Student property remains one of the most lucrative investments available to landlords, with sky-high double-digit yields currently on offer in many parts of the country.
With students heading back to university over the next few weeks, demand for student housing is currently high thanks to the growth of international students coming to study in the UK, and rise in UK nationals signing up for higher and further education. It is therefore unsurprising that investing in student property is on the rise – up 17% according to Savills.
But being a landlord is not easy and there are many issues faced, therefore bill-splitting service Glide had created a guide on how to deal with various tenant issues in the best way possible.
Although student tenants have a reputation for house parties and late night drinking, that stereotype is perhaps a little outdated.
With the rising cost of student loans and students themselves becoming more money conscious than other generations, ensuring that their deposit is returned to them at the end of term likely a key priority for the majority.
However, as with renting to anyone, wear and tear is to be expected, especially for larger multi-occupancy properties, while any issue with the structure or exterior of the property you are renting out is your responsibility to maintain. Issues relating to flooring, walls and any sanitaryware, such as toilets, sinks or baths, must also be resolved by you if they break.
But items brought into the property by the tenant are their responsibility to maintain. It’s not the landlord’s responsibility to pay for the repairs on items like TVs which were provided by the occupant.
It is important to remember to take an inventory of the property before tenants begin their occupancy, in order to enable you to tell the difference between repairs which naturally develop and issues that are caused by tenant neglect. Photos of the premises are useful to have in case of dispute.
As a landlord, you are responsible for ensuring that all gas and electric appliances are safe in the property, and a gas safety check is required every year. It is also your duty to install smoke alarms on every floor of the building – and carbon monoxide alarms in every room where a fuel burning appliance is situated.
But while it is down to the landlord to ensure the safety of these features, if appliances provided by the tenant break, or light bulbs need replacing, that’s down to the tenant to replace themselves. It is important to clarify these terms in the lease agreement to avoid any disagreements.
Making sure the boiler works and is regularly serviced to maintain the constant and safe supply of hot water for an occupant is also a non-negotiable. Should a boiler break, or if any leaks in the water supply occur, it is the landlord’s responsibility to get these fixed as soon as possible. It is also worth checking with your tenants how long the property will be empty during the Christmas break – if the boiler is switched off for extended periods during a particularly cold spell, there is a risk that the pipes will freeze, which could lead to central heating issues when tenants return in January.
A landlord must keep the general state of the property to a level which is deemed to be fit for habitation. This essentially means they must be kept clean, tidy and without any health and safety hazards for when the tenant moves in.
From there, it is the occupant who is responsible for the upkeep of the home, including features such as the gardens. However, issues like mould, damp and pests – such as rats – must be resolved by the landlord if they result from general wear and tear.
As the owner, you are entitled to inspect the property as many times as you like, but tenants must be given at least 24 hours written notice advising of your intentions to enter the premises.
Bills and payments
The collection of rent payment is a concern, especially for student tenants, who may not be used to the responsibility of regular payments and arranging bills. However, the stigma around students being irresponsible with money is outdated and not reflective of the current generation.
CPS Homes of Cardiff said that “Students make for reliable, almost guaranteed tenants each year due to the academic cycle. You know that if the current tenants are planning to leave at the end of their tenancy a new group is just around the corner, ready and waiting to move in at the start of the next academic year.
“And contrary to the beliefs of many, they are usually very prompt payers of rent because they’re in receipt of a student loan that they receive termly.
“Having confirmation of this student loan is far stronger than an employment reference because people are far more likely to quit or lose their job than drop out of University.
“If they ever do get into trouble with their rent payments, a parent or guardian will have usually agreed to act as a financial guarantor at the start of the tenancy. This means a landlord can approach said person and demand full payment of the balance owed.”
If you are the landlord of a shared property, it is not up to you to organise the payment of rent and utility bills.
This is the responsibility of the occupants, as the money is ultimately to be paid to you, while any disputes should be settled between tenants.
