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.

 

 

 

 

Don’t Fall Foul of New Letting Regulations

The government recently revealed they are planning to crack down on rogue landlords and agents, with those who treat tenants poorly potentially being banned from letting properties. The new initiatives will target property agents and landlords who mistreat their tenants and do not provide them with safe and suitable accommodation. The plan is to improve standards across the rental market as a whole and to protect both tenants and the interests of responsible property owners who ensure their properties meet the required standard. Gavin Barwell, the government’s current housing minister, set out the proposals, which aim to ensure the worst offenders can be banned indefinitely from managing or letting a property. In the event of banning orders being issued, the landlord or property agent would have their name added to a national register to enable the authorities to see they don’t let or manage any other properties anywhere in the country in future. It is hoped that the proposals will help protect the millions of tenants currently renting properties in the UK.

Some of the most serious offences the proposals aim to address include the flaunting of health and safety regulations. In the event a landlord fails to complete work requested by the local council, a ban could potentially be issued. Other serious offences include things like making violent threats to tenants, or evicting tenants illegally.

It is hoped the proposals will force rogue landlords to ensure properties remain in a good state of repair at all times, and that the rights of private tenants are not neglected. Rogue landlords are commonly featured in the media, and the charity Shelter has an ongoing campaign that urges local authorities to sign up and pledge to stamp out irresponsible landlords. Over 100 local councils are currently taking part in the campaign.

Advice for Landlords or Would-be Landlords

If you are currently a landlord or are thinking about entering the property market as a landlord, you will have nothing to worry about if you adhere to all the necessary rules and regulations. In fact, for legitimate and responsible landlords and property agents, the new proposals should be seen as a positive thing. With rogue landlords and agents being forced out of the market, tenants will be safer and the remaining landlords will enjoy an enhanced reputation rather than being tarred with the same brush as the less scrupulous individuals who blight the property industry. If you’re looking for Harpurhey landlord advice, or own property in any other district of Manchester or the surrounding areas, dealing with a reputable property agency and ensuring you comply with all relevant regulations will be vital in order to ensure you are not faced with a lengthy ban.

Some of the reasons a landlord or agent could be banned include:

– Evicting a tenant illegally
– Letting out unsafe properties that have failed inspections by the local council
– Committing or conspiring to commit a criminal offence with the tenant, including supplying illegal drugs or tax evasion
– Criminal damage or theft
– Growing cannabis on the property
– Committing housing benefit of identity fraud
– Violently threatening a tenant, or actually using violence against them
– Letting a property to anyone who is in the country illegally
– Failing to complete any work the local council requires in order for the building to comply with health and safety regulations

The minimum ban length will be 12 months, while there is no upper limit for the maximum time a rogue landlord or agent can be banned for. This will allow the authorities to ban the worst offenders indefinitely, and potentially for life. Anyone served with a banning order will be unable to profit from renting out any other properties he or she owns or manages. Those banned will also be unable to work in the property management sector subject to banning orders will not be able to earn income from renting out housing or engaging in letting agency or property management work. Unscrupulous landlords might also have their properties taken over by local authorities, who would then manage the properties themselves and rent them out to tenants.

The proposals are good news for responsible landlords and property agents who uphold high standards and provide suitable accommodation for tenants. By improving the standards and practices across the industry, the new proposals will ensure reputable landlords do not lose tenants to those who charge cheaper rents by bypassing applicable rules and regulations and failing to properly maintain their properties.

Letting agent’s jail sentence over maintenance bills mark-ups after huge investigation


Letting agent’s jail sentence over maintenance bills mark-ups after huge investigation


he former Belvoir franchisee Harpreet Garcha, who was yesterday jailed after marking up maintenance bills, was described by investigators as “being at the centre of a sophisticated web of fundamentally dishonest financial criminal activity”.

The case comes as it is known that there are other agents who routinely charge mark-ups.

Any new scandal is one that the industry could do without – although this case is clearly exceptional.

Garcha was specifically in breach of his agreement with Belvoir where he should not have inflated any bills but simply passed them along to landlords, and where the sub-contractors should have billed the landlords directly.

He is also said to have utilised “multiple businesses, multiple bank accounts, family members, fraud, forgery and perjury to generate significant profits”.

Garcha, 39, ran a company as sole shareholder and director, called Five Rivers Enterprises, that operated three Belvoir franchises from 2006.

Northamptonshire County Council began investigating in late 2011 after receiving complaints.

Trading Standards officers found a man described by his own staff as dishonest, ruthless, money-orientated, dominating, a control freak, and “a man determined to get away with whatever he could”.

