Selective licensing schemes are introduced by Councils to deal with concerns over the standard of privately rented properties in particular areas. These concerns range from Health & Safety concerns, inadequate living standards to anti-social behaviour by tenants.

Landlords have a legal responsibility to protect their tenants’ welfare and to the wider community. 

Selective Licensing will therefore improve the condition of rented property and the wider environment. A number of areas in Leicester and South Wigston have been highlighted as having particular problems with poor standards of accommodation and anti-social behaviour.

The areas identified are not the first choice for tenants and this reflects, amongst other issues, lower than average rents and investment property values.

Any scheme therefore designed to improve standards throughout an area can only be to the benefit of both landlords and their tenants.

Tenants will potentially be happier and more settled in their accommodation. This means they may well want to stay longer.

Landlords will find that improvements in their area attract more tenants. Higher demand will lead to higher rent levels, and the value of investment property is likely to increase accordingly. The fact that tenants are more settled will lead to less periods of unoccupancy which are most costly to landlord returns.

The cost of bringing property up to Licensing Standards is likely to be met by the benefits any scheme provides. Those landlords that stay ahead of the game will also be in a prime position when it comes to letting their property.

For a full appraisal of the letting potential of your property please do not hesitate to contact the Lettings Team at Butlin Property Services on lettings@butlinps.co.uk or 0116 274 5778 option 1. Butlin Property Services Ltd are a member of ARLA Propertymark approved by Selective Licensing schemes.

South Wigston Licensing Scheme

Leicester Licensing scheme

It is clear that private sector landlords in Leicester and throughout the country are being discouraged through higher taxes and punitive legislation. Just when you feel that there is nothing else the government, or prospective government, can do to make it harder for a private sector landlord to operate, something else gets thrown into the mix.

As Mrs May has now resigned as Prime Minister and the race has started for her replacement, the Labour party are starting their campaign for leadership in preparation for the next general election; with that come promises, sound bites to attract various groups into voting for them, and Labour party plans for government.

The Labour Party has commissioned a report, ‘Land for the many: Changing the way our fundamental asset is used, owned and governed’. Edited by George Monbiot and contributions from Robin Grey, Tom Kenny, Laurie Macfarlane, Anna Powell-Smith, Guy Shrubsole and Beth Stratford, it has several proposals in it, probably the most radical being that the responsibility for Council Tax should be removed from the tenant and put squarely back on the landlords’ shoulders. A new ‘progressive property tax’ would be introduced, set nationally by the government, rather than as it is at present, by the local authority.

For the landlords who decide to leave their properties empty, the new property tax would be set at a higher rate – there will be no escape from the property tax. It will be equally punitive to owners of second homes and properties owned by non-resident owners.

As might be expected from the Labour party, the aim is to ‘discourage the use of homes as financial assets, reduce the tax paid by the majority of households and encourage more efficient use of the housing stock’.

More efficient? In whose opinion is that? Sorry, it is obviously Labour’s. Remember how they failed to solve the housing crisis when last in government? But apparently, by making the tenants more dependent on the landlord, by taking the responsibility for the payment of council tax for the services they need away from them – this will increase efficiency?

Landlords in Leicester are already reducing their portfolios; they are maligned for having the audacity to ask for rent; they are criticised when they want to evict a nuisance tenant. It is being made harder and harder for a landlord to manage their properties in a way that will make their investment worthwhile; will this lead to a vibrant and healthy private sector?

The answer to that one is ‘No!’. The sector will get smaller, there will be fewer landlords ready to put their pension funds into property. Can social landlords make-up for the shortfall?  Optimistic politicians doubtless believe they can, but is it reasonable to believe this?

Various pieces of research indicate that for ‘generation rent’, for older people, for those on insecure incomes or benefit dependent, the private sector will be their only option, if property need exceeds the supply of social housing. At least 25 per cent of the population are anticipated to be housed in the private sector by 2021.

setting the right rent levels is fundamental for Leicester landlords to achieve the maximum potential of their property. There are certain things that are common sense when considering how much rent landlords in Leicester can charge. The key is how to calculate what is a fair rent, that is appropriate for your properties and will keep your properties tenanted as long as possible.

Landlords in Leicester are operating in a competitive market. As competition between the major supermarkets will determine whether we shop at Asda or Tesco, so will competition between landlords determine whether one operates at maximum capacity with a waiting list and one scratches around for tenants on a regular basis as his tenants move on.

Is the rent you want at the right level?

• Compare with similar properties in the area. Rent can differ considerably around Leicester and Leicestershire according to location of the property.
• Is the property with the lowest rent also the one with the most basic amenities? The standard of your property will help it compete with properties in the area.
• Is your property for example freshly decorated with an en-suite bathroom?
• Look at the facilities you provide and advertise them – Wi-fi, washing machines, new carpets, close to amenities are all worth mentioning.