However, encouraging your tenants to sign up to a bill splitting service takes the headache out of arranging bill payments – each tenant receives a bill for their share of the utilities, meaning no-one is stuck chasing for payments and all potential arguments are negated.
Landlords of the draughtiest homes in England and Wales will be required to upgrade their properties ahead of new rules requiring the installation of energy efficiency measures.
Since April 2018, new rules have been in place across England and Wales, setting out minimum energy efficiency standards (MEES).
These regulations made it unlawful for landlords to grant a new lease for properties that have an energy performance certificate (EPC) rating below E, from 1 April 2018, unless the property is registered as an exemption.
While April 2018 heralded an initial change in the rules regarding energy efficiency standards, the bigger picture will see regulations that affect all rental properties, irrespective of the length of tenancy, in April 2020, when it will become unlawful to rent any property that has an existing or continuing tenancy that fails to meet the minimum required energy rating.
What’s more, the government is considering raising this target in another couple of years, at which point ‘D’ is expected to be the minimum EPC rating, so it is worth getting your properties up to scratch now to prevent even more work later.
To help landlords understand the rule changes, Fladgate, a City law firm, has shared some information below to allow them to understand what precautionary measures they should take and the consequences of not complying with MEES.
Do I benefit from an exemption?
If your property is caught by the EPC regime, you must comply with the MEES Regulations, unless you can rely on one of a few exemptions available to landlords, including but not limited to:
1. Exemption due to devaluation – a temporary exemption of 5 years will apply if a landlord can demonstrate that the installation of energy efficiency measures would reduce the market value of the property by more than 5%;
2. Exemption for new landlords – if a person becomes a landlord recently or suddenly in specified circumstances under the MEES Regulations, a temporary exemption of six months will apply; and/or
3. Third party consent – if a landlord cannot obtain necessary third party consents to improve the EPC rating of the property (including but not limited to lender consent, superior landlord consent and/or tenant consent), then a landlord may let a “sub-standard” property.
A landlord wishing to rely upon an exemption must register an exemption on the online Private Rented Sector Exemptions Register. Local authorities give and keep these fines and so are incentivised to enforce the legislation.
What if I don’t comply with the MEES Regulations?
If a landlord fails to comply with the MEES Regulations, there are financial penalties, which vary depending upon the length of the breach.
A landlord renting out a “non-compliant” property (less than three months in breach) may be fined up to either £5,000 or 10% of a rateable value up to a maximum of £50,000, whichever is greater.
A landlord renting out a “non-compliant” property (three months or more in breach) may be fined up to either £10,000 or 20% of the rateable value up to a maximum of £150,000, whichever is greater.
There is also a fine of up to £5,000 for providing false or misleading information, or failing to comply with a compliance notice.
What should I do?
The tightening of the MEES Regulations imposes further onerous obligations on landlords operating within the private rented sector.
If you have a property with an EPC rating of F or G then unless one of the exemptions referred to above applies, you should begin preparing now for the extension of the regulations to existing tenancies to take effect on 1st April 2020.
As the deadline fast approaches, landlords would be well advised to consider the following, in order to protect their assets:
1. Review your property or property portfolios to identify whether or not properties are compliant;
2. Consider the cost and extent of any works required;
3. Consider access to the properties (lease terms permitting) to carry out works required to bring the properties up to the minimum ‘E’ rating; and
4. Consider whether any exemptions may be relied upon.
Failure to do so will impact upon landlords’ abilities to market and deal with their properties.
There is speculation that MEES will rise again in 2022, making ‘C’ or ‘D’ the new minimum requirement. When considering any works to upgrade a property to comply with the MEES Regulations for April 2020, landlords should also bear in bind the potential future impact of the regulations.
The government’s decision to invest an additional £4m in funding for local councils to tackle criminal landlords and letting agents has been warmly welcomed by The Guild of Property Professionals.
