The Must-Known Legislation To Let A Property Compliantly
Landlords, are you aware of the two main pieces of legislation that you need to comply with to remain safe and compliant?
In the ever-changing private rented sector, it can be difficult to keep up with the latest laws and regulations that govern this space. However, failing to meet the government’s requirements can result in serious consequences in the form of; notices, fines and prosecution.
That’s why we at Concentric Sales and Lettings are focused on helping you get the compliance information you need on all aspects of Landlord law. In this blog, we’re going to dive deeper into the two pieces of landlord legislation designed to ensure the safety of your tenants within your private rented properties. These two laws are The Landlord and Tenant Act 1985 and the more recent Homes for Fitness & Habitation Act 2020.
The Landlord and Tenant Act 1985
Section 11 of the Landlord and Tenant Act 1985 details a landlord’s obligation for repairs. Simply put, as a Landlord, you must ensure the safety of your rented properties.
Specifically, you must ensure that the air, space, water, and heating of the property are properly maintained and kept safe. The law also clearly states that you must carry out repairs on your properties as and when they are due.
This brings up the question – when are repairs due?
The legislation states that repairs should be carried out on a “reasonable timescale” based on when you are first notified of the repair requirement. “Reasonable” is somewhat subjective and difficult to define but generally depends on factors such as (a) whether or not the tenant is living in the property and (b) whether or not the severity of the repair warrants an urgent response.
Major repairs (as in water gushing through a ceiling) are required to be acted upon immediately. You, as a Landlord, should take all reasonable steps to carry out any maintenance work or repairs to the best of your ability. Some repairs may take time to be rectified, but as long as you have taken the steps that you can take, the law will consider it reasonable.
Protect Yourself Against Claims
We recommend that you always act as quickly as possible when carrying out repairs for your tenants. This is not just for the comfort of your tenants within your rented property. It is also one of the best ways to protect yourself from potential claims that the tenant may choose to pursue against you.
Under the law, tenants have the right to report any outstanding maintenance issues to the local authority. The council may then decide to carry out a full inspection which can often lead to a much longer list of repairs.
It’s important to remember that you are not the only person given responsibilities under Section 11. Tenants are also obligated to “behave in a tenant-like manner”, meaning that they are required to take care of the normal maintenance activities that keep the property clean and functional. This includes things like changing lightbulbs, keeping the drains clear, cleaning the gutters, and other similar activities. Now that we’ve covered the first piece of legislation for landlords let’s cover the second, more recent law.
Homes for Fitness & Habitation Act 2020
This law does not replace the one we’ve discussed but creates additional rights and responsibilities. Generally, it focuses on areas that are not necessarily covered under the Landlord and Tenant Act 1985. There are two key factors you should be aware of when it comes to this law.
First, this act gives tenants the right, for the first time, to take a Landlord to court for not maintaining their repairing obligations. The government has removed the requirement to first go to the local authorities and has enabled the tenant to go directly to the courts. Landlords must be aware of this change.
Secondly, Landlords are now responsible for hazards and repairs within communal areas throughout the tenancy. You are obligated from the moment the tenancy begins through to the conclusion of the tenancy to ensure that the property is fit for human habitation at all times. The only way to achieve this is through regularly inspecting the property. You must not rely on tenants to report repairs because they do not always do so.
Final Thoughts
Your main focus as a Landlord should be to ensure that your tenants are safe at all times. Failure to comply with these laws can result in; prosecution by the tenant in court, penalties issued by the local authority, fines, and improvement notices that can restrict your right to gain possession of your property.
With over 170 different pieces of legislation regulating the private rented sector, you may be wondering how to be compliant as a Landlord.
Fortunately, we have created several resources to help you stay safe, compliant, and up-to-date. That’s why we run a quarterly webinar hosted by Dawn Benett, where we spend 2 hours diving deep into various pieces of legislation that you need to know about. Click here to register for FREE today!
What you need to know about the immigration act 2016 (2022 changes)
Are you aware of the changes that were made to the Immigration Act 2016 that just came into force in April 2022? The laws surrounding the private rented sector are changing all the time. As a landlord, it can be difficult to keep up with the many hundreds of different laws. However, you understand that there can be serious consequences if you fail to do so. Lettings law is serious. Here at Concentric Sales and Lettings, our goal is to help you by keeping you up to date with all the changes. We’re here to give you the knowledge and practical tips you need to always remain compliant.