Be clear about how services are charged for and what is included in the rent. If there are additional payments, be up-front about them and prove how the charges have been calculated. If a house is in multiple-occupation, the landlord is still responsible for Council Tax, though if all tenants are students, this should provide exemption. But, if even one of the tenants leaves the University course, whether working or not, the exemption is eradicated.

Rent should be calculated to provide a profit for the landlord. If there are extras to pay, the landlord must be prepared to prove to the tenant that these charges are reasonable.

Butlin Property Services have been providing professional services to landlords in Leicester and Leicestershire since 1996. Landlords are welcome to contact the Lettings Team for free, no obligation avice on the rent levels that their property can achieve. We will help you to achieve the potential of your rented property.

Leicester letting agents and landlords will be aware that the Government announced on 23^rd January 2019 that the Tenant Fees Bill will come into force on June 1st 2019.

This piece of legislation bans letting agents and private landlords from charging fees to tenants in order to set up a new tenancy or renew an existing tenancy.

What does it mean?

The ban would apply to tenancies signed after 1st June 2019, there must be no fees charged to tenants for tenancies starting after this date.

How does it affect private landlords?

The Bill applies to private landlords and their letting agents. Private landlords will need to review their processes and costs and consider the loss if they absorbed these costs, shop around and look at services which may alleviate the burden of costs and or time spent. Another measure may be to look at increasing rent, remember this needs to be a consistent increase for the duration and you are not permitted to front load your fees into the first months’ rent.

Leicester landlords that use an agent should find out what they charge now and consider how they will replace that revenue.

Letting agents have until now benefitted from charging letting fees to their tenants, supplementing the cost of running their business.  This benefit has certainly been a factor in the fees letting agents charge to landlords.

Peter Butlin, Director of Butlin Property Services Ltd, stated: “The issue of fees charged to tenants has been influenced largely by overcharging by many letting agents. Many letting agents in Leicester and throughout the country charge fees to tenants of half or more of the first months rent. This loss of income for letting agents will now need to be made up in some way and it is likely charges to landlords will rise accordingly. Butlin Property Services have always charged much lower fees to tenants. This more fairly reflects the work we have to do at the letting stages, and removes any cost barriers that would deter prospective tenants. Butlin Property Services will still need to recoup lost income to continue to provide a high standard of service, however, increased costs to landlords will be much lower than other letting agencies.”

What do tenants need to know?

A lot of effort has gone into publicising the proposed ban over the past 12 months particularly. There will still need to be an education to tenants around how they can enforce this and support groups like Citizens Advice and Shelter will help.

Put simply tenants need to be aware that from 1st June they cannot legally be asked to pay a fee in association with granting or renewing a tenancy. This includes application fees and fees requested from third parties such as reference companies. Tenants will have the right to query this with any agent or private landlord and should they pay a fee they can take action to recover the fees with the assistance of Local Trading Standards.

Conversely prospective tenants may find that the services provided by letting agents will be reduced and that rents will have to increase to cover the landlords’ costs. This will be through necessity as the running costs of the letting companies will need to be more cost effective.

Holding deposits are permitted at a cap of one week rent and can be held for a maximum of 15 days. The holding deposit can then be used towards the full deposit which is set to be capped at 5 weeks rent. The holding deposit must be returned in full where the tenancy does not go ahead within 7 days of the deadline or if the landlord backs out. Full repayment is not required where tenants back out, fail a right to rent check or provide false/misleading information.

The Ministry of Housing, Communities and Local Government (MHCLG) has announced in January that mandatory five-year electrical installation checks on private rented housing in England will be introduced in a phased approach.

Whilst the implementation date has not yet been clarified, MHCLG has stated its intention to introduce legislation as soon as parliamentary time allows, with letting agents and landlords being given at least six months to familiarise with the new legislation before it comes into force.

A transitional period will apply for two years. In year one, all new private tenancies will be affected and in year two all existing tenancies will come within scope.

Properties that already have a valid electrical installation condition report (EICR) will not need to replace it until five years have passed since it was issued.

Peter Butlin, Director of Leicestershire letting agent Butlin Property Services Ltd (BPS), stated Leicester letting agents must ensure that any inspectors hired to issue an EICR hold the correct qualifications and are competent to carry out the inspection. Tough financial penalties will apply where this isn’t complied with.

Peter Butlin stated that he welcomes private rented sector electrical testing by qualified engineers. This not only protects tenants but also provides better ongoing maintenance of their property and a marketing benefit for Leicestershire landlords. Butlin Property Services already recommend to their landlords that an electrical installation condition report (EICR) is carried out, and as a leading East Midlands leasehold block manager BPS already routinely carry out statutory inspections to communal areas of leasehold blocks.

