Right to Rent checks mandatory in England from 1 February 2016

Right to Rent checks will become mandatory for all adult occupiers with new tenancies in England from 1 February 2016 

Last week the Home Office issued an updated version of the Right to Rent Code of Practice to be used by landlords and agents letting properties in England from 1 February 2016. The existing Code published for landlords and agents working in the phase one areas of the West Midlands continues to apply to properties within those phase one areas. Any ID checks or follow up checks which fall after 1 February will be subject to the new Code of Practice.

The new Code includes amended lists of acceptable documents for Right to Rent checks. The Home Office planned a more complicated structure for the ID lists with certain documents weighted for importance. However, our lobbying efforts have resulted in this structure being rejected in favour of the simpler existing system. Amended lists of acceptable documents are specified in section 5.2 of the updated Code.

 Immigration Minister James Brokenshire:

“Landlords with property in England need to prepare now for the new Right to Rent scheme to ensure they are ready for 1 February.

“Right to Rent is part of the Government’s wider reforms to the immigration system to make it stronger, fairer and more effective. Those with a legitimate right to be here will be able to prove this easily and will not be adversely affected. The scheme is about deterring those without the right to live, work or study in the UK from staying here indefinitely.”

 Here’s a reminder of how to carry out checks

• Establish who will be living in the property
• Carry out the checks on all adult occupiers
• Retain the documentation until 12 months from the end of the tenancy
• Be ready to produce evidence of the checks if required

If the tenant is only allowed to be in the UK for a limited period of time, you will have to carry out follow-up checks at a later date. Note the dates for this.

The Home Office are running a media campaign to highlight awareness among landlords and tenants. We have stressed the importance of this; the more that consumers are aware of an expectation to meet the new requirements, the easier it will be for agents to comply.

It remains to be seen how a multi-agency approach to enforcement works as the scheme is rolled out across England however you could face a civil penalty of up to £3,000 per tenant for renting your property to someone who isn’t allowed to stay in the UK.

YOUR AGENT Comment: 
These new regulations apply to England Only. We will keep all our clients updated about any changes that effect them.

UK landlords report increased tenant demand in third quarter of 2015

Private rented sector tenant demand continued to grow across the country in the third quarter of 2015 with 41% of landlords reporting a rise in demand.
 
The data from a survey by Paragon Mortgages also shows that rental yields, that is annual rental income as a percentage of property value, have remained at the same levels seen throughout 2015.

The survey, undertaken by BDRC Continental on behalf of Paragon Mortgages, found that yields averaged 5.6% nationally in the third quarter and amongst Paragon customers this figure was higher, with a national average of 5.9%.

The greatest number of landlords, 17%, reported yields between 3% to 4%, while one in 10 landlords reported yields of 10% or more. 

Yorkshire and the Humber reported the highest yields in the third quarter at 6.1% with outer London reporting the lowest at 4.8%, despite outer London having the second largest increase in levels of tenant demand.

On tenant demand, the East of England region has performed best in the quarter with 52% of landlords reporting an increase in demand. This figure was just 31% for the North East with a national average of 41% of landlords saying demand had increased.

This figure represents a strong year on year increase in tenant demand across several regions since the third quarter of 2014 with the demand in the North East having increased from 23% to 31% and in outer London from 42% to 48%.

'This research shows that yields, and tenant demand have remained strong throughout the third quarter, in common with 2015 overall. The figures reflect a steadily improving economic outlook for the UK as a whole and show that, more and more people are actively choosing the flexibility of making a home in the private rented sector,’ said John Heron, Director of Mortgages at Paragon.

‘Yields too have remained stable throughout 2015. Quarter three data shows London and the South East slowing down somewhat, while yields in the regions are growing. This represents a welcome rebalancing of the national economy, with some of the heat from London’s economy escaping the M25 and being distributed around the country,’ he added.

YOUR AGENT comment 

We continue to see strong tenant demand and are currently running at a 98% occupancey. rate. We despirately need new properties for waiting tenants. So if you are a landlord who is looking for a first class srevice then Why not let YOUR AGENT be your agent. 

95% loans hit post-recession high

What’s the latest?

The number of mortgages for buyers with just a 5% deposit has surged to its highest level since the recession struck.

There were 260 loans available for buyers wanting to borrow 95% of their home’s value in November – that’s an enormous 84% jump on a year ago.

