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Category: Landlord Problems

How to protect revenue during the rental crisis

by Sorcha DugmorePosted on

It’s no secret that the UK is moving towards a serious supply and demand crisis. In addition to the growing cost of living and energy prices, what can landlords do to protect their revenues?

  1. Tenant Screening: One of the most effective ways for landlords to protect rental income is by carefully screening tenants by conducting credit checks, verifying employment, and checking references. By selecting tenants who have a stable income and good rental history, landlords can reduce the risk of rent arrears and therefore protect their income.
  2. Being informed: Landlords must stay up to date with all relevant regulations and guidelines. Including significant policy changes, such as The Renter’s Reform Bill. Understanding and properly preparing for policy changes will help landlords to avoid potentially large fines for non compliance.
  3. Rental insurance: Rental insurance can provide an extra layer of protection for landlords in the event of rent arrears or property damage.
  4. Re-evaluate rental prices: With rising costs, it is only reasonable for landlords to raise the monthly rent of their private lettings. Landlords are responsible for ensuring that rent increases are carried out legally by following Government guidelines and ensuring that rental increases comply with their current tenant contracts.
  5. Reviewing Investments: Landlords should schedule regular intervals to review their property portfolio and ensure that their investments are working as cost-effectively as possible. The profitability of an investment can change drastically depending on location demand and property type, landlords should continually be reviewing their existing investments and changing their strategy to meet the current market needs.

This year will be a tough period financially for UK landlords, however by staying informed and planning ahead, landlords will be able to protect their investments and consequently their profits. 

Why Landlords can’t ignore Right To Rent Policies

by Sorcha DugmorePosted on

New research from the Home Office has identified that landlords without letting agents are the least likely to understand their legal obligations when onboarding new tenants through the Right to Rent Scheme (RTR).

What is the Right to Rent policy?

The right to rent policy, which has been in place since 2016 requires landlords to check that their tenants have the legal right to rent in the UK before allowing them to move into their property. Failure to comply with the policy can lead to serious consequences, both financial and legal.

When do these checks need to take place?

Right to Rent checks have to be conducted before the tenancy starts. For Tenants who are only allowed to stay in the UK for a limited time, you need to do the check in the 28 days before the start of the tenancy.

How to conduct the check:
Landlords need to check that their tenant’s photograph, name and address match and that the document hasn’t been tampered with. Landlords are responsible for taking copies of these documents and keeping them on file for at least 12 months after the end of the tenancy. 


What are the consequences of not checking your tenants right the rent? 

If a landlord fails to carry out the necessary checks, they may face a civil penalty of up to £3,000 per tenant. This penalty can be imposed on landlords who rent out a property without carrying out the necessary checks, or who knowingly rent to tenants who do not have the legal right to rent in the UK. In severe cases, this can result in a custodial sentence of up to five years.

Whilst the Right to Rent policies may seem difficult to navigate and have potentially severe consequences, working with a letting agent can provide landlords with the peace of mind that they have followed the correct procedure for ensuring that their tenants are legally allowed to stay in their property, and therefore avoiding potentially large penalties.

Landlords look forward to predicted drop in mortgage repayments

by Sorcha DugmorePosted on

Most UK landlords will be using fixed rate mortgages, but there’s good news on the horizon for those who aren’t. New analysis from wealth manager, Quilter, suggests that monthly mortgage payments could fall by around 25% by the end of 2023.

How does this affect landlords?
For affected landlords, this potential drop in mortgage costs could significantly increase cash flow, allowing them to increase profits or reinvest finances back into their rental property. For example, by using the additional income to pay for property repairs, improvements, or even to purchase additional rental properties.

Moreover, landlords may be able to consider mortgage repayment strategies to pay off their mortgages faster by making higher monthly payments or increasing their repayment frequency.


What evidence suggests the 25% drop?
Recent statistics released by the UK government’s house price index indicate that the average cost of a property in the country was £294,910 in November 2022. Mortgage rates surged to roughly 6% in the aftermath of the mini-budget, adding to the already high cost of investing in new properties. 

However, it is anticipated that house prices will fall by 8% in November 2023 as predicted by Halifax.

The director of Halifax Mortgages, Kim Kinnaird, said “We expected that the squeeze on household incomes from the rising cost of living and higher interest rates would lead to a slower housing market, particularly compared to the rapid growth of recent years,”

Halifax predicted that mortgage rates will continue to decline, potentially hitting 4%. As a result, the average UK house price could fall to £271,317, leading to an estimated 25% decrease in monthly mortgage payments compared to the previous year, with payments amounting to £1,145.

