Think Law

I have been informed of an initiative from the British Property Federation, relating to reform of the Local Housing Allowance system. I copy below an email I received from the Eastern Landlords Association (ELA) who are looking to collect evidence to support this. As many other landlords may want to support the initiative, I have agreed to publish it here. This is the information I received from Eastern Landlords:

“As you are aware, the implementation of local housing allowance (LHA) on 7 April 2008 has caused numerous problems for private sector landlords throughout the UK. A survey earlier this year painted a bleak picture. In many cases landlords are not being passed the rent money by their tenants, resulting in an average loss to landlords of £2,000. As a result of this, many landlords are refusing to offer properties to tenants claiming LHA, creating a shortage of housing for them.

Unfortunately, the survey was limited to the north-west of England. We have been working with the British Property Federation (BPF) on this issue and they have decided that an effective route is to compile evidence across the rest of the country. With enough evidence, our argument against the current LHA regime will have the most chance of winning over politicians in the run up to an election and convincing them of the need for reform.”

The email from the ELA attached a survey form together with a template letter for you send to your MP (whose details you can find out from www.theyworkforyou.com). I have put these online, and you can download the survey form (which is in pdf format) from here and the letter (which is in word format) from here.

The survey form should be returned by 16th October to:

Andy Fretwell
Senior Administrator
Eastern Landlords Association
Suite A, St Francis House,
141-147 Queens Road,
Norwich, NR1 3PN

If you want to speak to the ELA, the telephone number is 01603 767101, or you can email them at officer@easternlandlords.org.uk.

Letting agents are supposed to be the experts in lettings. Many are excellent. Unfortunately however, there are a lot of ‘cowboys’ about. The growing level of dissatisfaction with many agents is made very clear by an excellent article in the Cash section of the Observer today, which states that a number of surveys show increased levels of complaints from tenants regarding incompetent landlords and (in particular) letting agents.

The Property Ombudsman’s figures show that in July there were a record 1446 complaints about private lettings, more than 110 per week, and since summer 2008 there has been 44% increase in complaints about lettings. Which, as many people fight shy of making official complaints about problems, indicates that the real level dissatisfaction is far higher. Particularly as, unfortunately, it is not compulsory for agents to belong to a scheme such as his, or indeed any scheme.

The CAB reports that 73% of tenants were unhappy with their letting agent. Top complaints with them are the time taken to carry out essential reports, and additional charges levied, e.g. for referencing and renewals. Shelter also report a big increase in complaints, particularly regarding the return of tenancy deposits.

Surely it is time for letting agents to be regulated? Or at the very least, be required to be a member of the Property Ombudsman scheme.

Here we are in the middle of August and you find that the rest of the office is away on holiday and it’s too wet to go outside to play. To help pass the time why not play Clay Cost Muppet Shooting (external link) courtesy of Box Legal? Apparently, no cost muppets were harmed or subjected to psychological torment during production of the game.

Carlton has not given up his fight with Amelia.  He has another trick up his sleeve.

“Even if she is interviewing with Chance Investments, I don’t have to give her a good reference, do I?” his voice is tinged with triumph.

“If it is your firm’s usual practice to give references then you …

It has recently been announced by the Scottish Parliament that a tenancy deposits scheme is going to be set up in Scotland. This has been welcomed by the Scottish National Union of Students, Shelter Scotland and ARLA.

There is also a report on the BBC site where perhaps predictably, there are objections from Scottish Association of Landlords, who say the scheme is not needed and is disproportional to the actual problem. The BBC report points out however that ‘evidence from England and Wales suggests that as many as half of disputes over deposits feature unjustified complaints by tenants.’

I cannot see a time scheme in any of the reports so we do not know yet when it is likely to be introduced. I only hope they take a bit more care with drafting the legislation, so as to avoid the problems which have beset the tenancy deposit scheme in England and Wales.

There is an interesting article in the most recent (July 09) issue of Property Investor News about rogue letting agents.