So, without further ado, let’s get into the Immigration Act and the 2022 changes.
What is the Immigration Act of 2016?
The Immigration Act is a piece of legislation that applies to landlords and letting agents and came into force in England on February 1, 2016. The goal of the law is to ensure that properties are not rented to tenants or occupiers who do not possess a right to rent in the UK. Specifically, the legislation states that a landlord and/or a letting agent must be able to prove any occupier’s right to reside within the property throughout the tenancy. This means that landlords must check that any tenant or occupier within the property has the right to rent in the UK before the tenancy starts. This law applies to every adult who is 18 or more years old and who is living within the property, whether they are named on the tenancy or not.
How to verify the right to rent
The most important part of the Immigration Act is the requirement that you verify your tenant’s right to rent in the UK. You mustn't discriminate when checking the occupant’s right to rent. Ask each of your tenants, regardless of their backgrounds, to provide the same evidence – namely, that they have the right to reside on the property. The easiest way to prove the right to reside in the UK is by presenting a passport. If it is a UK passport, you have all the evidence you need to prove that the tenant has the right to rent for the duration of the tenancy. If your tenant is from the EU, the process is a little different. In this case, their right to rent can be verified through the government website online. To do this, all you need to do is ask for a share code from the tenant or occupier. Using this code, along with their full name and date of birth, you can conduct an online rent check. Here is where you can do that. Finally, if your occupier is from outside the EU, other documentation will be required to verify their right to rent. Often, tenants from outside the EU prove their right to rent by showing a passport with a supporting Visa that shows the data the tenant or the occupier entered the UK and the expiry date of their visa. For any tenant or occupier that has a limited time to remain, you are required by law to conduct a follow-up check after completing the original right-to-rent check. The follow-up will need to be carried out either upon the date that the visa expires or 12 months after you carried out the initial check, whichever comes last. What this means is that you could, in theory, legally move a tenant into a property today, when their visa expires tomorrow. This wouldn’t be a violation of the law, but it might not make sense for you as a landlord. Therefore, you need to consider all the facts about a tenant’s right to rent before starting the tenancy. Some tenants may not be able to fulfil the fixed term of their tenancy.
Landlords must keep documentation and evidence that the right-to-rent checks were carried out at the start of the tenancy. Also, landlords should keep records of any follow-up checks that were conducted while the tenant or occupier was living on the property. Finally, the right-to-rent requirements apply to all occupiers as well, so we recommend conducting further checks to ensure that no unauthorised occupants are living on the property.
Two big changes in 2022
Originally, the Immigration Act required these right-to-rent checks to be held face-to-face. However, due to recent events, for the past two years, we have been able to conduct right-to-rent checks via video call. The first big change to the act is that this amendment has been extended to the 30th of September 2022. The second big change is the alterations that have been made regarding biometric residence permits. Biometric residence permits are documentation that we have now used for many years for any tenant or occupier that has a set amount of time to reside. Based on the 2022 changes, these documents are no longer sufficient to demonstrate a right to rent in the UK. Tenants or occupiers that rely on these permits will also need to provide a share code just like EU nationals so that you, as the landlord, can verify their right to rent online.
Stay compliant, stay safe
Although landlords are not immigration officers, this law is an essential piece of property law that you must comply with. This regulation carries with it fines of up to £3,000 per occupier and, potentially, a prison sentence. However, by ensuring that you are checking both your tenants and occupiers for their right to rent in the UK, you can remain safe and compliant. The Immigration Act of 2016 is just one piece of legislation in our private rented sector that you as a landlord should be aware of. If you’d like to learn more, feel free to join our FREE quarterly webinar hosted by our very own Dawn Bennett, where you can get more detailed information about the laws and regulations that you need to know.
Landlords Heading To Liverpool As The City Property Market Booms
A new report has revealed Liverpool is the place to buy for landlords – but anyone looking to add to their portfolio should act quickly, as property prices are on the up faster there than in other locations.
The report (commissioned by London’s Beauchamp Estates and Liverpool’s Logic Estates, with analysis by Dataloft) describes the city as a ‘regional powerhouse’, stating residential property prices have risen more quickly than anywhere else in the last five years – including the capital.
