Thousands of Tenants on the Move

 Housing Benefit, Landlords, Rent, Tenants  No Responses »
Feb 012012
 

Changes to Housing Benefit Rates have been well publicised.  But the new restrictions on single claimants under the age of 35 have received less publicity and are likely to mean that thousands of tenants across the country will be on the move over the next few months.

Caps on housing benefit payments for new claimants came into force in April last year and are being phased in for existing claimants from January 2012.  They are:

  • £250 per week for a one bedroom property
  • £290 per week for a two bed
  • £340 per week for a three bed
  • £400 per week for four-bed and larger properties

The higher rate for properties larger than 4 bedrooms has been abolished.

Less well trailed is the fact that single claimants (i.e. those living alone) under the age of 35 will now only be entitled to the cost of renting a room – the Shared Accommodation Rate (SAR).  Previously, this applied to people under the age of 25.  The SAR varies depending on where the claimant lives. In Central London it is £123.50 per week but it is much less in other parts of the country.  Details of the new housing benefit rates for any postcode can be found here.

There are certain exemptions and the SRA caps only apply to people who rent from private landlords, not those who are accommodated by a housing association or local authority.

Nevertheless, the practical effect is likely to be significant, with thousands of tenants having to up-sticks over the next few months.  By way of example, a 32 year old tenant, living alone in a one bedroom flat in Shepherds Bush, claiming housing benefit of  £225 a week, may shortly have his payments capped at the shared accommodation rate. The SRA for Shepherds Bush is £100 a week.  In other words, his monthly housing benefit payments will be reduced from £975 to £433.  Since he won’t find a flat in Shepherds Bush for £433 a month he will have little choice but to move.  Or –  if he is able –  to find a job and pay the rent himself.

Unlike the main housing benefit changes – which will have the greatest impact in London – the restrictions for under 35′s will have an effect across the country as those previously entitled to rent a whole flat will have their benefit slashed to the room rate for their area.

Many housing benefit tenants are likely to be hit hard by these changes.  But then so are a number of landlords, whose tenants will no longer be able to afford the rent.

Some commentators have made predictions of areas turning into ghettos, with houses and flats divided up into shared accommodation to make room for the expected new influx of under 35 claimants. Is this far-fetched?  Probably.  But there could well be a lot more people returning to live with parents or sleeping on friends’ sofas until everything settles down.

 Posted by Christian at 5:03 pm  Tagged with: , , , , , , ,

When can a Landlord increase the Rent?

 Landlords, Rent, Tenancy Agreements, Tenants  No Responses »
Jan 302012
 

There has been a good deal of talk recently about rents being at an all time high in many parts of the country.  We have ourselves run several stories on how rental demand has pushed up average rents over the last 12 months.  But what does this mean for landlords with long-standing tenants?  Can they put the rent up to reflect the increase in the market?  If so, is this wise?

First of all it is necessary to decide whether the Landlord has any legal right to put up the rent.  Rent increases can be made in four ways:

1. By making use of a rent review clause in the lease.  Such clauses, which provide for a review of the rent at certain fixed points throughout the term, are common in commercial leases, but relatively rare in Assured Shorthold Tenancies.

2. By means of a new tenancy agreement incorporating the increased rent.  A new tenancy can only be put in place once the original tenancy agreement has expired (unless the tenant agrees to an earlier variation – see 4 below).

3. By serving formal notice of increase.  Again, this can only be done once the original fixed term contract has ended and the tenant has continued in occupation. In such a case, the contract becomes a statutory periodic tenancy under the same terms as the original tenancy, but being renewed each time the rent is due (be that monthly or weekly).  It is important to use the correct form of rent increase notice.  Landlords, ask us if you need guidance on this.

4. At any time, by agreement with the tenant.  The lease is a contract between landlord and tenant and can be varied by agreement at any time.  Assuming the tenant agrees, make sure that the change in rent and any other variations are fully documented in writing.  Alternatively the Landlord can ask the tenant to sign an entirely new lease with the new rent incorporated.

But is a rent increase a good idea?  Well, if you have the tenants from hell then putting up the rent may be one way to compensate a stressed landlord for all that aggro. With any luck, they may take the hint and leave.