The housing secretary, Robert Jenrick, announced on Friday that he has pledged new funding to be used to clamp down on rogue landlords, with the money set to be shared between more than 100 councils across England
He commented: “Councils already have strong powers to force landlords to make necessary improvements to a property through the use of a range of measures, including civil penalties and banning orders for the worst offenders.
“The grants will support a range of projects to enable councils to make the best use of these powers. This will include trialling innovative ideas, sharing best practice and targeted enforcement where we know landlords shirk their responsibilities.”
There are more than 4.5 million households in the private rented sector in England, with recent statistics showing that 82% of private renters are satisfied with their accommodation, which although impressive, does suggest that there is room for improvement
The Guild’s inhouse Compliance Officer, Paul Offley, said: “We fully support this initiative as it will ensure that rogue landlords and letting agents are punished for breaking the law and it will also ensure that more tenants are treated fairly.
“With the funding providing councils with a means to crack down on illegal activity in the lettings market, tenants will have more protection and the standards of the rental sector will be raised.”
“An environment where exploitative landlords are stamped out will enable good landlords and letting agents to thrive,” he added.
But the government funding to root out criminal landlords has been described by the Residential Landlords Association (RLA) as inadequate to tackle the scale of the problem.
David Smith, policy director for the RLA, said: “We welcome the government’s focus on rooting out criminal landlords. For too long the debate has been driven by ideological calls for more regulation of the sector. What is needed is better enforcement of the powers already available to tackle the minority who bring the sector into disrepute.
“The funding though is nowhere near enough. Instead of offering inadequate and sporadic pots of money, it is critical that the government provides proper, multi-year funding to enable councils to plan and prepare workable strategies to find the criminal landlords. This should be supported by councils having the political will to prioritise enforcement against the crooks rather than tying good landlords up in licensing schemes which do nothing to protect tenants.”
Greater confidence and more certainty in the housing market following last month’s Tory election victory looks set to boost the housing market and unleash pent-up buyer demand from property buyers, including buy-to-let investors, in the early part of 2020, analysts predict.
But Anton Frost, a partner at Carter Jonas letting agents, believes that continued political uncertainties, in particular, the deadline for Brexit rade talks at the end of the year, will keep a lid on activity levels in the housing market, including the buy-to-let sector.
He said: “2020 may begin with a new government but the familiar uncertainty over our departure from the EU will remain, and there is no doubt that this year will see the lettings market continuing to navigate through what has been a turbulent period.”
Frost, like many letting specialist, is concerned that tax and regulatory changes will dampen landlords’ appetites to invest and expand their property portfolios, with many consolidating their assets, or opting to flee the sector altogether.
Frost commented: “Policy changes and financial pressures on landlords has left many concerned that their investments are no longer viable. We’ve already seen the tenant fee ban and continuation of tax relief changes deter investors from the market in 2019, and this may well continue into 2020.
“With less stock comes increased competition and higher rents, and without legislative changes that can stabilise the landlord market, the tenant struggle for the right home at an affordable price may go unchanged.
“That said, no matter what picture the political landscape paints, people need to move and there has and always be a healthy level of activity in the rental market. Yield potential and tenant affordability are problems that remain paramount, but the market will always be transactional.
“Landlords are dubious about what 2020 holds, but clarity over if, how and when Britain leaves the EU should see an overall sense of stability return to the market, which can only be a positive thing.”
Under-resourced county courts are struggling to cope with the number of possession claims being put forward, ‘causing misery for landlords’ not to mention costly delays, according to Landlord Action.
The vast majority of residential possession claims are dealt with in the county courts and enforced by county court bailiffs. But government spending cuts, an increasing number of possession cases, court delays and administrative errors mean evictions are taking longer than ever, pushing many landlords into debt.
In a recent Section 21 case handled by Landlord Action, a tenant claimed she did not receive the ‘How to Rent Guide’ so the court set a hearing date of 27th June 2019. But the court postponed the hearing with just 24 hours notice because the Judge was no longer available.
Several hearing dates have since been set and cancelled, leaving Landlord Action with little choice but to chase for a new date some 12 months after the original Section 21 notice was served back in January 2019, and the landlord no closer to gaining possession.