For example the journalist (Donia O’Loughlin) interviewed Paul Shamplina of Landlord Action. He reports a huge increase in instructions from landlords seeking to recover money from their agents, and it looks as if many of these are using landlords and tenants money to cover their own debts. For example there is a report of one landlord being owned some £24,000 (over 12 months worth of rent). Another case involved an agent defrauding over 30 landlords and tenants. The article even mentions a case where an agent had an online gambling problem!

To a certain extent agents using clients’ money improperly, particularly tenancy deposits, has always been a problem. One (reputable) agent is reported as saying: “using the deposits happens a lot, and its not just small players either. Its looked on as an interest free loan.” He goes on to say that since the introduction of the tenancy deposit scheme this sort of conduct has become harder, although ‘not impossible’.

A number of those interviewed support recent suggestions by the government to introduce regulation for letting agents. As Mr Shamplina says in the article, “This can only be a good thing. It will stop decent letting agents getting a bad name due to the rogue agencies that often tarnish this industry”. I am sure a lot of reputable agencies will agree with that!

So what can a landlord do to protect himself? The answer is to use a company which is a member of one of the recognised agents associations, i.e. ARLA, NALS, RICS or NAEA, as most of the problems occur with unregulated agents.

Although these organisations are not perfect (the article highlights some criticism of NALS, for example, regarding delays) cases are being dealt with, and affected landlords and tenants will (eventually) receive a full reimbursement. Assuming of course that the agent is a member of NALS. Whereas where an agent is unregulated there is often no redress for the landlord, who at best will be able to claim as an unsecured creditor. It seems that even if rogue agents are constantly shutting shop and reopening again, the police, and even trading standards sometimes, are not really interested.

The article ends with some very wise advise from Lucy Morton, president of ARLA

“ARLA would recommend that landlords do their own homework on letting agents and ask questions such as ‘Are they licensed? What protection for client money do they have in place? Is there a route to redress should something go wrong? If not then ARLA would recommend looking elsewhere to be certain that their money is protected.”

Landlords should also consider the points made in my earlier post with tips for landlords on agents going bust.

For more information about Property Investor News magazine (and a trial subscription) visit the web-site.

The Dispute Service have published their annual report, which can be downloaded from their web-site (a direct link is here) and it makes interesting reading. I list below the points which struck me.

Generally it looks as if the service has been under some strain during the year, due partly to the increase in tenancies covered and partly due to a huge increase in deposit disputes. Interestingly the report states that the majority of the disputes come from a small number of agents, which, they say, is going to be reflected in the subscriptions (presumably to the offending companies).

The case of Harvey v. Bamford (reported on this blog here) caused them some concern, resulting in a chance of their terms and conditions to reinforce the requirement for landlords and agents to both protect the deposit and serve the notice on tenants within 14 days of receipt of the deposit money. Which, they say was the intention of the act.

There is some discussion of the insolvencies among a few unregulated agencies, which between them resulted in lost deposits of over half a million pounds. The result of this was an increase in premiums and the withdrawal of cover from unregulated agents (reported on this blog here). Apparently half of the agents affected joined NALS and so were able to continue their membership.

There has been a massive increase in deposit disputes in the past year. This was not entirely unexpected, although the number is higher than anticipated, and has caused TDS problem. The report suggests that agents should make more effort to resolve these, rather than just passing the decision on to TDS. The majority of the disputes appear to be about standards of cleaning. TDS has suggested that tenants be given a list of approved cleaners so that if one of these firms are used, the tenants will not be held responsible if the level of cleanliness is subsequently criticised.

Even though all of TDS membership is now presumably regulated agents (save for a few landlords) it is surprising (or perhaps not) that the report complains about poor reporting and documentation provided by agent members. As many landlords will attest, even being a member of a professional organisation does not appear to give any standard of quality.

The report ends with a selection of interesting arbitration cases, which are worth reading.

Havent posted in ages, which is a shame, as have been having a brilliant time at work.

Very small moment today when one of the solicitors noticed my name in the journal of the law society as a new entrant Quite exciting to see it there. Plus had the added benefit of proving to my managing partner that my training certificate isn’t forged and the law society really has my name on their lists…

Finally got round to signing my training contract. I’d been waiting for the firm to provide one. It’s almost the deadline when the law society demands it, so I emailed my managing partner and the head of HR to see what was going on.