But this surge shouldn’t deter potential investors, because prices there are still affordable compared to other key locations. The report looks at the Liverpool Waterfront, where an average-priced apartment would cost just under £240 per square foot. This compares to around £353 (per square foot) for a similarly well-positioned property down the road in Manchester and £678 (per square foot) in London.
Buy-to-let landlords are also collecting higher rental yields – with an average of 6.4% across all apartments in Liverpool, compared to 5.5% in Manchester and 4.5% in London (of the cities included in the survey, only Leeds saw a higher rental yield for all apartments, sitting at 6.7%).
And there are also seemingly more renters to attract – 55% of the city’s population live in private rented accommodation, compared to 27% in the capital and 17% across England as a whole.
However, while this report extols the virtues of buying in Liverpool, it’s worth noting that there are multiple favourable locations which have emerged as key investment hotspots in recent reports.
The Buy To Let City Tracker research undertaken by Aldermore Bank saw Bristol top the list of best places to purchase an investment property, based on indicators including average total rent, short and long-term returns, percentage of vacant housing stock, and number of renters.
Second place was Oxford, with Cambridge coming third, followed by Manchester and Luton to complete the top five.
And in a third piece of research – this time conducted by Compare the Market – Birmingham topped a list of the 20 best places to be a landlord in the UK, with Bradford, Coventry, Bolton and Burnley also making it into the top five.
Landlords- Selective Licensing Is Returning to Liverpool April 2022 - Are You Prepared?
Are you a landlord in Liverpool?
If so, are you aware that in April 2022, selective licensing is returning to the borough?
Today, we’re going to talk about what this change in legislation means, and the steps you can take to ensure that you remain compliant. Here at Concentric, our goal is to help landlords succeed by providing practical guidance surrounding each legislation update as well as helpful advice regarding overall best practices for landlords.
What is Selective Licensing?
Selective licensing simply means that the city council has decided that they are going to selectively license a specific area. Thus, selective licensing in Liverpool means that the Liverpool City Council has agreed to selectively license a group of postal codes within the borough. In order to determine if this impacts you, you’ll need to see if you own any properties that fall within the range of postal codes that are covered by this new legislation. If you are a landlord in this area and you have a property from a one-bedroom flat all the way to an HMO, you may need a special license in order to continue letting that property.
What Does This Mean to You as a Landlord?
Now, we’re going to talk about what you need to do when selective licensing comes into place in Liverpool. Practically, this means that any property you rent that falls within the impacted area will need a special license as of April 2022 in order to be compliantly let. So, you’ll have to head to the Liverpool City Council and file applications, when the process is opened, for these licenses. There will be a cost element to this. You’re going to need to pay a fee to the Liverpool City Council in order to make the application for the license. Selective licensing is going to continue within Liverpool for the next 5 years until 2027.
Official guidance around the new law is still evolving, so we don’t yet know what the cost of licensing will actually be when selective licensing is rolled out. However, through experience with past licensing programs, we do know that there are many ways to secure discounts and reduce the licensing fee. This can be done by maintaining a good EPC rating, using accredited agents, and through other strategies. We recommend keeping an eye out for further updates on the Liverpool Government website. This is also the place to be when the application process opens for selective licensing. If you need help, contact us and we can help you with licensing applications.
How Do You Stay Compliant?
As of the time of this writing, the details of what will be specifically required to be compliant with this new legislation are not known, but we do know the general standards that have to be met in order to be compliant. There are a number of ways you can take care of your properties and ensure that you are always remaining compliant with the law. We’ve listed a few of them here:
Have a valid gas certificate
Have a valid electricity certificate
Ensure that your EPC ratings are at ‘E’ or above
Have your smoke alarms and carbon monoxide detectors tested
Ensure that your property is fit for habitation
By following these main steps, you can be confident that your property is already a long way towards full compliance. Previously, when the Liverpool City Council enacted selective licensing, they added some additional requirements. This was in 2015. They required things like changes to the tenancy agreements to incorporate anti-social behavior clauses as well as adequate refuse management at properties. Thus, additional requirements may also be a part of the new selective licensing law.
It’s important to remember that the purpose of selective licensing is to regenerate areas and make the private rented sector the best that it can be. If landlords take good care of their properties and ensure that their tenants use the property responsibly, you’re ahead of the curve.