The franchise agreement with Belvoir required him to use local sub-contractors for maintenance jobs.

He was expected to pass the expense on to the landlords at cost, having obtained competitive prices. Sub-contractors should have been asked to invoice the landlords directly.

However, Garcha breached the agreement by insisting of one tradesman that the invoices were sent to his Belvoir address. The invoices were then increased by at least 30% before being passed on to unsuspecting landlords.

Tenants were also caught: Garcha would frequently retain deposits by lying or exaggerating about the damage caused to properties, and over-charging for repairs.

Garcha also set up a second sole trader business called Kettering Property Maintenance, with the object of disguising what he was up to.

Sub-contractors would address invoices to Kettering Property Maintenance, which would then appear on statements as the contractor that had done the work.

KPM subsequently had some employees who did do maintenance work and this was also marked up.

Garcha was said to rely on the fact that few landlords would ask to see invoices, and would take their statements of account at face value.

However, one client complained about the price of work and demanded to see the files.

A gas safety certificate that cost £57.50 had been inflated to £95; an electrical inspection at £58.75 was inflated to £312.50; and a £50 gas safety certificate almost doubled in price to £95.

The painstaking investigation cross-referenced over 1,000 invoices and found that Garcha’s fraud amounted to at least £200,000.

The prosecution said this amount had been money-laundered.

There was also VAT fraud, with over £6,800 of VAT refunds falsely claimed.

Other charges included insurance fraud, and contempt of court for breaking the terms of an order stopping him from dissipating his assets.

Garcha was sentenced to two years and nine months in prison after admitting two counts of fraudulent trading, two counts of money laundering, five counts of insurance fraud and one of VAT fraud.

Garcha has also been banned from being a director for nine years.

However, when he comes out of jail, as the law currently stands, there will be nothing to stop him working in either the lettings or estate agency industry.

£5 million cash for councils to stop rogue landlords

Housing Minister announces cash boost for councils to tackle rogue landlords.

Councils across the country are to receive a £5 million cash boost to tackle rogue landlords in their area, Housing Minister Brandon Lewis announced today (22 January 2016).

Forty-eight councils will share the funding so they can take on the irresponsible landlords that force tenants to live in squalid and dangerous properties, making their lives a misery.

The cash will also allow councils to root out more ‘beds in sheds’. Since 2011 nearly 40,000 inspections have taken place in properties with over 3,000 landlords facing further enforcement action or prosecution.

The funding will allow local authorities to carry out more raids, increase inspections of property, issue more statutory notices, survey more streets and to demolish sheds and prohibited buildings.

Mr Lewis said

“today’s funding is part of a package of measures that will ensure millions of hard-working tenants get a better deal when they rent a home. Significant progress has already been made, now with £11.7 million distributed to councils to crack down on rogue landlords.

And we have introduced protection for tenants against retaliatory eviction where they have a legitimate complaint and stopped landlords from serving an open-ended eviction notice at the start of a tenancy.

The measures will not hamper the vast majority of landlords who are diligent and responsible. Housing Minister Brandon Lewis said:

Many private rental tenants are happy with their home and the service they receive, but there are still rogue landlords that exploit vulnerable people and force their tenants to live in overcrowded and squalid accommodation.

We are determined to tackle these rogues which is why we are providing 48 councils with extra funding, so they can get rid of the cowboy operators in their area and bring an end to tenants living in miserable homes in the name of profit.

We also want to raise the quality and choice of rental accommodation across the sector. The funding will ensure tenants know what level of service they can expect and have confidence to get help and take action if things go wrong.

The poor quality, overcrowded and dangerous accommodation let by rogue landlords can result in a ripple effect of wider problems in the local community such as noise problems; sanitation issues for whole roads; greater fire risk; council tax and benefit fraud and anti-social behaviour such as street drinking.

Today’s funding to tackle rogue landlords is part of an ambitious package of proposals in the Housing and Planning Bill to ensure that England’s 9 million private tenants feel confident to demand better standards and management of their property by landlords.”

Measures in the Bill include:

  • database of rogue landlords and property agents convicted of certain offences
  • banning orders for the most serious and prolific offenders
  • introduction of civil penalties of up to £30,000 as an alternative to prosecution
  • extension of Rent Repayment Orders to cover illegal eviction, breach of a banning order or failure to comply with a statutory notice
  • more stringent fit and proper person test for landlords of licensable properties such as Houses in Multiple Occupation
  • From 1 February 2016 landlords in England will have to carry out Right to Rent checks to ensure potential tenants have the right to rent property in the country.

