowed the landlord access as long as the flat owner was given at least 48 hours’ notice. However, when the landlord gave a time and date to inspect the flat, he heard nothing apart from an email from the leaseholder stating that he wasn’t happy about the landlord entering his property. A second letter was sent, including a new date for entry to the property. Again, there was no reply.

The landlord took the case to the First Tier Tribunal, arguing that the leaseholder’s failure to answer his letters was a breach of covenant. However the FTT disagreed and ruled against the landlord. The reason given was that the lease did not specify that the landlord could only gain access after gaining confirmation that the time and date given was acceptable.

The landlord then appealed but the appeal failed too. Again, the reasoning was that there was no evidence that the leaseholder refused entry at the date and time specified by the landlord and so the leaseholder was not found to be in breach of the lease.

This is a technical point but an important one for landlords. There are two lessons to be learned here. First, when landlords want to access a property, they must think hard about the wording of the notice they issue.

And second, when access is required – and is acceptable under the lease terms – it seems that landlords should go ahead and try to gain entry on the time and date specified in the notice, regardless of whether or not they have received a response from the leaseholder. This is potentially time-consuming but any other approach may end up being even more so, as this landlord found out.

At Ringley we have our own in-house legal department. Our qualified specialists are always on hand to offer advice and help you navigate the complexities of leasehold law. So if you have any questions relating to your lease or any other legal matters, contact us at http://www.ringleylaw.co.uk

Landlords and tenants – you need each other!

Fixed-term tenancies for private renters should be scrapped. Landlords should also stop evicting tenants just because they want to sell their homes. These are just two of the reforms called for by leading thinktank, the Institute for Public Policy Research (IPPR) in a recent report.

Landlord and tenant: PRS reform must consider the needs of both
Landlord and tenant: PRS reform must consider the needs of both

Under the law as it stands, without giving a reason, private landlords can issue a ‘Section 21’ eviction notice to tenants whose assured shorthold tenancy has ended. This puts millions of private renters in the UK in a precarious position, says the IPPR, as they never know when they may be forced out of their home. The thinktank is calling for increasing security for tenants through an ‘open tenancy’ and wants to prevent landlords from selling in the first three years of a tenancy agreement, giving renters greater peace of mind .

There is no doubt that for many renters, the PRS is insecure. Around one in 10 tenancies comes to an end because the landlord has terminated them through a no-fault eviction. Tenancies ended by landlords were the biggest cause of homelessness in England in 2017, accounting for almost a third of all local authority homelessness acceptances.

The IPPR believes tenants face unaffordable rents, poor conditions, a lack of tenure security and limited control over their rented home. In response, among other things, the thinktank wants to see changes to recent welfare reforms to help struggling tenants and a national landlord register to help drive up standards in the rental market.

Tenants undoubtedly stand to gain from these proposals. But are they fair to landlords? The majority of landlords in the UK own just one or two buy-to-let properties. Many are ‘accidental’ landlords who have inherited a property and may be renting it out simply until they can make a profit by selling it. Most take their responsibilities seriously and many are happy to offer their tenants a well-maintained home for as long as the arrangement suits both parties. The property they rent out is theirs – why shouldn’t they be able to take it back if they want to?

The IPPR agrees that landlords need to be treated fairly. It proposes that the Government should launch a review of all taxation relating to private landlords. Reforming the tax system  would promote socially responsible landlordism and a long-term, high quality and stable rented sector as well as challenging wealth inequality, says the thinktank.

There is no doubt that private renting causes hardship for many, especially those on benefits. However, the PRS has grown substantially in the last two decades. It is now home to 20% of households and many more people expect to rent for longer. If it is to continue to thrive and to provide high quality homes for more of us each year, any reforms that are put forward must take into consideration both the profitability and the rights of landlords as well as those of tenants.

Back build-to-rent, drive up quality

Build-to-rent is really gaining momentum around the UK. The number of build-to-rent homes being built across the country has increased by nearly 40% in the last 12 months, according to new figures released in January. Last month, a new build-to-rent developer, Core Living, hit the market with a target of 2500 new homes across the north of England by 2020. In Manchester, the 35-storey Angel Gardens – one of the biggest schemes outside London – is nearing completion and north of the border, planning has just been granted for some of Scotland’s first purpose-built for rent homes on Clydeside.

Over the last few months, the government has put the rental sector firmly in the spotlight. Ministers are determined to drive up standards for tenants and improve affordability and security of tenure. Locally, councils are being called on to clamp down on rogue landlords. They have been allocated funding to encourage them to do this.

This build-to-rent PLATFORM_ development in Bedford has its own yoga studio.
This build-to-rent PLATFORM_ development in Bedford has its own yoga studio.