Karen Noye, mortgage expert at Quilter says:

“Rising mortgage rates have played a significant role in the affordability of buying a first home or moving home, and for many these costs were pushed to unaffordable highs. It is therefore a real positive that looking forward we can hope to see such a significant dip in monthly mortgage payments by the end of the year should house prices and mortgage rates continue to fall as expected.

The potential reduction in mortgage costs could make it easier for landlords to obtain new mortgages or refinance their existing mortgages. With lower interest rates, landlords may be able to secure more favorable loan terms or lower monthly payments. Additionally, with a lower mortgage payment, landlords may be able to increase their borrowing capacity, allowing them to expand their property portfolios.

Whilst substantial evidence points towards a fall in mortgage rates, this is still vulnerable to many different factors such as inflation, government intervention, the type of property and location. It is not impossible that mortgage rates will rise during 2023, and landlords should stay cautious and up-to-date with new developments as the year progresses.

How to guarantee rental payments as cost of living increases

by Sorcha DugmorePosted on

Cost of living prices in the UK have been steadily increasing over recent years, having serious consequences for renters. A study in August 2022 revealed that food prices had risen by 12.5% compared to one year earlier. Additionally, rising gas and electric prices are putting huge strains on renters across the UK trying to keep up with the rising prices without compromising on their quality of living. 

Many renters are now facing difficulties being able to pay their monthly rent, due to no fault of their own. Long-term renters chose rental properties which fitted their budgets given the average cost of living prices at the time of entering their rental contract. However, renters who have been in their property for 2+ years are now finding their financial circumstances drastically changed, despite having stayed in the same property. 

Whilst a lot of renters have developed plans to cope with the rising costs, the significant increase in cost of living is inevitably causing serious problems for some renters, with knock-on consequences for landlords as tenants struggle to pay rent each month. 

What can landlords do to guarantee rental payments? 

When entering into new rental contracts, landlords should now pay more attention than ever to the average cost-of-living in the local area, and account for this when bringing in new tenants. Ensuring that your potential new tenants can provide proof of yearly income 30 times the rental cost will create a safety-net which should guarantee timely rental payments each month, whilst leaving space for cost of living prices to increase further throughout the next year. 

In addition to this, the most effective way to ensure timely rental payments is to enter into a “Rent Guarantee Scheme”. For a small monthly payment, this insurance will guarantee rental payments when a tenant does not pay their rent within 10 days of it being due – meaning that landlords will receive the rental payments each month even when their tenant is unable to pay. 

In summary, the cost of living crisis in the UK continues to cause serious challenges for both tenants and landlords. However, by developing an informed plan, landlords can limit the impact these challenges have on their monthly profits and gain more security with their investments.

New limitations on social housing rent increases

by Sorcha DugmorePosted on

Driven by inflation and high rental demand, rental prices are increasing across the country. But what does this mean for landlords? And what are your limitations when considering rental increases? 

Social Housing rental increases 

Housing associations are considering the impact of rental increases for social and affordable housing tenants; several options are now being considered to offer support to tenants dealing with these price increases. Most notably, new limitations are being implemented in 2023 to cap rental costs for social housing tenants. 

Why does action need to be taken? 

Monthly rental costs for Social housing are permitted to increase by up to CPI plus 1% annually. However, in August 2022 the Bank of England forecast that CPI would be 9.9% in Quarter 3 of 2022, suggesting very significant rental increases would be permitted in 2023-24. These increases will inevitably cause significant pressure for some social renters as they struggle to keep up with the price increases. 

In October 2022, the UK government launched a consultation to cap these social housing rental increases in 2023. The consultation proposed to protect existing social tenants from significant rent increases in 2023 by capping social housing rent increases from April. The consultation considered rental increase caps at 3%, 5% and 7% in response to these concerns. 

Whilst many social housing providers might independently choose to cap property rental below CPI plus 1%, imposing a rental increase ceiling would provide protection for tenants who are in exceptional circumstances. 

The Government has now confirmed that these rental increases will be capped at 7% from April 1st 2023, this change also applies to shared ownership tenants. 

A detailed report of the October consultation can be found here. 

The new cap on rental increases for social housing tenants in 2023 should offer a sense of security and protection to tenants concerned about rental increases. 

Blackouts

by Sorcha DugmorePosted on

Blackout warnings have been issued by the National Grid, with planned nationwide blackouts expected to affect the UK in the coming winter months.

The Chief Executive of the National Grid, John Pettigrew, has warned that the blackouts are likely to take place during “very cold winter weekdays” between 4pm and 7pm and are a consequence of Russia’s war in Ukraine. 