In November 2015 65 local authorities were invited to bid for a share of £5 million funding to tackle rogue landlords.

Our Councils will receive:
Manchester £60,000
Salford £63,952

Right to Rent checks can be done from 28 days before the start of a tenancy agreement.

 

Landlords and the Housing and Planning Bill

The Housing and Planning Bill is set to become a cornerstone of the Conservative Government’s vision for the property and rental market from now until 2020.

This is a heavy weight piece of legislation, much of the content trailed in advance in the Conservative Manifesto and “Fixing the Foundations”, the new Government’s productivity plan – it has 145 clauses and 11 schedules.

The measures are far reaching and are intended to ease the way and encourage the building of new starter homes and self-build among many other things to do with planning and development. Local authorities, many of whom have so far resisted planning and development measures introduced under the last government, for example the conversation of redundant office space to residential, will be put under a duty to promote the supply of new homes, and to prepare reports about the actions they have taken under the starter homes duties.

However, of most interest to landlords are the measures included to tackle so called “rogue landlords”.

Banning Orders

BANNING ORDER red Rubber Stamp over a white background.

A banning order is a new concept in housing which will be an order made by the First-tier (Property) Tribunal, which has the effect of banning a person from:

  • letting housing in England;
  • engaging in letting agency work that relates to housing in England;
  • engaging in property management work that relates to housing in England;
  • or doing two or more of those things.

The regulations will be set out what explaining constitutes a banning order offence. A local housing authority in England will be able to apply for a banning order against a person who has been convicted of a banning order offence.

Before applying for a banning order, the authority will need to give that person a notice of intended proceedings, informing them that the authority is applying for a banning order, and inviting them to appeal within 28 days.

The clause in the Bill provides that in deciding whether to make a banning order and if so, what order to make, the Tribunal must consider:

  • the seriousness of the offence;
  • any previous convictions that the person has for a banning order offence;
  • whether the person is or ever was included in the database of rogue landlords and letting agents;
  • the likely effect of the banning order on the person against whom the banning order is proposed to be made and anyone else who may be affected by such an order.

A ban must last for at least six months. If the order is breached, a the local authority can impose a financial penalty up to £5,000.

A breach of a banning order does not invalidate or affect the enforceability of any provision of a tenancy or other contract. In particular, this is to ensure that a tenancy agreement cannot be found to be invalid on the basis that it was granted when a landlord or letting agent was subject to a banning order.

This provides protection for the parties to a tenancy agreement by ensuring that they do not lose their rights under the agreement as a result of the banning order.

Creating a Database of Rogue Landlords… and Letting Agents

Housing-enforcement-offic-012The Secretary of State is to be required to establish and operate a database of rogue landlords and letting agents. All local housing authorities in England will be responsible for maintaining the content of the database.

Those with banning orders made against them will be included, plus those where a local authority deems them suitable for inclusion, even if they are not in possession of a banning order. An appeal mechanism is to be available for those included in the “rogues’ database”.

Rent Repayment Orders

dab1422639385_866_90984443This provision in the Bill for Rent Repayment Orders will empower the First-tier Tribunal to make the orders to deter rogue landlords who have committed an offence, or rented housing in breach of the new banning order.

The offences will be:

  • breaches of improvement orders and prohibition notices and of licensing requirements under the Housing Act 2004,
  • violent entry under the Criminal Law Act 1977,
  • and unlawful eviction under the Protection from Eviction Act 1977.

 

An order requires a landlord to repay rent paid by a tenant or to repay to a local housing authority housing benefit or universal credit which had been paid in respect of rent. For clarity, the Bill provides for definitions of a “letting agent”, “letting agency work” and “property management work”. It also describes what is meant by “English letting agency work” and “English property management work”.

Recovering Abandoned Premises in England 

camelot-UK_2012SquattedRoom-78 Abandonment of rental properties has for a long time been a very difficult situation to deal with for landlords, given the provisions of the Protection from Eviction Act 1977. The Bill provides that a landlord may follow course to recover possession of a property where it has been abandoned, without the need for a court order.

A private landlord will be required to give a tenant notice which brings the tenancy to an end on that day, if the tenancy relates to premises in England and certain conditions are met:

  • a certain amount of rent is unpaid (two months, if monthly, or one quarter);
  • that the landlord has given a series of warning notices;
  • and that neither the tenant or a named occupier has responded in writing to those warning notices before the date specified in the notices.

    If you require any further information on any of the details of this article, feel free to call our offices on 0161 681 3724 and we will be glad to help you.

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