But in most cases that will not be the case and I suggest that any Landlords contemplating a rent increase think long and hard before doing so.  In 15 years’ experience as a landlord, I have found that maintaining a good working relationship with my tenants considerably outweighs the benefits of a few extra pounds in rent each month.  Once I find tenants I trust, who are looking after the property well, I am very reluctant to do anything which might undermine that trust.  Increasing the rent causes resentment.  And a resentful tenant is a bad tenant.

And of course the rent increase may backfire and end up costing a landlord more in the long run.  A tenant who is asked to pay more money may decide to demand something in return.  That leaking gutter they have so far ignored may suddenly become an issue and the extra rent could very soon be used up in repair costs.

Alternatively, the tenants may simply leave rather than accept the rent increase.  A landlord then has all the hassle of finding new tenants, not to mention the cost of any resulting void period.

Landlords should remember that what they see as a source of income, the tenants see as a home.  Trust is a very valuable asset when letting property; squander it at your peril.

 

 

 

 

 Posted by Christian at 10:28 am  Tagged with: , , , ,

Western Union Lettings Scam: Tenants Beware

 Landlords, Tenants  No Responses »
Jan 262012
 

It doesn’t happen very often but, if it succeeds, it can be devastating to those affected. We’re talking about rental scams whereby fake “landlords” con prospective tenants into paying money upfront for a property which does not exist.

The scam usually works like this. The fraudster posts an advert for a property to let on a classified ads website or in the press. The property address may be genuine but it is posted under a fake ID and using photographs usually taken from other property ads. When a prospective tenant enquires about viewing the property they are told that the landlord lives some distance from the property and is happy to arrange a viewing but wants to be sure that he is not wasting his time. The landlord asks for the tenant to prove his/her good faith by transferring a sum of money – usually one month’s rent – to a friend (perhaps another flat mate) by Western Union money transfer. The “landlord” assures them that there is no risk in this because they are only transferring the money to a friend. When they have made the transfer, they are asked to scan the confirmation receipt or email the details of the transaction to the “landlord”, who promises he will then show them the apartment.

In most cases, the fraudster lives abroad and uses the transaction details to withdraw the money from his local Western Union office. We presume he does this by altering the scanned receipt in some way.  Very few checks are required by Western Union to withdraw sums under £2000.

The property, of course, is not owned by the fraudster and the tenants never hear from him again.

RentFair checks all properties added to our site and regularly removes suspicious properties as soon as they are listed. Unfortunately, some are very difficult to detect and we are grateful to two members who emailed us about one such property in Islington recently. Needless to say, we removed the property and “landlord” immediately.  Even charging landlords for advertising makes very little differences since the fraudsters have ready access to stolen credit card details and have no problem paying for services online.

For some time, we have had prominent warnings across the site never to proceed with a property where you are asked to wire money in this way, whether by Western Union, MoneyGram, or any other such service. If in doubt, email us and we will investigate.

The signs to look out for are:

  • fraudsters use addresses that they know are desirable, perhaps to attract potential tenants, perhaps simply because these are locations they have heard of  - Kensington, Chelsea, Islington, Camden, Hampstead are common.
  • properties often seem unusually cheap for the area (if it seems too good to be true…)
  • photographs seem unusually professional – the interior sometimes resembles a hotel room, with soft lighting, cushions on the bed etc.  This may be because the photos are indeed pictures of hotel rooms or show properties.
  • no one answers the phone or the number given is wrong.
  • the “landlord’s” email address is from an easy-to-set-up email program such as gmail, hotmail or yahoo.

If you are at all suspicious about any of the properties advertised, please email us before you proceed.  The scam affects all property advertising sites, as well as printed classified papers such as Loot.  Our thorough checks make RentFair one of the safest places to rent property.  Please help us to keep it that way.

 Posted by RentFair at 10:28 am  Tagged with: , , ,

Housing Benefit Caps : Coalition forces through Welfare Reforms

 Housing Benefit, Landlords, Property Market, Tenants  No Responses »
Jan 232012
 

As I write, the Coalition Government’s latest welfare reforms are being hotly debated in the House of Lords. The Government wants to introduce a cap of £26,000 a year in the total amount of benefit an out-of-work household can receive. The cap won’t apply if anyone in the household is working and doesn’t apply to those on disability benefits. According to the Government, the cap will initially affect about 67,000 households, mainly those with large families living in expensive parts of London.