But according to one developer, PLATFORM_, there’s a quicker and cheaper way to do this. Give more support to the build–to-rent sector, he says.  PLATFORM_ managing director Jean-Marc Vandevivare believes that another way of driving up standards – less costly for the taxpayer and less time-consuming for local authorities –  is to back the growth of the build-to-rent sector. Rather than using public money, BTR developers are using institutional funding to build thousands of quality homes. In turn this could drive improvements for renters.

Large-scale developers need to attract renters into their block rather than the one next door. They have a vested interest in excellence. The quality of build-to-rent homes varies but most are professionally managed, offer a sense of community, and provide a growing range of amenities that cater to modern day working and lifestyle trends.

The success of build-to-rent to-date pays testament to this business model. As the January figures show, build-to-rent is set to take an increasing share of the UK rental market and at Ringley we are committed to being part of this via our new brand Life by Ringley. With mandatory qualifications on the cards for property managers and a tranche of regulation on its way, as a professional property agency we are delighted to be offering management services to this exciting sector as it develops and expands.

Rent control – do we really need it?

Every so often the thorny issue of rent control raises its head. Rent control was in the Labour Party’s 2017 election manifesto and it has the backing of London Mayor Sadiq Khan. The Mayor has now said he intends to outline a plan for stabilising and controlling rents for the 2.4 million renters now living in the capital. The London Mayor’s powers don’t extend to bringing in rent control across the city but he has said he will campaign for it and lobby the Government for his proposals to be accepted.

Rents in London are extremely high as a percentage of earnings compared to other parts of the country and private rents rose on average by a whopping 38% between 2005 and 2016. According to Mr Khan the arguments for rent control are “overwhelming” and it is vital the Government acts to improve the quality of millions of lives. Londoners seem to agree with him. A recent survey confirmed that 68% of Londoners were in favour of capping the amount private landlords could charge tenants. But is rent control really the answer to renters’ problems?

Rent control: could it be coming your way?
Rent control: could it be coming your way?

The argument against capping rental levels has always been that it will impact supply as landlords, unable to make a profit, take their properties off the market. As the majority of private landlords only own one property this is a distinct possibility, especially as higher taxes are already eating away at profitibility in the buy-to-rent market. This would certainly add to the problems tenants already have in finding a suitable home to rent. Build to rent developers may also take a step back from the London market if they can’t make the figures add up on new developments. However, the rental market’s loss could be the housebuyer’s gain if there is a sudden flood of former rental housing onto the market.

In other major cities such as New York and Berlin, rent control has been in place for decades. The lesson to learn from the experience in these markets is that in tandem with bringing in rent control, it is important to provide a supply of social housing to mop up the shortfall in private rentals when some landlords, inevitably, decide to quit the market.

Mr Khan has invited Karen Buck, the MP behind the Homes (Fitness for Habitation) Bill, to work with James Murray, the deputy mayor for housing and residential development, to work up proposals for future rent control laws. This is clearly not as straightforward as it may at first appear and the additional social housing that Sadiq Khan has also pledged to provide for London must be brought into the mix, otherwise rent control could be completely self-defeating and simply hurt the people it is intended to support.

So will London follow the lead of other major cities around the world and become the first place in the UK to enforce a rental cap? Watch this space – the next few years could be interesting.

Guaranteed for renters – a home fit to live in

The government aims to ensure a decent home for renters is guaranteed as part of the new Homes (Fitness for Human Habitation) Act. A Private Members’ Bill allowing tenants to sue over the condition of their rental properties completed its paslawsage through Parliament just before Christmas and will become law on 21 March.

The new Act makes changes to the Landlord and Tenant Act 1985, and the Building Act 1984. So what does it mean? Well, from the date the new Act comes into force, all landlords in the social and private sectors must ensure that their property is fit for human habitation at the beginning of the tenancy and stays that way – essentially  guaranteeing that their rented home is fit for purpose. Where this is not the case, tenants will have the right to take legal action for breach of contract on the grounds that the property is unfit to live in. The new Act only applies to tenancies in England. The Welsh Government has already included similar rights for tenants in the Renting Homes (Wales) Act 2016.

The Residential Landlords Association and National Association of Landlords are backing the changes set out in the new Act but some individual landlords are not so keen. They are worried that the new law could mean tenants refusing to pay rent until the freeholder carries out repairs, etc. leading to landlords getting caught up in costly litigation while rogue tenants are given free rein to cause damage.

A simple way to get around this issue is to carry out regular inspections and ensure tenants sign these off every time. Any damage caused can then be noted and a paper trail created that can be used by both sides to prove that what should have been actioned has been done and the tenant charged for repairs where appropriate.