Licensing in the Private Renting Sector is Serious
Most landlords are probably already aware of the importance of remaining in compliance with all of the relevant laws. The penalties for not doing so can be immense. Failure to comply with selective, additional, or mandatory licensing as a private landlord can result in penalties up to £30,000. If your property falls under the category of selective licensing after April 1st of 2022, and you are not in possession of the correct license, your rights to gain possession of your property could be negatively impacted.
We hope we’ve answered some of your questions about this important new legislation. If you’re a landlord in the Liverpool area and would like some additional information, please contact us and we will be happy to help you in any way we can, also we are running a live webinar on this topic, which you can register for HERE.
What Is The Rental And Property Investing Market Like In Liverpool Right Now?
We have let thousands of tenancies, worked with hundreds of investors, and managed hundreds of properties, helping landlords navigate the local Selective Licensing schemes since their inception in 2015.
Like tenants, landlords and investors come in all shapes and sizes, have different levels of experience, and have different wants and needs, but there are a few questions that we get asked all of the time, and right now, it seems like everyone wants to buy property in Liverpool and the surrounding areas... and I can see why.
We have been instrumental in letting property in and around the west of Liverpool for over 10 years now, our focus; to work with the landlord investors in the area.
We have let thousands of tenancies, worked with hundreds of investors, and managed hundreds of properties, helping landlords navigate the local Selective Licensing schemes since their inception in 2015.
Like tenants, landlords and investors come in all shapes and sizes, have different levels of experience, and have different wants and needs, but there are a few questions that we get asked all of the time, and right now, it seems like everyone wants to buy property in Liverpool and the surrounding areas... and I can see why.
There's a lot of investment opportunity in the area with great property prices compared to many other city locations, and will generate fantastic income (and now capital) returns.
So, if you are thinking of buying a property in the area, here are a few questions you should be asking yourself.
What are the most in-demand areas from tenants at the moment?
The top areas that are most in-demand from tenants right now are Bootle, Walton & Fazakerly.
What sort of property cannot you get enough of?
There appears to be a real shortage of 2/3 bedroom houses, maybe because people want more space or a place to work from home, we have all experienced being locked in, and a 1 bed flat can become less desirable.
Where are most investors looking to buy at the moment?
Most Investors are looking to buy property in Bootle & Walton, which ties in nicely with the increased tenant demands we are seeing.
What rent increase levels have YOU seen in the branch?
With rents across the UK increasing on average by 8.5% (according to Homelet), we have seen rents across the board here increase by at least 10% over the last year and in some cases a lot more!
What property price increases have you seen in your area?
According to the Liverpool Echo, Liverpool has the fastest rising house prices of any UK city. This year is set to be the busiest for the UK housing market since 2007, with Liverpool topping the house price charts at 10.6% and some areas such as Toxteth maxing out at over 20% in just 12 months.
Are unfurnished properties renting better than furnished?
We find that most properties rent better if they are unfurnished, that is unless they are a house share or student accommodation, then of course furnished is best.
What are the key features tenants are asking for right now?
Of course they still want the usual, a good location that feels safe, a nicely presented property that’s clean and has good access to facilities and transport, but this year we have seen a rise in tenants asking for gardens, and to be allowed pets (probably due to the experience of lockdown), and with HMO’s they really do all want en-suite facilities (due to becoming more germ aware).
How many applications from tenants are you getting per property?
During most of 2021, we were seeing around 10 applications from tenants per property, however, this year it has more than doubled, we seem to currently (January and February) be getting up to 25 pre-applications for each property, it's gone crazy!
If you were looking to buy a property right now Elisha, what would you buy?
If I was to buy a property now, I would definitely be looking to secure a 3-bedroom terraced house for around £130k, generating me a monthly rent of around £750pcm which results in a 7% gross yield, because I know I could rent it over and over again with zero problems and get good quality tenants.
What sort of landlords are buying at the moment?
It seems all types of landlords are buying at the moment, from 1st-time landlords, those with 1 or 2 properties looking to expand their portfolio and large landlords alike, it feels like everyone is buying right now, it’s a very busy market, driven in the main by the huge increase in demand and the shortage of stock out there.
What’s the big challenge for the Liverpool market at the moment?