The reforms, says Iain Duncan Smith, the welfare minister, are intended to re-align the benefits system so that it will always be worthwhile to work.   One of the problems at present is that some families would not be able to afford their present homes if they were working. In other words, the moment a member of such a household starts work, housing benefit will be lost and the family will no longer be able to pay the rent. Understandably, families in such a situation may be reluctant to seek employment if the result would be that they lose their home.

It can not be fair, says the Government, for people on benefits to live in houses that hard-working families, paying taxes, could not dream of.  Polling shows that they are supported by the general public.  Indeed, most polls show clearly that the electorate consider that the government is not being touch enough and would like the cap set much lower.

The debate in the House of Lords today is part of a whole package of welfare reforms being introduced during this parliament. Housing Benefit itself has already been capped; the cap came into force in April 2011. From that date, the maximum that can be claimed in housing benefit each week for new claimants is as follows:

  • £250 for one-bed
  • £290 for two-bed
  • £340 for three-bed and
  • £400 for four-bed and larger properties

The changes will be phased in for existing claimants from this month, January 2012.

Families in central London will see the biggest impact.  Before the cap, the maximum rent payable for a 3 bedroom property in the Central London Broad Rental Market Area was £700 per week.  That has been cut by more than half.

With such public support for benefit cuts, the Labour Party finds itself having to back the idea of a cap, their opposition being confined to technicalities about the way it is implemented.

Despite protests from the likes of Paddy Ashdown, Church of England Bishops and the respected Baroness Tanni Grey Thompson, the demands from the public for big cuts in benefits means the government have a strong incentive to push the reforms through. This is one situation where acting tough is likely to win them votes.

If you have been affected by the changes to housing benefit, either as a landlord or a tenant or in any other way, we’d like to hear from you.

 

 Posted by Christian at 2:29 pm  Tagged with: , , , , , , ,

Harry Hill launches “Angry Buyers” game

 Agents, Trivia and Gossip  No Responses »
Jan 212012
 

You may have read our post on letting agent reviews: angry tenants and landlords sounding -off about their experiences with agents.   On a similar theme,  Harry Hill (no, not that one, the man who set up RightMove) has launched a conveyancing website,  publicised by that affable property hunter, Phil Spencer. The site includes an online game – “Angry Buyers” – in which you can vent your anger by firing estate agents, mortgage brokers and property lawyers out of a cannon to knock over houses.  It may be simply a clever marketing ploy but it’s certainly very satisfying to play and, like Angry Birds, very addictive.

 Posted by Christian at 11:00 am  Tagged with: , ,

Letting Agents Slated on Reviews Website

 Agents, Trivia and Gossip  No Responses »
Jan 192012
 

“I am astounded at how bad these people are. Rude, unprofessional and unqualified...”

“the majority of the staff at …  are unhelpful, rude, dishonest and above all incompetent”

“The worst letting agency I ever came across. Arrogant and rude…also they are useless at their job”

“they did nothing. Absolutely nothing.”

“lies after lies”

And those are by no means the worst comments. All the above are taken from the review section of uklettingagent.co.uk, an online directory of letting agents. To be fair, there are one or two positive reviews but I suspect they may have been posted by the agents themselves. The overwhelming majority of comments are negative, very negative; you can feel the anger in the reviewers’ words. Entertaining and definitely worth a read.

Let us know of your experiences with letting agents, good or bad.  If there’s enough interest, we’ll set up our own review section for you to let off steam. Ludlow Thompson would be top of my list.

 

 Posted by Christian at 2:49 pm  Tagged with: , , ,

Rent Prospects for 2012

 Landlords, Property Market  No Responses »
Jan 102012
 

Rents reached record highs in parts of the country last year but is the rise set to continue?  Experts seem divided.

FindaProperty.com believes that, after a small seasonal fall over the Chrismtas period, rental prices will continue a steady rise, pointing out that prices have picked up very quickly after the seasonal dip in previous years. Belvoir lettngs, one of the biggest UK franchises, on the other hand, predicts that rents will remain broadly flat, keeping in line with inflation but that the south-east will again out-perform the rest of the UK.  Knight Frank expects modest rent growth of 4-5% in central London for the whole of 2012, a much slower rate than we have seen recently.

