Selective Licensing – Our experiences so far

Selective Licensing is currently active in North Manchester for 315 properties, this scheme has been in place since March 2017, and has required private landlords to pay Manchester City Council £750 per property to continue letting their properties – under threat of prosecution under Section 95 of the 2004 Housing Act

As one of North Manchester’s leading letting agents, we actively manage properties within this area and have had first hand experience of the process for Selective Licensing.

We are an ARLA registered agency, we are members of the RLA, NFOPP, the NLA and the Property Ombudsman Service. These are not just fancy letters, they all mean things for the way we operate and the standards to which we keep our properties, these associations in themselves regulate our activity, we hold nationally recognised qualifications in Property Lettings and Management and we closely follow latest legislation and regulations.

We do a good job.

Why then, when we pay all of our regulating bodies an annual fee to audit and monitor our activity are we paying Manchester City Council an additional £750/property to confirm what has already been proven beyond doubt by the highest authority in the Housing Market?

 

What Needed to Change?

Of the 315 properties targeted in Crumpsall, we manage or own around 40 of them so are well aware of the localised and wider issues affecting Crumpsall.

One of our regulatory bodies, the RLA, says this about selective licensing:

“An area may be designated for selective licensing either (i) if the area is (or is likely to be) an area of low housing demand or (ii) the area is experiencing a significant and persistent problem caused by anti social behaviour and some or all of the private sector landlords are failing to take action to combat the problem that it will be appropriate for them to take.”

From our experience, Housing Demand in Crumpsall is no lower than other areas in North Manchester, the entire city has high demand for housing, with a booming population and an ever expanding City Centre, affordable and accessible housing is at a high premium. Anti-social behaviour is somewhat out of our remit, we ensure the tenants renting our properties are of good standing, they keep their homes well and they can afford and do pay their rent on time, but anything above neighbour disputes of noise or rubbish, antisocial behaviour is wholly outside our sphere of influence as managing agents or as landlords. The third clause about Private Sector Landlords “failing to take action to combat the problem that it will be appropriate for them to take”, is a little vague, but as ARLA registered agents, we have rules and requirements in place for ensuring we are fit and proper persons to be managing the properties.

Was the problem the landlords, was the problem the demand for property or was the problem Anti-Social Behaviour?

 

Whats the Point?

Every property that we manage in Crumpsall has passed its Licensing Check to date, we had some disputes; at one inspection, that we didn’t attend with the council, they reported we were not eligible for a license for that property because there were no smoke alarms in the property. Immediately we called the tenant, popped round, and as they opened the door, we saw the downstairs smoke alarm in the hallway and within a minute we had checked and verified both smoke alarms in the property were correctly installed and working. When we queried the council, they admitted they had got the property “mixed up with another one”.

At £750 per property and potentially a landlords livelyhood at stake, is this really the kind of mix up that we want to be seeing by Manchester City Council?

Since 2015, If we let a house to someone without smoke alarms, we would be liable for recourse from: ARLA, NLA, RLA, NFOPP, Property Ombudsman and a £5000 civil penalty from the Government. We would be fined, our memberships stripped and we would not be able to operate as an agent.

Whilst its very positive that Manchester City Council are concerned and actively ensuring the safety of its residents, Licensing only applies to the private rented residential sector. Housing Associations/Local Authority housing is exempt, Owner Occupiers are exempt, Student Halls are exempt, live in landlords are exempt and care homes are exempt. So actually, the only properties that are liable are those which are privately rented.

 

Fit & Proper Persons

Selective Licensing essentially is a 5 year certificate to say that you can rent out one particular property. You are checked to be a “Fit and Proper Person”- essentially this is like a Landlords DBS Check, they look for:

  • any criminal convictions to do with violence, drugs, sexual offences or fraud
  • whether we have broken any laws to do with housing or being a landlord
  • whether we have been found guilty of unlawful discrimination
  • whether we have previously managed House(s) in Multiple Occupation (HMO) and broken any approved code of practice.

and they do this for every single property. Just like the ill thought out DBS checks, its a repetition of work and a waste of resources- checking this 40 times in as many days, will not produce any different results, but will keep someone busy and generate £30k of income for the council.

Why are Manchester City Council choosing to line their own pockets at the expense of landlords, agents and ultimately private rented tenants?

 

Do we agree with Selective Licensing?

Yes and no.

We recognise, accept and embrace the need to raise housing standards across the city. We absolutely agree that the rogue landlords and those providing housing that is not fit for habitation need to be cracked down on and dragged to standard.

But, we do not agree that reputable landlords, agents and those working well within the law should be further penalised to make up for the failings of others. Especially when Selective Licensing has been a scheme run in the past and was proven beyond reasonable doubt that it was at best ineffective and a major contributing factor to increasing rental rates in an area.

 

How Could it Improve?

The same scheme has, this week, been rolled out in areas of Rusholme and Moss Side, although Crumpsall was a “pilot”, it seems no changes have been made to the way the system runs and no lessons learned from implementing the initial wave of Licenses.