And at the same time, the average rate charged on one of the loans fell to 4.12%, the lowest since the credit crisis, narrowing the gap with mortgages that require a 25% deposit.

Why is this happening?

Mortgage lenders are gradually recovering their appetite for risk following the credit crisis. And the surge in mortgages at high loan-to-value (LTV) ratios – that is how much mortgage is owed compared with how much the home is worth – is being driven by the government's Help to Buy scheme.

There are now six times as many mortgages for buyers with just a 5% deposit as there were in September 2013, before the mortgage guarantee element of Help to Buy was launched, when only 43 of the loans were available.

The number of deals has increased by 68 in the last three months alone, at a time when competition in other areas of the mortgage market has remained stable or even declined.

Who does it affect?

The increased availability of 95% mortgages is great news for first-time buyers and would-be borrowers with small deposits.

With the average home hovering around the £200,000 mark, many buyers would struggle to raise the £40,000 needed to put down as a deposit on an 80% LTV mortgage.

Not only do buyers now have more choice, but the average interest rate charged on a 95% LTV loan has fallen from 5.27% in November last year to 4.12%, making it more affordable.
By comparison, the rate on average 75% LTV mortgages fell from 2.17% to 1.9% over the same time spell.

Unsurprisingly, the increased availability of mortgages requiring a 5% deposit has led to a jump in first-time buyer numbers, with 86,800 people getting onto the property ladder between July and September.

Minimum Energy Efficiency Standards for Rented Property

Minimum Energy Efficiency Standards for Rented Property

Overview

The 2015 Energy Efficiency Regulations, passed in March 2015, set out minimum energy efficiency standards (MEES) for England and Wales.

These regulations make it unlawful for landlords to grant a new lease of properties that have an energy performance certificate (EPC) rating below E, from 1 April 2018. The regulations do not affect sales. 
 
The regulations will come into force for new lets and renewals of tenancies with effect from 1st April 2018 and for all existing tenancies on 1st April 2020. It will be unlawful to rent a property which breaches the requirement for a minimum E rating, unless there is an applicable exemption. A civil penalty of up to £4,000 will be imposed for breaches. 

What will the regulations mean for landlords and tenants? 

More control of energy bills and warmer homes

Up to 1 million domestic tenants in the private rented sector may be helped by the regulations, which is likely to grow over time as people move from property to property. The regulations are another way Government is helping consumers take control of energy bills and have warmer, more energy efficient homes.   

Tackling fuel poverty 

Improving the energy efficiency of domestic privately rented property is important in tackling fuel poverty.  Fuel poor households privately renting an F or G EPC rated home would need, on average, to spend around £1,000 more per year on energy to heat their homes properly compared to typical homes. This compares to around £390 for those in EPC bands E and above.  

More energy efficient properties

Investing in their properties will benefit landlords as they will own more energy efficient properties that should be warmer and more attractive to tenants.  

Landlords will be required by law to have improved the energy efficiency rating of the properties they let to at least a Band E from April 2018. However, there should be no upfront costs for them to do this, and the regulations provide safeguards to ensure this is the case.   

Funding improvements

There are a range of funding and financing options, such as Energy Company Obligation and the Green Deal that will help support residential landlords and tenants make improvements before the regulations apply.  Landlords and tenants can find out if they are already eligible for Government support schemes, such as the ECO, by contacting the Energy Saving Advice Service (ESAS) on 0300 123 1234 or visiting www.gov.uk/greendeal.    

What’s more, from April 2016, tenants will be able to request consent from their landlord to make the property they rent more comfortable, and easier and cheaper to keep warm, and the landlord cannot unreasonably refuse.

Prohibition on letting

A domestic private rented sector property is substandard if the EPC rating is F or G, unless an exemption applies. The legislation prohibits a landlord from letting out a substandard property. If there is an EPC in place which shows that the property is an F or G then it must not be let; otherwise the landlord is liable to penalties. This is subject to any available exemptions. 

Energy efficiency improvements must be carried out to bring the property up to an E rating at the minimum, unless one of the exemptions is applicable. In particular, if the work cannot be carried out so as to meet the Green Deal Golden Rule then there is potentially an exemption. Under the Golden Rule there should be no upfront costs (or any net cost to the landlord) because savings resulting from the works should repay their cost over the expected lifetime of the works.

If a landlord lets and continues to let the property in breach of the regulations, however, the breach does not affect the validity or legality of the tenancy itself, so the rent still continues to be payable.