It has to be the introduction of another Selective Licensing scheme across Liverpool from April 2022. This is going to be an additional cost and more paperwork for those landlords in the areas affected, but we have been through this before with Sefton, so we are ready to support our landlords through it.
If you have any queries regarding any of the subjects covered in this article or want to learn how the introduction of the new Selective Licensing laws could effect you as a landlord in the Liverpool area, we're running and inviting you to a free-to-attend webinar on the 23rd March 2022 at 18:30. On the webinar, we will cover all the nitty-gritty details you should 100% be aware of.
Landlords – Are You Getting The Best Out Of Your Letting Agent?
Here’s a question for you – how important is it to employ an agency and what can landlords get out of it?
If you’ve ever had the stress of self-managing your properties, you’ll know that there are huge merits in having a good letting agent to take care of things such as contracts, credit checks, inventories, and all of the points of legislation that go along with rentals.
Over recent years, there has been a significant growth in the private lettings sector, which makes it more important than ever for landlords to not only find the right letting agent, but to know what they can offer in terms of service. And striking up a good relationship with your agent is key in getting the most for your money.
Why do I need a letting agent to manage my properties?
The purpose of a good letting agent should be to eliminate stress for both landlords and tenants, by making the process of renting a property as easy as possible.
As a self-managed landlord, it is vitally important that you know about all of the key legislation, such as the newly approved Tenant Fee Ban, deposit protection, and the Immigration Act, as well as health and safety issues, including up to date gas certificates and electrical checks. If you fail to comply with any one piece of legislation, you could be facing fines, and even imprisonment.
By employing a letting agent to fully manage your property, you are safeguarding yourself, your property, and your reputation, as well as having peace of mind that they have worked hard to find the right tenant, and that the rent is paid on time.
And from the tenants’ point of view, they are assured that they are protected during the term of their tenancy, are aware of their rights, and have a point of contact if anything goes wrong. So you are eliminating those late night phone calls when your tenant encounters a problem!
What should I look for in an agent?
You need to decide from the offset what it is you need from your agent. Most agents will offer a range of services for landlords, including a tenant finding service, and fully-managed. Be aware that if you opt not to pay an agent to fully-manage your property, then you as the landlord will be fully responsible for drawing up all the required paperwork, including inventories and contracts, as well as taking full ownership of ensuring that you are compliant with all relevant laws and regulations. If you are not able to put in the time to learn all about the laws and regulations surrounding letting a property, or don’t want the stress or responsibility of organising regular checks for things such as gas safety, electrical checks, PAT testing for appliances etc. then perhaps you’d be better off looking for a service which will cover you for all of that.
A fully-managed service also means that the agent will deal with all of the day to day issues, such as general maintenance, complaints, and rent collection. So if anything goes wrong, your agent will act as the contact for your tenants, and will be able to sort out any issues on your behalf.
Once you have decided the level of service you want, begin by researching local letting agents. If you have connections with other local landlords, ask them for recommendations, and look for online reviews. Compare what they offer, as well as their fees, and check out that they have the required memberships and money protection schemes.
I’m not happy with my current agency service – what should I do?
Firstly, try talking to them – is it just that you have bought into the wrong service? It could be that you’re with the right agency, but simply need to renegotiate the service you’re getting. But if that’s not the case, and you think you’re with the wrong agency for you, there’s no shame in shopping around for a new one. The purpose of employing an agent is to take the stress off you, and if you don’t feel that they’re pulling their weight, then move on.
City wide landscaping scheme for landlords
What Licensing Means
Licensing affects not just myself and landlords in Liverpool, but others across the country as more and more local authorities will adopt such schemes, once they realise how much money can be generated from it!
Licensing was implemented in Liverpool on 1st April 2015. From the landlord’s perspective, that means every rental property within the boundaries of Liverpool City Council must have a licence, the cost of which is £400 per property, a big dent in cash flow even for someone with a small portfolio. If you have a block of, say, five flats, then you have to get a licence for each flat, amounting to £2,000 for a licence for one single building.
Negotiations and the Council’s Response
We have been negotiating with the council for the past two years in an attempt to get the point across about the cost of licensing. Once you take out mortgage payments, insurance, maintenance costs, agents’ fees, compliance (such as gas safety checks and mains-powered smoke alarms from later this year) and so on, many landlords are ‘on the brink’ with regard to cash flow – there is not much left by way of profit to cover the additional cost of the licence fee.