As the regulations and controls for rogue landlords are already in place by governing bodies, why hasn’t Manchester City Council considered teaming up with reputable and regulated agents, offered an affordable and mutually cooperative package for Licensing to ensure standards are raised and upheld by agents, and Landlords who self manage then have the option to be Licensed and monitored by the council OR use an already licensed agent who then takes liability for maintaining standards.

With over 60% of Manchester Private Rented sector Landlords already using an agent, this would give the landlords choice, the local agents an opportunity to lead the raising of standards, save the council resources AND ultimately prevent the entire burden of the cost of licensing ultimately landing on the tenants lap.

Right now, the way this scheme works, will do nothing to help tenants with affordability.

 

 

 

 

Lettings Agency Fee’s

Since 27th May 2015 it has been a legal requirement that all letting agents must publish full details of their fees and charges. Ours can be found here for Landlords and here for tenants. Letting agents must publish full details of their fees and charges on their websites and prominently display them in all their offices where they deal face to face with customers.

However, some letting agents’ websites do not make it easy for you to see the fees they are charging. Aside from the usual, expected, costs, there may also be other hidden charges that landlords and tenants may not be aware of. The description of what each fee covers and how it is calculated must be clear so you can understand the service and costs covered.

If a letting agent doesn’t show its fees or make them clear you can contact the local council who are responsible for enforcement with fines on the agent of up to £5,000.

Amy Andrew from This is Money spoke to experts at Shelter and easyProperty to find out more about fees so landlords and tenants have the information they need to avoid being overcharged letting agent’s fees. The full article on the Daily Mail website can be read here

We carried out some local research and were surprised by what we found. We typed into google “moston letting agent” and took a look at the first 20 agents website that appeared – we ignored zoopla, on the market, rightmove etc etc and just looked at the websites for our 19 most local competitors (we were the extra one)

Of the 20 agents operating in this area a staggering 13 of them, that’s 65%, have NOT published any of their fee’s on their website, despite it being a legal requirement and them being liable for a £5000 fine.

fees1

If an agent is not publishing their fee’s, as they have been told to do, are they being lazy, ignorant or are they wilfully ignoring the law?

Whichever the three scenario’s, would you be happy leaving your property in the hands of an agent who is guilty of any of the above sins? I wouldnt!

In terms of fee’s, we could obviously only take a small sample of data, as so many agents have chosen not to publish their fees. But of the 7 local agents we found, we first looked at their Let Only Fee’s.

To make the comparisons fair we added up all the additional costs lurking around so each agent was offering for a 2 bed property at £550pcm:

  • Marketing & Advertising
  • Tenant Find
  • Tenant Referencing
  • Deposit Collections and Protection
  • Drawing Up Tenancy Agreement
  • Move in Inventory

Our fee for this basic service is £300 inc VAT below are all the fee’s we found:

fees2

As you can see fee’s range from £300 upto £660 for this single service. We didn’t inflate figures or stretch ourselves down to London to try and shock, all these agents are operating within a couple of miles of our office and these are the fee’s they are charging you just for a simple Let Only Service.

Completing the same exercise for a managed property was a little more complex, but don’t worry, we did it for you.

Sadly when looking further into FULL fee’s we lost another four of our agents, pushing our total of non compliance to the law to a whopping 85% of local agents have no published full fee’s for their landlords.

How did we lose 4 more agents to make this 85%? They were not publishing FULL fee’s, its all good saying what your setup and your commission fee are, but why aren’t the agents publishing their routine maintenance costs, gas safety, epc, electrical inspections etc? How can a landlord compare like with like, when there is so much secrecy?

Again, ask yourself why aren’t these agents publishing their fees? Is it ignorance of their legal obligations? Is it that they don’t want you to know their fees? Or is it simply that they cannot be bothered to update their website? Whatever the reason, do you want to work with these agents who are either lazy, ignorant or downright unlawful?

Our four remaining agents now went head to head with each other looking at total expected fee’s over the course of 12 months on a 2 bed property fetching £550pcm and having all its annual checks. here are our overall results:

fees4

There isnt a great difference between the 3 agents in terms of costing over the year, the difference in rates is about 9% – but thats only from the 3 agents out of 20 who actually published full rates, in accordance with the law. If we get the time to snoop around further it would be really interesting to find out what the real variety in fees is around Moston and East Manchester.

fees5

We obviously cannot publish the names of the agents who are not complying to legal requirements and any updates we receive we will endeavour to use to keep this information accurate.

What are your thoughts on this?

June Auctions – 31 Radnor Street Gorton

tips

 

This months Edward Mellor Auction, really does have some hot property this month (sorry for the summer related pun). Radnor Street is a 2 bed terraced house in Gorton.

 

In my eyes the attractive thing about Gorton is the potential yield and the potential for longer term tenants. I’d expect this property to fetch around £50-55k and could easily achieve a rental income of £500pcm (almost 10% yield)

As an agent, I have lots of experience in letting properties in and around Gorton and would be happy to talk with you if you were looking at this property, or other properties around East or North Manchester. Please feel free to drop in to my offices on Moston Lane, Manchester for coffee and a chat, or call me on 0161 681 3724.

Look forward to speaking to you soon!
 
Regards 
 
Mike Brown

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