YOUR AGENT comment.

As qualified Energy assessors (both domestic and commercial)  we will work together with all our landlord clients to ensure they are fully compliant with this change in legislation.

Help to Buy ISA deals unveiled

Banks and building societies are offering returns ranging from 0.7% up to 4% on savings in the Help to Buy ISA.

What’s the latest?
First-time buyers saving for a deposit can earn tax-free interest of up to 4% following the launch today of the Help to Buy ISA.

Banks and building societies are still unveiling their rates for the product. But those who have already published them are offering returns ranging from 0.7% to 4%, while the Government will also add a bonus of up to £3,000.

The leading rate for the product will enable people saving to get onto the property ladder to accumulate a £17,500 deposit over five years by setting aside just £200 a month.

Why is this happening?
The scheme is the Government’s flagship initiative to help people who are struggling to get onto the property ladder save money for a deposit.

With the average home now costing more than £186,000, and mortgage lenders still demanding significant deposits, many potential buyers face an uphill struggle to set aside the money required to purchase a property.

The Help to Buy ISA aims to make it easier for people to save the deposit they need.

Who does it affect?
Help to Buy ISAs are obviously good news for first-time buyers. Like conventional ISAs, any interest earned on the money is tax-free.

Potential buyers can save up to £12,000 through the Help to Buy ISA, and the Government will top this up with £50 for every £200 they have saved – the equivalent of a £3,000 bonus.

As a result, people saving as a couple will be able to set aside £24,000 and receive a further £6,000 from the Government, giving them a total deposit of £30,000.

The accounts can be opened by anyone over 16, as long as they have not previously owned a property.

Prime Minister David Cameron said: "My message is clear – if you’re working hard and saving for the future, I don’t just want you to have a roof over your head – I want you to have a roof of your own.

"Thanks to our strong economy and steps this government has already taken, over 230,000 more people have become homeowners since 2010. I want to go further and turn generation rent into generation buy – and today’s announcement is another clear step in us delivering on that commitment."

Sounds interesting. What’s the background?
It is early days for the Help to Buy ISA. Up to 14 banks and building societies will offer the product, but they are still announcing their rates.

Halifax currently leads the field, offering a variable interest rate of 4% on the product. The group claims this return, combined with the Government bonus, will give savers who set aside the maximum £1,200 in the first month and £200 a month thereafter a total of £17,500 after five years. 

And at the other end of the spectrum, Clydesdale Bank and Yorkshire Bank are each offering a rate of 0.7%.

Here are banks and building societies' variable rates on Help to Buy ISA so far:

• Halifax: 4%
• Virgin Money: 3%
• Barclays: 2.27% (available from December 17, 2015)
• Aldermore: 2%
• Bank of Scotland: 2%
• HSBC: 2%
• Lloyds Bank: 2%
• Nationwide Building Society: 2% (it offers up to £1,750 cashback for first-time buyers accessing its Save to Buy mortgage range)
• NatWest: 2%
• Newcastle Building Society: 1.51% (rate includes a 1% bonus on the condition that you make a deposit each and every month)
• Santander: 1.5% (and 2% for 123 World and Select customers)
• Clydesdale Bank: 0.7%
• Yorkshire Bank: 0.7%

Given that the accounts are more akin to regular savings accounts, hpes were for rates closer to some of the very high rates currently available on standard regular saving accounts, to reflect the small amounts being saved. Halifax could well clean up with its market leading 4% rate – double what the majority are currently offering

Having said this, the interest rate is really the icing on the cake. A generous 25% bonus is a great incentive for those who are struggling to find the money to save for a deposit.

Are You Prepared for Right-to-Rent Day?

The UK government has confirmed that all landlords in England will have to check new tenants have the right to live in the UK before renting out their property from February next year.

 
It means that the pilot study on immigration checks which has been ongoing in the West Midlands will now be rolled out across England from February and in other parts of the country at a date yet to be announced.

Under the new rules, landlords who fail to check a potential tenant’s Right to Rent will face penalties of up to £3,000 per tenant.

The Government says that the scheme has been designed to make it straightforward for people to show evidence of their right to rent and a range of commonly available documents can be used, including a UK passport, a European Economic Area passport or identity card, a permanent residence card or travel document showing indefinite leave to remain, a Home Office immigration status document and a certificate of registration or naturalisation as a British citizen.