“We are experiencing cases like this time and time again” said Paul Shamplina. “It’s not only causing extra work for us at Landlord Action, meaning we now have a full-time member of staff whose main responsibility is chasing courts for updates on possession orders, Notice of Issues and bailiff appointments, it is also causing extreme stress for the landlords who are already facing financial hardship as a result of rent arrears.”
Landlord Action is now calling on the government to increase investment in the court system before pressing ahead with plans to scrap Section 21 of the Housing Act, as part of the new Renters’ Reform Bill.
Shamplina continued: “The situation is the worst I have experienced in my 28 years in this industry. Cases are being overlooked, delayed or thrown out due to administrative errors and there is little we can do to improve matters for landlords when we are at the mercy of the courts.
“Remember, many courts were closed due to cost saving by the Ministry of Justice (MOJ).”
A new landlord organisation, which is the largest ever trade body in the letting sector, has been officially launched.
The National Residential Landlords Association, which came into force yesterday, has a membership of more than 80,000 landlords.
The new organisation has come about after the National Landlords Association (NLA) and the Residential Landlords Association (RLA) agreed to merge in autumn, with a view to delivering a stronger voice for landlords in the private rented sector.
Ben Beadle is the NRLA’s new chief executive, having joined from Touchstone, part of the Places for People housing group. He was previously managing director of TDS Northern Ireland and director of customer service with the TDS.
The two previous chairs, Alan Ward of the RLA and Adrian Jeakings of the NLA, said in a joint statement: “After more than 20 years of friendly competition the time is right to create a single organisation to represent and campaign for landlords.
“With so much of our work done in parallel there are major benefits to be gained for our landlord members.
“We will be stronger together when presenting a unified voice to government both nationally and locally about the importance of supporting the majority of landlords who do a good job providing the homes to rent the country needs.”
A man who rented hundreds of properties that he sub-let to criminal gangs running brothels and cannabis farms has been jailed for seven years and four months.
Chinese national Feng Xu used several fake identities to secure accommodation, according to the National Crime Agency (NCA).
Feng was arrested in Birmingham in May as part of a major investigation into modern slavery and human trafficking.
He had previously admitted 22 fraud, false identity and money laundering offences at Birmingham Crown Court.
The 43-year-old was described by investigarors as a “prolific operator” and an “important enabler” for different criminal networks involved in prostitution, drug production and housing illegal immigrants.
One computer database listed 446 different addresses that Feng had been involved in renting, investigators said.
Matt Rivers, branch commander at the NCA, commented: “Using numerous false identities and false documentation he was able to supply hundreds of different properties across the UK.
“We believe that taking him out will have caused significant disruption to a number of different organised crime groups involved in sex trafficking and drug production.”
Feng, who has lived in the UK illegally for almost 20 years, will face deportation after serving his sentence.
The housing plans being put forward by Boris Johnson have been described by the National Landlords Association (NLA) as “ruinous” and likely “to lead to an exodus of responsible landlords from the private rented sector”.
The NLA fears that the government’s flagship policy to introduce legislation to end Section 21 repossessions, as announced in yesterday’s Queen’s Speech, could potentially pave the way for the mass exodus of landlords from the private rented sector in the coming years.
The association, which represents 42,000 members, cited research from Capital Economics, an independent consultancy, showing that if Section 21 is abolished without any accompanying reform of the law courts, the supply of private rented houses in England could fall by as much as 20%, with up to 960,000 fewer homes available to renters if landlords pull out of the market.
It also pointed to data showing that there would be a 59% reduction in the number of private rented dwellings available to households in receipt of local housing allowance or universal credit – 770,000 fewer residential units – because landlords would instead opt to rent to people more able to demonstrate a track-record of making regular payments and a steady income.
Richard Lambert, CEO of the NLA, commented: “Landlords need certainty of their ability to end failing tenancies. If this cannot be provided by Section 21 then the Government must reform the courts. Strengthening landlords’ rights will make no difference if the court process is seen as simply delaying or obstructing possession.