Despite our involvement, as of yet we have only had limited success in breaking the barriers regarding the cost issue within the council. To make my position clear, I have always been an advocate of raising housing standards within the private sector. There is nothing worse than being tarred with the same brush as rogue landlords. So when the city council comes forward to promote schemes to raise housing standards, I am always in favour. Our objection, though, is the ‘taxation’ that comes with the licensing. Through the co-Regulation model we have successfully formed with the council we will continue to have regular meetings regarding on going issues with licencing and we hope to demonstrate in the coming months the minimal administration involved with working with regulated agents that we can further reduce the licence cost to our landlords.
Councils and public sector workers seem to fail to understand that landlords do not sit on Caribbean beaches sipping cocktails all day, counting their money. Many have just a few buy-to-let (BTL) investments running alongside their main job. And if they bought during the boom, then they are probably in negative equity as well.
The Price of Ignorance
As agents, we see many accidental landlords, or people with just one or two rental properties who don’t think of themselves as professional landlords. When we ask “Have you applied for a licence?” the answer is frequently, “What licence?”
This is very worrying for us. Landlords generally want to be compliant and not fall foul of the law, but they are simply not aware of the scheme. If they hadn’t spoken to us, they might have let the property to a friend or work colleague without knowing the consequences.
Those consequences are heavy. Fines can be up to £20,000 along with a criminal conviction. Aside from the huge financial implication, a conviction, depending on their job, could affect their mainstream income. Along with being in breach of their mortgage conditions & insurance.
We have tried to press the council about their policy for issuing these fines. They have assured us that they will take a softly, softly approach in cases where the property owners are not professional landlords, and advise them of the steps they need to take to get the property licensed. My concern, however, is that the council has told us the reason for bringing in licensing in the first place is because they want to ‘sharpen the stick’ to raise housing standards in rental properties. Our response to that is: they have sufficient power under the Housing Act to do that, without the need for licensing. I am dubious and concerned about whether they really will adopt a lighter approach, but it remains to be seen how they will enforce it. Only time will tell.
A Revenue Generating Exercise – Or Not?
From the very start, I have believed this to be a revenue generator for the council. I understand there are government cut-backs and accept they are trying to find ways of getting in more revenue, but let’s look at the figures.
Number of rental properties in Liverpool: approx. 50,000
License fee for each: £400
Revenue generated: in the region of £20,000,000
As we all know, this money can only be used for administering the license and not used within other departments, so we have asked several times why the fee needs to be so high – surely they don’t need £20 Million to run the scheme? Each time, they have failed to clarify the costs.
This week, I found out that an additional £50 will have to be paid for a ‘fit and proper person’ check. This was not included in the business case or on the application form and will be interesting to see how they will enforce this after a licence has been applied for?
When the council first consulted about the scheme, we formed a consortium of landlords and letting agents to legally challenge them. Councils can cite one of two reasons for implementing licensing: anti-social behaviour or low demand. Liverpool opted for low demand as the business case; we felt this was flawed as it is only true in small pockets of the city. What frustrated us was that the twenty members of the consortium are all property professionals with years’ of experience, but the council would not listen to our professional advice or what we thought would benefit the private rental sector within the city. It seemed they had made the decision and were going through the consultation as a tick-box exercise, with no plan for how to introduce this licensing scheme.
On top of that, we are now three months into the scheme, and I don’t think anyone has received a licence yet. That would seem to support the argument that they did not have much of a plan for implementing and producing 50,000 licenses.
Compliance
The council’s original application for licensing declared that 42% of the private rental stock in Liverpool was below standard. We challenged this, as the figure did not fit with our experience. It turned out they had compiled the figures from complaints received from or about properties within the PRS over the previous year – they had found 42% of these to be substandard, not 42% across the board. We felt there should have been a broader assessment from a random selection of properties selected from agents and private landlords to provide a fair assessment.
Being as all of our properties are managed through our ARLA-accredited managing team, we ensure that all of the rental properties on our books meet licensing standards already (seeConcentric’s Top Ten Tips for letting). Licensing, however, will effectively duplicate our administrative workload as it will include notification of gas checks, tenancy agreements, etc.; things that we already have to do in accordance with our professional body.
