Monthly Archives: April 2013

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By Judith Loeffler 15 April 2013

Whilst our last newsletter featured the latest on plans for compulsory landlord licensing the last few months have seen increasing demands for regulation of lettings agents. Currently only 60% of lettings offices in the UK are registered with The Property Ombudsman (TPO) – including Castle Estates (South London). The objective is to get all agents to subscribe to agreed standards and to offer consumers a free route to redress. Out of all complaints received by the TPO in 2012 over half related to poor service, 19% to unfair business practices and 12% to fees and charges.

On a political scale Major Boris Johnson had published the ‘London Rental Standard’ in Dec 2012 with, amongst others, the aim to promote higher standards in the private rented sector. The demands include minimum standards around deposit protection, contract information, repairs response times, complaint handling, fees as well as training of lettings agents. The proposal has been developed in consultation with existing accreditation bodies including ARLA. At the beginning of March 2013 the House of Lords voted in favour of regulating the lettings industry whilst the House of Commons decides on an amendment to regulate lettings agents on 16th April.

The debate on fees, especially tenant fees, was fuelled by a report published by Shelter England in October last year stating that almost  1 in 4 British people have been charged unfair fees by lettings agents in England. Some of the most unethical practices observed were renters being charged over £150 for repeat credit checks every year or prospective tenants being charged £100 each time they view a property.

In this context, a recent ruling was made by the Advertising Standards Authority (ASA) against for not displaying the exact amount of fees that will be charged to tenants. Whilst the advert on Rightmove stated that fees will apply and in a link to the agent’s website all those charges were listed, this was not deemed sufficient. This happened despite the agent acting in line with guidelines from both, the Association of Residential Lettings Agents (ARLA) and TPO which require all members to detail their charges in their terms of business to be made available to tenants prior to any commitment. Clearer guidance is expected shortly from the Office of Fair Trading (OFT).

By Judith Loeffler 15 April 2013

The fact that any assured shorthold tenancy (AST) started after 6 April 2007 requires the deposit to be held in a government approved tenancy deposit protection scheme is well known by now. However, April has seen some changes to tenancy deposit protection you might want to be aware of.

Firstly, there’s now four government approved schemes rather than three. To date, the Deposit Protection Service (DPS) is still the only custodial scheme available. A custodial scheme means that the landlord or the agent pays the tenant’s deposit into the scheme where it is kept until the end of the tenancy, free of charge as the scheme is financed via the interest on the deposits held. The two insurance based schemes, The Dispute Service (TDS) and MyDeposits have been joined by a third scheme, Capita TDP, on 1 April 2013. Under an insurance based scheme the landlord or agent keeps the tenant’s deposit and pays an insurance premium to the scheme which insures the deposit in case of a dispute.

Secondly, the established TDS scheme has announced it is relaxing its rules. Amongst other changes, this includes removing the 10 day time limit at the end of a tenancy for telling a tenant if deductions are going to be made. This strict timeframe has been replaced by the guidance to ‘deal with end of tenancy matters as soon as is practicable and tell tenants promptly if deductions are being made’.

Thirdly and lastly, DPS introduced an insurance based scheme on 2 April 2013, making it the only deposit protection provider to offer both services.

What has not changed is the importance of protecting the deposit and serving the prescribed information within 30 days of the tenancy starting or the deposit being taken, whichever is earlier. If this is not completed correctly, then the landlord or agent could be fined and a section 21 notice cannot be served.

By Judith Loeffler 15 April 2013

Improving energy efficiency of housing in the UK is a continued focus as witnessed by the Energy Performance Certificate (EPCs) regulation and by the Green Deal initiative that came into effect end of January 2013.

The Green Deal was introduced to allow landlords to improve the energy efficiency of their properties eg by installing insulation, heating upgrades or double glazed windows to name just a few. A loan of up to 25 years can be obtained to cover the cost for improvements and, rather than the landlord having to pay upfront, tenants will pay for the loan costs through their electricity bill. The golden rule is that the estimated annual energy bill saving due to the improvement must be greater than the annual loan repayment. The loan will be repaid by keeping the energy bills at the pre-improvement level and using the difference to the lower, actual energy bill to service the loan. Written permission of the tenants will have to be obtained for this.

In choosing whether the Green Deal is attractive for landlords, the benefits  seem to be:

  • The tenant pays for the works by servicing the loan through their energy bills and the loan remains with the property rather than with the landlord
  • Neither landlord nor tenant will have a loan impacting their personal credit rating.

Potential downsides to consider are:

  • The Green Deal debt will be a charge on the property which might make it more difficult to sell
  • Future tenants might not be happy with the higher electricity bill which might make it more difficult to let.

Whether Green Deal as an instrument is attractive or not will depend on individual circumstances – however, each landlord needs to consider how to improve energy efficiency of their properties as future intentions are 1. that as of April 2016 all landlords will be obligated to fulfil tenant’s ‘reasonable request’ for Green Deal works to improve the energy efficiency of a property (where there is no upfront cost involved) and 2. that as of April 2018 properties below a certain energy efficiency rating, presumed to be an E rating, cannot be legally rented out unless Green Deal recommended works are installed.

By March 2013 more than 1,800 assessments had been carried out by Green Deal providers.

Additionally, as of January 2013 EPC regulation has been updated requiring that

  • a landlord commissions an EPC prior to issuing marketing instructions to a lettings agency
  • all marketing material includes the EPC rating
  • an EPC is to be available at viewings if the property is to be let

EPCs are not required for listed buildings and for lease renewals or extensions with existing tenants.