The checks should be carried out on all new tenants and are backed up by codes of practice, including guidance on avoiding unlawful discrimination, which was drawn up with the assistance of the Human Rights Commission.

Landlords need to check which adult tenants will live in the property as their only or main home and ask tenants for the original documents that show they have the right to be in the UK.

They then need to check the documents are valid with the tenant present, make and keep copies of the documents and record the date the check was made. If a potential tenant has an outstanding immigration application or appeal with the Home Office, landlords can conduct a check on that person’s ‘right to rent’ via the Landlords’ Checking Service.

The Immigration Bill, which is currently passing through Parliament, is likely to introduce even more stringent rules and it will be made it easier and quicker for landlords to evict illegal tenants if they lose their rights or they have no rights to remain in the UK. 

It will also make it a criminal offence to let to illegals, so that so called “rogue landlords” who repeatedly fail to carry out checks and rent to illegals will face not only a criminal record but they will be placed on a blacklist which will prevent them operating a landlording or letting business in the future.


YOUR AGENT will ensure all our landlord clients are fully compliant with the new legislation.

If you are a landlord who does not want to go through this onerous process then why not let YOUR AGENT be your agent? And let us take the hassle out of managing your property.

Legislation Update: Rent Smart Wales launches 23rd November

About Rent Smart Wales

Rent Smart Wales, the brand name for the new registration and licensing requirements under Part 1 of the Housing (Wales) Act 2014 will be launched on 23 November 2015. 
 
Landlords who need to register, and landlords and agents who need to become licensed, will be able to register and apply for a licence from this date. They will have 12 months from 23 November 2015 in which to comply with the new legislation.  During this first year there will be a focus on raising awareness of the new requirements and encouraging compliance. 

Registration

It resembles a policy introduced by the Scottish Government a decade ago. The Welsh Government believes that registration will help to improve standards in the private rented sector by being better able to target criminal landlords. 

What this means for Landlords?

This applies to every landlord who rents properties located in Wales, without exception.  It doesn’t matter whether the landlord lives in Wales or not.  It also applies to landlords who rent properties that are managed by an agent.

For the first time Landlords will have to register thier details with a central ‘Licensing Authority’ and details of all thier rented properties in Wales.

If Landlords don’t comply they will be unable to legally rent thier property and could face a number of penalties including unlimited fines and rent stopping orders.

What do I have to do?

The preferred process for registering will be via a new online portal, although written registrations will also be possible.

Landlords will have to register prescribed personal details, including full name, date of birth, previous names and details of any agent who manages thier property. 

They will also have to register details for each of thier properties.  The cost is TBA, but may be approximately £50 for personal registration and £10 for each property.

Licensing

The Welsh Government believes that national licensing will help to improve standards in the private rented sector by compelling managing landlords and agents to follow a set of conditions and undertake approved training. 

What this means for Landlords?

This applies to every letting and managing agent, and landlord who manages or undertakes maintenance on their property(ies) located in Wales.  It doesn’t matter whether the landlord lives or the agent’s main office/ branch is in Wales or not.

For the first time agents or landlords who manage their properties will have to have a licence.  Landlord who don’t wish to become licensed, or are unsuccessful in obtaining a licence, must then instruct an agent to manage the property on thier  behalf.  Agents that don’t obtain a licence will be unable to trade.  Landlords could face a number of penalties including unlimited fines and rent stopping orders.

What do Landlords have to do?

It has been confirmed that the process for applying for a licence will include personal or business details, including full personal/company name, date of birth, contact details, previous convictions and details of ‘connected persons’ (for agents potentially every member of staff).  Licensees must be: a ‘fit and proper person’, complete a training course, follow a set of TBA conditions and code of practice.  

Landlords and Agents will also have to meet some of this criteria before applying for a licence.  The cost of obtaining a licence is TBA and will be in addition to separate fees for training.  For managing landlords, this will be in addition to registration fees.

Please do not confuse this with Mandatory HMO, Additional HMO or Selective licence.  If landlords require one of these types of licence they shall also require this new national licence as well. 

Your Agent Comment

There will be no need for any of our Landlord clients to undergo the licencing, training or accreditation process. YOUR AGENT will be licenced on your behalf. We will also guide you through the registration processs and ensure you fully comply with the new legislation.

If you are a landlord who does not want to go through this onerous process then why not let YOUR AGENT be your agent? And let us take the hassle out of managing your property.

Where can I find out more?

https://www.rentsmart.gov.wales/en/