One thing we have succeeded in doing is to set up a co-regulation model with Liverpool City Council. Properties managed by ARLA- or NALS-accredited agents will qualify for a 50% reduction of the licence fee, because they already meet certain housing standards. This will bring the fee down to £200 and we hope to negotiate it down further as previously mentioned.
Living with Licensing
One of the issues we raised with the council was the issue of rogue agents. This was one of the reasons for forming the co-regulation model – the city council accepted that an ARLA- or NALS-accredited agency is governed by a professional body, and that properties and client funds are managed to industry standards. They recognise that we set good housing standards by complying with the HHSRS.
One of the conditions of co-regulation is that the agent must be the licence-holder for a rented property. Consequently, if owners are concerned about licensing, we will take over that liability. It is a degree of protection for landlords because we are then the ones with our neck on the block. This is a matter that we have had to thrash out with the council because as with HMO licensing, many agents previously thought that by having the licence in the landlords name not theirs would exonerate them from prosecution for failures to comply with licence conditions. This was not the case and many agents have been prosecuted by Liverpool city council even though the licence was in the landlord’s name. By making the decision to become the licence-holder ourselves, we can make sure landlords are meeting all their obligations and won’t fall foul of non-compliance.
Key Issues
A fee discount and becoming the licence-holder in place of the landlord might help, but there are so many other issues. I have already mentioned the risk of criminal prosecution, and through the consortium’s research, we have also discovered that 30% of lenders will not lend on a property within a selective licensing area. We have asked our landlords to check with both their mortgage and insurance providers whether the conditions allow them to let within a licensed area.
The combination of all of these things could have a detrimental effect on rental housing stock as landlords will sell up and move elsewhere. The risks are getting too high.
There would be a knock-on effect to that. According to housing officers, Liverpool has a housing crisis with 17,000 people on the waiting list for council housing. With landlords who have good quality properties being put off by the scheme, we believe that over time, there will be a negative impact on the amount of quality housing stock available within the borough.
Future Planning
At the end of March, the Secretary of State for Housing stated that no councils would be allowed to bring in a city- or borough-wide scheme without first applying to the Secretary of State. Unfortunately, that came too late for Liverpool because it had already been passed. In essence, by bringing in the scheme city-wide, this council (along with Newham) has defied government guidance on selective licensing, which was intended to target selective areas with anti-social behaviour or low rental demand.
Personally, I feel that the London Rental Standard is a much better scheme. But licensing is what we have. The implications of continuing to invest in a licensed area include factoring in the cost of licensing when taking on a property or working on a project, particularly if it has multiple units. That additional cost could dictate whether you go ahead with that project. I have been able to incorporate the costs into my portfolio given our agency discount but there are plenty of landlords in negative equity who are just breaking even; this will be enough to prompt them to walk away. That would result in a repossession, which takes the property off the rental market, ultimately diminishing stock.
Will It Happen Elsewhere?
It has already happened in Newham, and will be implemented in Wales in October. “Newham council is sharing the details of their successes with other councils across the country and this is sparking an interest, due to the high level of income generated from the highly successful scheme they have operated in their area”
It’s likely that most are at least consulting on it internally, but there are mixed views. The selected scheme was adopted in Manchester but scrapped after a couple of years, once the cost-benefit ratio compared with the number of chimneypots being licensed was examined.
Going forward here in Liverpool, we will continue to work alongside the council and hopefully that will reflect in license fees as they sort out the good landlords & agents from the bad.
For those in areas not yet affected, I hope this will clarify some of the issues and provide some ammunition for when the time comes to challenge any proposed plans for licensing.
Concentric’s Top 10 Tips for a Safe, Compliant Rental Property
Make the property safe for the number and type of people in occupation.
Make sure it’s clean and carries no trace of the previous occupant.
Present it for your market.
Make sure all the legalities are in place, and check mortgage lender consent if it is not a BTL mortgage.
If the property is leasehold, get leaseholder consent and check for any restrictive clauses.
Get the right insurance for rental property.
Use the right tenancy agreement.
Have a professional inventory done.
Register the deposit; make sure all the paperwork is in order for yourself and the tenant.
Have a working knowledge of landlord/tenant law.
See the video link for Sally Lawson’s full presentation of Top Ten Tips Before You Let.
Contact Details
To talk to the team at Concentric about property in Liverpool, contact us via email: liverpool@concentricproperty.co.uk
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