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The first property owners to take advantage of the Green Deal are to be offered a government cash back incentive, which could be worth over £1000.

Perhaps sensitive to criticism that the Green Deal – which launches on 28 January 2013 – has not been widely publicised, the government has announced a fund of at least £40m to kickstart the scheme. Those who are first to take up the energy saving measures will be offered the cash at set rates. The more work that is carried out, the more cashback will be paid. For example, £100 cashback is available for loft insulation, £250 for cavity wall insulation, and up to £320 for double glazing.

To be eligible for the money, householders will have to have the work carried out under the rules of the scheme and completed within a specified period. Tenants are fully eligible for the cashback. Private landlords are eligible but this appears to be restricted to the case “where they pay installation costs, up to certain limits.” Unfortunately, it is not clear exactly what this means and we are endeavouring to find out more. It is assumed that the approved providers will be able to advise further when they assess the property for eligibility. The cashback rates are available here.

A London council is to force all private landlords to take out licences if they want to continue to let property in the borough. The scheme, which will come into force on 1 January 2013, is estimated to cover 35,000 private tenancies, representing a third of all the borough’s households. Landlords who do not comply face fines of up to £20,000.

Newham Council decided to go ahead with the scheme after a consultation in which it says 74% of residents and 76% of private tenants expressed their approval for the proposals. We do not know how many landlords agreed with the scheme or indeed if they were even consulted.

Private landlords will be required to pay £150 for a 5 year licence if they register before 1 January 2013. Otherwise the full fee is £500. The licences are per property, not per landlord. So landlords will be required to buy a separate licence for each property owned.

Newham believes it is the first council in the country to require all private landlords to obtain licences and describes the scheme as “pioneering”.

The Housing Act 2004 allows local authorities to create areas of “Selective Licensing” – defined geographical areas in which private landlords would have to apply for a licence before being allowed to rent out property. The measure was designed to target specific problems of crime or poor housing in particular neighbourhoods. There are a few such Selective Licensing schemes already in operation across the country but this is the first “Selective Licensing” scheme to cover a whole local authority area.

Newham Mayor, Sir Robin Wales, said “We want to ensure that private sector rented properties are well managed and meet a good standard. We also want to deal with the crime and anti-social behaviour that is sometimes associated with bad private sector rented housing. We will never accept private sector tenants being directly exploited by landlords who force them to live in dangerous and unacceptable conditions. Good landlords have nothing to fear from this scheme. For the bad ones, this is a clear message they must clean up their act – or pay the price.”

The proposals have been welcomed by Shelter, who urged other councils to follow suit. The National Landlords Association have expressed their view that this is “the wrong tool at the wrong time”.

RentFair believes that a blanket licensing scheme across the borough will be counterproductive for Newham’s tenants. At a time when there is a dire shortage of property to rent in London, particularly at the lower end of the market, additional red tape and expense will do nothing to address the shortfall.

Nor, do we believe, will it do anything to tackle crime or anti-social behaviour, which the Mayor seems to believe is caused by poor housing. Whilst crime may be higher in areas of poor quality housing, we not believe that there is any causal link. Unemployment is also higher in areas of poor housing, yet few would argue that smartening up the housing stock would reduce unemployment amongst the affected tenants. Correlation does not equal causation and it is far too simplistic to suggest, like the ill-fated ID card scheme, that simply licensing people will reduce crime.

The problem of poor housing and unscrupulous landlords is mainly caused by the fact that landlords are in a position to exploit tenants because of the severe shortage of available property. Some landlords undoubtedly take advantage of this situation. However, the way to tackle the problem is to increase the supply of private rented housing, so that tenants have a greater choice. The licensing measures will unfortunately do the opposite and the increased costs will be passed on to tenants in the form of higher rents.

A final thought: 35,000 multiplied by £500. We make that £17.5 million – a nice addition to the Council’s revenues. Or is that too cynical?

UPDATE: October 2, 2012: Landlords in Newham have been sent notices that they must license all their properties by 1st January. It is possible to apply for a licence online but it is understood that the process will take about 40 minutes per property.

Home Information Packs. Remember those? Well the same piece of complex legislation that inspired those much-loved documents also heralded a new regime for the licensing of Houses in Multiple Occupation (HMOs). The Housing Act 2004 sets out a new definition of HMO and requires Landlords letting certain types of HMO to apply for a licence from the local authority. There are very strict penalties on landlords who fail to comply. In 2010 a landlord in Brighton was fined £2000 plus costs for failing to register an HMO and last year a Cornish Landlord only avoided a whopping fine of £62,500 for failure to register and other offences because of her ill health and impending bankruptcy.