What is clear is that there will be stark differences across the country.  2012 is a big year for London and it seems likely that the capital will again lead the way, with demand for accommodation outstripping supply.  The picture outside the south east is likely to be less certain.  Much will depend on the economy, which in turn hangs on whether the Eurozone can successfully resolve its current crisis, a prospect that most commentators consider is unlikely (as to which, see my comments)

 Posted by Christian at 1:44 pm  Tagged with: , , ,

I want my Tenant to Leave Early

 Ending Tenancy, Landlords, Tenancy Agreements, Tenants  2 Responses »
Jan 102012
 

Tenant LeavingIt’s a common problem: you let your property, perhaps to move in with a partner, and sign your tenant up to a 12 month contract. But then after a couple of months, things aren’t working out with your partner and you want your place back. What do you do?

You’d be surprised how often we are asked this question. Assuming you’ve signed an assured shorthold tenancy – as will almost always be the case – your rights are as follows. First, check to see whether you have a break clause in your contract. If so, this will allow either party to end the contract early, usually after 6 months. RentFair always recommends inserting a break clause into contracts of 12 months or more and our tenancy agreement contains just such a clause. You can download one free here. If you don’t have a break clause then you don’t have any legal right to end the tenancy early. However, it may be possible to do so by reaching an agreement with the tenant.

The lease is simply an agreement between landlord and tenant and it is possible to vary or end that agreement if both sides agree.   So why would a tenant want to leave their home early if they don’t have to?  True, but you don’t know until you ask.  It could be that the tenant was himself/herself hoping to end the lease early, but worried that there was no legal right to do so.  Perhaps they are struggling with the rent, perhaps the commute is further than they thought.  You have nothing to lose by approaching them.

Even if the tenant is perfectly happy to stay put, they might be willing to leave early if they are offered an incentive.  Overlooking that stain on the carpet, or the cigarette burns in your sofa perhaps?  Or half a month rent free if they will quit early.  We find that most people are open to negotiation if you treat them with respect and explain your situation openly and honestly.  Let us know how you get on.

 

 Posted by Christian at 12:43 pm  Tagged with: , , , ,

To Buy or not to Buy, that is the Question

 Property Market  No Responses »
Jan 042012
 

Perhaps more than ever before, the housing market in this country is one of contrasts. Those people lucky enough to have held on to tracker mortgages taken out in the boom years are laughing – interest rates at close to zero mean rock bottom mortgage payments and lots of disposable cash.

At the other end of the scale are first time buyers like my sister.  Earning a good salary, with a clean credit record, the mortgage she has been offered will buy her little more than a studio flat, even in the cheaper London boroughs.   Assuming she can manage to raise the huge deposit of course.

By way of background, data just released from the Land Registry shows that the only region to experience an increase in average property values in 2011 was London (+1.4%). Prices in the North East fell the most, by 5.4%.

Incidentally, London was also the location for the most expensive house sold last year – £19.25 million for a detached house in Hampstead and the cheapest property sold was in the north east, where £16,000 bought one shrewd buyer a whole terraced house in Middlesbrough.

As usual, the buoyancy of the central London market can be attributed partly to wealthy foreign investors looking for a secure haven for their money.  Likewise, the fall in the North East is probably a reflection of that region’s dependence on public sector employment, which has been hit particularly badly over the last 12 months.

Knight Frank expect the divide to continue to widen; they are forecasting a further 5% increase in London prices this year, but expecting property values nationally to fall by the same amount, 5%.

But coming back to my sister – what should she do?   Take Knight Frank’s forecast at face value and jump on the property ladder before London prices rise even further?  That would mean downsizing from her current rented property to something barely big enough to swing a cat.  Or should she continue to pay ever-increasing rent, try to save some money, and wait.

Happy 2012 everyone.

 

 

 Posted by Christian at 10:55 am  Tagged with: , , ,

Prospects for Property Market in 2012

 Property Market  1 Response »
Dec 292011
 

EurosAs the year draws to a close, many people have been asking me where I see the property market going in 2012. Well, no one knows of course but my best guess is that it don’t look good. I’d say there’s a strong chance we could be heading back to the post-Lehman crunch of 2008. The possibility of Greece, Portugal, Ireland and others being unable to repay their government debts seems scarily real. Technically those countries are already bust and are only being propped up by massive international help. The problem is that if those governments can’t pay back what they have borrowed, then most of Europe’s banks – who have lent them the money – may also be facing bankruptcy. And we know what happens when banks collapse. Think Northern Rock, RBS etc. House prices would nosedive and the economy would follow. Let’s hope I’m wrong…

 Posted by Christian at 6:27 pm  Tagged with: , , ,
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