How should Landlords respond? 

Unexpected blackouts could cause uncertainty and stress amongst tenants, particularly if they do not receive information on the length and frequency of the blackouts. However, when properly prepared, blackouts can be dealt with and both landlords and tenants can avoid major inconvenience. 

To make the circumstances as manageable as possible, landlords should take responsibility for properly informing their tenants of the expected upcoming blackouts, and provide useful information on how to prepare. 

Tips on how to prepare for the upcoming blackouts: 

  • Landlords should provide their tenants with updated information on the expected blackouts, including expected times and frequency (where possible).
  • Tenants should be advised to locate external batteries available for important devices (phones, laptops etc) ahead of the blackouts.
  • Tenants should keep a working torch in an easy to find location in their home.
  • Landlords should also consider the additional impact the blackouts may have on tenants who have young children, particularly around mealtimes. Reminding tenants that the expected blackouts may interfere with mealtimes will allow tenants to make alternative plans (such as pre-preparing non-cook meal options, or using a camping stove (for tenants who have a safe outdoor space).
  • To avoid panic, tenants can also be reassured that blackouts which only last for a few hours shouldn’t cause any major food safety issues for food kept inside the fridge or freezer. As long as the doors remain closed during the blackout, the fridge and freezer should remain at a cold enough temperature that the tenant’s food quality is not compromised.
  • Finally, due to the blackouts taking place during cold winter evenings, landlords can remind tenants to have alternative means of keeping warm available in the case that the temperature in their home drops significantly during the blackout. (Such as extra blankets and warm clothing). 

If tenants are well-informed of the upcoming blackouts and receive guidance on how to prepare, these planned blackouts shouldn’t cause any major inconveniences for either landlords or tenants. However, we advise following related news stories as more information is released in regards to the planned times and frequencies of these blackouts. 

Housing supply targets

by Sorcha DugmorePosted on

The UK is facing an urgent need for new and affordable housing across the country caused by an increasing population and lack of new builds. 

Housing supply issues have a significant effect on quality of living for renters, and potential renters, across the country. Lack of suitable housing can lead to: 

  • Overcrowding in houses as people work together to save costs 
  • Unstable living circumstances caused by increasing numbers of landlords selling up, or not being able to secure long-term rentals 
  • Increase in homelessness 
  • Impaired labour mobility 

According to research by the National Housing Federation, to minimise this crisis the UK must build an estimated 340,000 per year, with 145,000 fitting into the affordable housing category.

Additionally, it comes as no surprise that the supply challenges are creating a competitive housing landscape, raising prices and making it increasingly difficult for first time buyers to enter the market.  In August 2012, the average house price in England was £180,000, since then, house prices have increased by an astonishing 76%. 

As part of the Renters Reform white paper, the UK government pledged to build 300,000 new houses per year to work towards this goal.

Housing targets scrapped

Nearly 60 conservative rebels pledged to back-up plans to ban mandatory housing targets. Rishi Sunak has responded to this by easing measures and setting them as “advisory” instead of mandatory. 

In response to the surprising shift, Michael Gove stated “there is no truly objective way of calculating how many new homes are needed in an area” but the “plan-making process for housing has to start with a number”. 

Looking back to when Rishi became Prime Minister in October, there were already doubts surrounding these housing targets. In October (2022) statements, Rishi had claimed that he “did not believe in arbitrary, top-down numbers”. Whilst committed to building more suitable homes across the country the new Prime Minister doubted the achievability and accuracy of the targets.

The conservative rebels took issue with the effects the targets might have on specific constituencies, with concerns of over-building in more rural areas. The government has claimed that they will now consult on how the new guidelines can take local density into account. 

Whilst housing targets of 300,000 new homes per year will be advisory and not mandatory, the Government has stated their commitment to plan high numbers of new builds across the country. Additionally, new measures are being put in place to better control the short-term letting market in the hopes that this can create opportunities for higher numbers of suitable residential homes. 

How and why we built Smart Settings to save landlords time and speed up resolutions for renters

by Asif AliPosted on

There’s never a convenient time for a water leak or a boiler breakdown. Each year we see thousands of reported faults through our platform. With many cases occurring at the most inconvenient of times for those affected.

Similarly, as a Landlord, finding the time to squeeze in regular tasks at your rental property can be a challenge alongside everyday life.

As a product development team, we asked ourselves how can we streamline these key events, and make them better for everyone?

Time is of the essence

Nobody likes waiting. Whether it’s waiting for a delayed train or for your coffee to cool down.