So what exactly is a House in Multiple Occupation? As might be expected, the definition is not straightforward. In simplified terms, an HMO is a building, or part of a building, that:

is occupied by persons who do not form a single household
who use the building as their main residence
and who share one or more basic amenities (such as a bathroom or kitchen).

Examples might include a house in which rooms are let individually with shared kitchen and bathroom facilities, or a property let to a group of tenants who are not part of the same family, or a building converted into bedsits with shared bathroom facilities.

Not all HMOs need a licence. Compulsory licensing under the Act only applies to HMO’s consisting of

3 or more storeys
occupied by 5 or more people
in 2 or more households.

So a 3 storey town house let to 5 students would require a licence. As would a two storey property let to 5 people who are not related, where the property is above commercial premises (as the whole building would be 3 storeys). However, the same properties let to 4 people would not require a licence.

The above are the mandatory licensing requirements. BUT individual local authorities have the power to extend licensing requirements locally to other types of HMO, so landlords should always check the definition that applies in their area.

Councils can set their own licence fees, which can be over £1000 per property in some areas and, in addition to a fine of up to £20,000, landlords who fail to apply for a licence can be required to repay the rent received in the period when the HMO was not registered.

The licences, which usually last for around 5 years, impose strict standards on fire and electrical safety, the number of tenants permitted in the property and even on the kind of person who can be a landlord.

The legislation is intended to maintain standards of rented accommodation and, in particular, to stop parts of some cities turning into ghettos with tenants crammed into unsuitable and poorly-maintained properties.

If in doubt, we advise you to check with your local authority. The requirements are onerous and in many cases Landlords may opt to reduce the number of tenants in a property to 4 or less – even if this means a reduction in rent – to avoid having to comply.

As 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…

A Portsmouth Landlord has been ordered to pay almost £12,000 in fines and costs after ignoring orders to stop letting an unsafe house to students. Council officers found a bedroom was too small to be used as sleeping accommodation, three bedsit rooms were too small for sleeping and cooking facilities were sub-standard. The three bedsits and cooking facilities could only be accessed via an outside metal staircase. The council acted after complaints from the students. The Landlord, JL Homes Ltd, was fined £3000 for each offence plus costs. Councillor Steven Wylie said “By taking this action, it places all landlords on notice. Make sure your properties are in good order or we will take whatever action is necessary.”

Immigration Checks on Tenants: a Landlord’s view
As widely publicised, the government is proposing to force private landlords to check the immigration status of prospective tenants before agreeing to let to them. The new measures were announced in the Queen’s Speech last week as part of a package of legislation aimed at making Britain a less attractive destination for illegal immigrants. … READ MORE
Foxtons in Brixton hires Security Guards as Protesters target Letting Agent Offices
Letting agents were the subject of protests across London last weekend, causing some to shut their offices for the day, whilst Foxtons in Brixton hired private security guards as a precaution. Dozens of angry demonstrators gathered outside the Foxtons office, claiming that they were being priced out of the area by gentrification, encouraged by letting … READ MORE
Home ownership falls for the first time in 100 Years
Home ownership has fallen to levels last seen in the mid-1980s, according to new figures from the latest Census, conducted in 2011. The peak was reached in 2001, when 69% of homes were owner-occupied. That figure has now dropped to 64%. The Census reveals that the number of owner-occupied homes remained steady over the decade … READ MORE
Letting Agents Ordered to Disclose Fees
Letting agents have been ordered to disclose their fees upfront when they market rental properties. In a landmark ruling earlier this month, the Advertising Standards Authority ruled that agents would be in breach of advertising rules if they did not clearly display on any property advert what compulsory fees they charge in letting a property. … READ MORE
A Cheering Tale
At a time when cynicism of landlords and authority is everywhere, a story reported in the Guardian this week shows how common sense and decency still sometimes prevail. Knowsley Housing Trust is to re-classify nearly 600 family homes as smaller properties from 1 April. Knowsley says that demand for the 2 and 3 bedroom flats … READ MORE

Advice & Opinions on Property | the RentFair Blog

Cashback Incentive for Property Owners under Green Deal

London Council to License all 35,000 Private Rental Properties

HMO’s – What are they? Why Landlords need to know.

Prospects for Property Market in 2012

Rogue Landlord Fined nearly £12,000

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