“The NLA is deeply concerned that the Government will precipitate a housing emergency, deepening the crisis of supply and affordability faced by many households. Landlords will stop letting to tenants who are perceived as higher risk and ultimately sell properties which would otherwise provide much needed homes for those who cannot afford to buy.
“If ministers do not address the problems of capacity within the Courts Service before removing landlords’ ability to use the no-fault procedure, the dramatic increase in cases that will be brought before it will bring the system to its knees.”
The Queen has announced the new government’s priorities for its coming term, and it includes a proposal to abolish Section 21 of the Housing Act and reforming the grounds for possession, as part of a new Renters’ Reform Bill, designed to “introduce a package of reforms to deliver a fairer and more effective rental market”.
But in the absence of any meaningful plan to boost the level of social housing in this country, the announcement confirming the abolition of Section 21 in yesterday’s Queens speech has been described by ARLA Propertymark as “another attack against the landlords who actually house the nation”.
The trade body’s chief executive, David Cox, said: “If Section 21 is scrapped, Section 8 must be reformed and a new specialist housing tribunal created. Without this, supply will almost certainly fall which will have the consequential effect of raising rents and will further discourage new landlords from investing in the sector.
“ARLA Propertymark will be engaging with the government to ensure they fully understand the consequences of any changes, and we will be scrutinising the legislation, to ensure landlords have the ability to regain their properties if needed.”
The government also plans to introduce a new scheme to permit tenants to transfer their tenancy deposits when they move properties.
The new Lifetime Deposit scheme will permit renters to transfer their deposit from one property to another instead of being left out of pocket for weeks while they wait to be reimbursed from their old landlord but have to spend money securing their new property.
However, landlords will also be given strengthened powers to regain possession of their property under the new proposed Bill, while the expansion of the database of rogue landlords is also included in the legislation to be introduced in Parliament.
But the Residential Landlords Association (RLA) has also warned of a rental crisis that could lead to a mass sell-off of properties following the announcement Section 21 will be scrapped.
The organisation is calling on the government to develop a dedicated housing court to ensure that there is easily accessible and swift justice available where there are conflicts between landlords and tenants.
David Smith, RLA policy director, commented: “We accept the need to protect tenants from abuse, but it is crucial that plans to reform the way repossessions can take place are got right if the government is to avoid a rental housing crisis.
“Unless the new system is fair to good landlords as well as tenants, those same landlords who we need to support simply will not have the confidence to provide the rented homes that are needed to meet the demand.”
The UK could be heading for a rental crisis, with experts dreading the prospect of a chronic property shortage in the PRS as more than a third of private landlords look to sell up in the next year in the face of lower profits, new research shows.
A wide-ranging study of 2,000 landlords by the Residential Landlords Association’s (RLA) research exchange, PEARL, has found that almost 34% of private landlords are looking to sell at least one property over the next 12 months.
The study also found that just 12% of landlords are looking to expand the number of homes they rent out, down from 14% a year ago.
Almost half of landlords – 45% – told the RLA that the 3% stamp duty surcharge on additional properties had been a deterrent to further investment in property.
The drop in housing supply comes at a time when the Royal Institution for Chartered Surveyors (RICS) is warning that the demand for private rented homes is on the up.
The RLA is now calling on the government to scrap the stamp duty levy where landlords provide homes adding to the net supply of housing.
This should include developing new build properties, bringing empty homes back into use and converting larger properties into smaller, more affordable units of accommodation.
David Smith, policy director for the RLA, commented: “This is yet more clear evidence of the sell-off of private rented housing largely due to the government’s extra tax on new rental homes.
“It is ridiculous that when the country needs all the extra housing it can get, it penalises good landlords who invest in new homes.
“With a new government and a Budget due, we need a shift in policy to one that supports investment because otherwise there will be a growing supply crisis in the private rented sector as demand continues to rise.”