One of the key hallmarks of Howsy’s service is that we give landlords ultimate control, visibility, and choice. This involves frequent communication with landlords who, for example, can approve repairs before they’re actioned and ask us to carry out important compliance checks at the appropriate time.

But there are instances where landlords are unable to review particular actions and would prefer everything to be handled instantly on their behalf. For such customers, by seeking approval, we’re actually slowing the process down by inserting them in the loop. And ultimately, making renters who are experiencing difficulties, wait.

Introducing Smart Settings

To help those who want ultimate control and those who just want us to get on with it, we’ve introduced a new range of smart settings. These settings allow landlords to define the behaviour of the technology for common scenarios on a case-by-case basis.

For example, a landlord may want us to automatically deal with an urgent repair when the quote falls below a certain threshold, but then always ask them for approval when dealing with low priority issues. Similarly, they may want us to automatically renew their gas safety certificate but ask them before renewing their energy certificate. These preferences can now be set and updated at any time.

Setting up these preferences can save landlords time, help them remain compliant and speed up the resolution of problems for renters living in the property.

Building & Designing Smart Settings

The ability to define how future events are handled is powerful and landlords need to work through each one and make the correct choice for them. At the same time, we wanted to make sure it was easy to configure and did not feel like taking a test.

To avoid this, we created a smart settings journey that takes landlords through each setting in turn. Using a carousel of cards, one card per smart setting, we’ve reduced the cognitive load for the user by giving a single setting to focus on at any given time.

Each card contains all the relevant information to make the right choice – it contains examples for each type of setting, a range of possible choices and indicative pricing when a setting would incur a cost.

The user experience helps the landlord make the right choice, quickly, without feeling overwhelmed.

Setting up your Smart Settings: 

Start reaping the benefits of this new feature in just a few minutes. Follow these three quick and easy steps:

  • Go to your Dashboard and click on ‘My Account’ in the top right-hand corner and then in the dropdown select ‘Account information’.
  • From the Account Information page, select ‘Smart Settings’ on the toolbar.
  • Now you have the opportunity to customise your preferences based on how you want your property to be managed. From managing repairs to handling tenancy check-outs.

Once complete, review and confirm your settings. Don’t worry, you can amend them at any time should your circumstances change.

Your thoughts and feedback

As a product development team, our role is to optimise and improve the experience of both our landlords and renters, with the ultimate mission to make renting better for everyone. With this in mind, we’re keen to get your feedback on this latest feature. Drop us an email to [email protected]

Letting agent refusing to disclose tenant references?

by Gurdeep ClairPosted on

When taking over the management of properties from other agents we often encounter one particular issue. Whether or not we are entitled to the tenant’s references and whether or not the previous agent is entitled to rely on the UK General Data Protection Regulations when refusing to release it. 

Is a landlord entitled to a tenant’s reference?

Put simply, yes, a landlord is legally entitled to their tenant’s reference. It is in fact a common misunderstanding in the lettings industry that a landlord is not entitled to a tenant’s reference for GDPR reasons. 

When agents act on behalf of landlords they do so under the law of agency. This means that when a landlord instructs an agent they are instructed entirely on the landlord’s behalf. By the very nature of the agent and landlord relationship, an agent is an extension of a landlord and acts on their behalf. Therefore when an agent secures a tenant they do so on behalf of the landlord and arrange for a tenancy agreement to be signed between the landlord and tenant. This of course means that there is in fact no contractual relationship between the agent and tenant. 

Any agent acting on behalf of their client the landlord is required to do so in their best interest. Landlords are ordinarily not a party or aware of the exchange between agents and tenants however, they are entitled to their tenancy documents, including references on demand due the agents responsibility and duty to account. 

Tenant references and data protection

Further with regards to the specific statement that references cannot be provided for GDPR reasons, this is wholly misconceived. Agents obtain references on behalf of their clients and they belong to those landlords. In fact when agents obtain these references they do so as data processors and it is the landlord that is the data controller for GDPR purposes. This means that agents are freed from many of the ordinary responsibilities for data protection that apply in this scenario. 

Read more about data processors and controllers and their respective roles in data protection.

Furthermore, having paid for the references a landlord is entitled to them not only to be confident about the person renting their property but also to ensure that the references have been obtained in the first instance. 

Finally, an agent can pass over data for processing by the landlord if it falls within the legitimate interests processing basis under the GDPR. Clearly, it is a legitimate interest of the landlord to have a copy of the references belonging to the tenant because they will have an interest in the identity of the person occupying their property as well as their ability to meet the tenancy obligations.

Gurdeep Clair
In-house Legal Counsel