CHANGES TO S21 NOTICES

The changes introduced by the Deregulation Act 2015 have applied to all tenancies since 1st October 2018. The new rules have applied to new tenancies for some time but from 1st October Leicestershire landlords and agents must ensure that they use the new style prescribed Section 21 Notice for all tenancies. Any old style Section 21 notices are invalid.

Many additional requirements introduced by this legislation now apply to all tenancies. Most, however, require items to be given to the tenant prior to entering into the tenancy.

The following must be given to the tenant and this should include any tenants prior to 1^st October:

• Gas safety record
• Valid EPC
• Latest version of the Government’s ‘How to Rent’ Guide
• An HMO licence – if required

The law now says that a Section 21 notice will be invalid if these items have not been given to the tenant prior to the tenancy. By ensuring compliance at the earliest possible moment, a good defence could be mounted should the matter land up before the Courts.

Remember also that a Section 21 Notice can now expire on any day providing a full two months’ notice is given. (Different rules apply if the tenancy was a periodic tenancy from day one.) It seems obvious, but it is now law, that any overpayment of rent must be repaid when the tenant vacates the property.

The notice cannot, however, be served until four months of the tenancy have elapsed and it only has a ‘shelf life’ of six months – ‘use it or lose it’.

An Improvement Notice served by the Local Authority will mean that Section 21 notices will be invalid for six months.

HMO LICENSING (HOUSES IN MULTIPLE OCCUPATION)

From the 1st October 2018 the definition of a licensable HMO as defined under the Housing Act 2004 changed for landlords in Leicester. The definition is now:

‘A property occupied by five or more people who form two or more households’.

The previous requirement of 5 storeys has been removed. There will now be many more licensable HMOs in the country and Leicestershire agents should ensure that they advise clients accordingly.

Minimum room sizes have also been introduced in the hope of stamping out overcrowding.

Local Authorities are becoming more and more interested in Standard HMOs. This is a property let to two or more households i.e. two unrelated people, but in the case of sharers the number is three.

If a family decides to let, or sublet, a room in their rented house they could easily be creating an HMO and not have any idea they had done so.

This would probably be unbeknown to the landlord or agent. For whatever reason the Local Authority could be alerted to the fact that this is now a licensable HMO. There is now the potential for the landlord to be fined up to £30,000 for not having a licence. There is also the possibility that the First Tier Tribunal could order the refund of up to 12 months’ rent.

Launched to coincide with the ARLA Propertymark conference earlier this month, TDS has become the first Tenancy Deposit Protection Scheme to introduce a range of free, online tools to help landlords and letting agents comply with incoming Deposit Cap legislation.

The Tenant Fees Act

As of 1 June 2019, landlords and letting agents in England including Leicester will only be legally allowed to take the equivalent of five weeks’ rent as a tenancy deposit on annual rents below £50,000, and the equivalent of six weeks’ rent if the annual rent is £50,000 or more on new or renewed tenancies. Any landlords or letting agents in England found to be in breach of the new legislation could face a fine of up to £5,000.

At this time, the new regulations apply to new and renewed tenancies beginning on and following 1 June 2019.  Tenancies will only fall under the cap if they are renewed for a new fixed term. Tenancies that become contractual or statutory periodic tenancies will not be affected.

What’s included

TDS’ free suite of information and tools includes:

• A free online Deposit Cap Calculator which is available for letting agents to embed in their own websites. To request the TDS Deposit Cap Calculator for your website, please contact info@tenancydepositscheme.com
• Landlords and letting agents can use the TDS Custodial Deposit Cap Solution which is a new ‘edit deposit amount’ function where they can increase or decrease the deposit amount if they need to repay a deposit above the cap after the 1 June 2019.  If a new fixed term tenancy is created the landlord or letting agent can simply change the deposit amount down to the new five or six week level and TDS will sort out the repayments back to the lead tenant.
• If the deposit has been reduced, a Deposit Protection Certificate in the new amount will be available in the member’s online account. As with the TDS Insured scheme no new Prescribed Information has to be issued in these circumstances.
• A dedicated Deposit Cap Resource Centre which hosts a suite of information on the incoming legislative changes. DepositCap.com is a one-stop-shop for all the information landlords, letting agents and tenants need to fully prepare them for the introduction of the Act.

The Resource Centre includes the Deposit Cap Calculator, a graphical timeline, example scenarios, guides, information and other tools to help provide clarity on how the Deposit Cap will affect letting agents and landlords and how to reduce the deposit they hold whether they use TDS’ Insured or Custodial scheme.

To see the suite of tools, please visit the deposit cap website.