In fact, where not carrying out repairs counts as a breach of contract, tenants have had the right to take their landlord to court since 2015 under the Consumer Rights Act, so that hasn’t really changed. What is new though, is that what defines  ‘fit for habitation’ is now enshrined in law over and above the existing ‘hazards’ that are listed in the Housing Health and Safety Rating System. This is already used by local authorities to ensure that rented housing is of an acceptable level. At the end of the day responsible landlords have nothing to fear from the new Act – after all, any property that is let should automatically be guaranteed to be of an acceptable standard.

As part of a bigger package of reforms that tackles housing problems, the government has also announced  a new Housing Complaint Resolution Service. This guarantees protection for homeowners as well as tenants and gives them a single point of contact to sort out disputes over repairs and maintenance. All private landlords must sign up to the new scheme. If they don’t they could face fines of up to to £5,000. A new Home Ombudsman is also on the cards, so watch this space. All good news for renters and flat owners we think.

Discover more about renting – it’s worth the effort.

informationDiscover more about renting – it could pay dividends. TotallyMoney’s Mark Moloney recently told Letting Agent Today that knowing your rights and being able to keep an eye out for warning signs means you’re well prepared in the event of an issue or a dispute.

We agree 100%. At Ringley we are fully committed to helping our clients and their residents stay as well informed as possible but we weren’t entirely surprised to read that a recent survey carried out by the credit report website revealed that tenants know a lot less than they should about the rental sector. This is also a problem among long leaseholders. In many cases, tenants and flat owners know very little about their rights and responsibilities.

According to TotallyMoney, a staggering 97% of renters do not know their full rights, while 50% don’t know if their landlord could change their rent without notifying them. Perhaps more worrying is that 38% of people renting a house or flat don’t know when the landlord is allowed to enter the property.

And it’s not just tenants who don’t have as much information at their fingertips as they need. Some landlords aren’t very well informed either. The most searched questions landlords  regularly ask online are pretty basic and include:

  • how long does a landlord have to return a deposit?
  • who pays council tax, the tenant or the landlord?
  • what does landlord insurance cover?

Our website at www.ringley.co.uk is packed with useful information. Need to know more about block management? Are you thinking of buying or extending your lease? Interested in right to manage or build to rent? Need legal or financial advice? Whether you are a tenant, a landlord or a developer, we have something for you.   We have teams of block managers, legal specialists, surveyors, engineers and finance professionals with experience of just about everything you can think of that’s related to property. And if you can’t find what you’re looking for online, one of our experts will be able to answer your questions or point you in the right direction. Just give us a call. We’re always here to help.

How to get better returns from your investment – go north!

blog 5

Are you looking for better returns on your rental investment property? As I wrote in this blog in December, the UK’s 2.5 million private landlords are coming under the cosh from a seemingly never ending host of extra taxes and new regulations. This is a trend that shows no sign of letting up in 2019. So getting good yields on their rental property is becoming ever-more important for buy-to-let investors who are having to think on their feet. And many are now heading north for better returns.

Property firm Your Move reported this month that the North East and North West are particularly attractive markets now because a combination of low house prices and large student populations in many areas mean good yields and fewer void periods for landlords. According to their rental tracker, the average investor in the North East enjoyed a rental return of 5% in the year to November 2018 while in the North West, returns were only slightly lower at 4.8%.

Landlords can get better returns in the north of England
Landlords are looking north for better returns

With landlords keen to buy and good transport links and job prospects attracting more people to the region, both housing transactions and rental demand are going up – while interest in the London market gently slows down.“Properties in the North appear to offer high percentage returns to property investors and, as a result, they are attracting interest even more,” Martyn Alderton, national lettings director at Your Move said. However, with massive interest now being shown in cities like Manchester and Liverpool from large-scale build-to-rent (BTR) operators, BTL landlords can’t afford to rest on their laurels.

In Manchester the city centre has seen an 8% increase in supply, leading to those inevitable questions about the possibility of the market overheating. Ringley now has a strong presence in the Manchester market, working with landlords, developers and investors in the city thanks to our 2018 joint venture with local property manager and lettings agent JP Hay.

We are now managing both BTR property and more traditional BTL rentals in the north of England, so our advice to BTL landlords is to ensure that your rental property is well-maintained, well-equipped and exactly matches the description that you or your agent is advertising .

There is certainly plenty of demand out there – but there is also a plentiful supply of new builds so competitition is fierce. But not everyone wants to live in a modern BTR apartment block – so if your rental property is older, is a house rather than a modern flat, or is located in the suburbs, it still has as much chance of appealing to a tenant as a brand new purpose-designed city centre studio or duplex – as long as it is well-presented and offered at the right price and you ensure that you fulfil your obligations as a responsible landlord.

As Your Move rightly said last week, landlords who are prepared to invest in their property will undoubtedly benefit from higher yields and better occupancy rates.