More than 170 tenants are being evicted every day according to 2015 Ministry of Justice figures.
More than half of the 42,728 evictions recorded in England and Wales last year were attributable to private landlords with rent arrears being cited as one of the most common factors. Retaliatory evictions of tenants who complain about poor property standards was also a factor in a significant number of the eviction cases. Many such evictions may have been brought forward in anticipation of laws against revenge evictions which entered into force on 1st October 2015.
It is believed that a significant fraction of the rise in evictions originated from the private rather than the social rental sector. Ministry of Justice figures show that the majority of evictions in 2015 resulted from a section 21 accelerated procedure which are usually a feature of private landlord evictions.
This situation is set to deteriorate as increasing numbers of people are forced into the rental sector due to the housing affordability crisis. According to information from the Association of Residential Letting Agents (ARLA), home ownership is expected to be permanently out of reach of around a fifth of people in the UK. Property unaffordability is exacerbated by rising rents with an average renter in the North East and London estimated to spend around £31,300 and £68,300 respectively on rent over a decade. To compound this situation further, rents are forecast to climb at a faster rate than house prices in future.
High agent fees are discouraging tenants living in unsatisfactory housing conditions from finding alternative accommodation according to the latest report on the Private Rented Sector.
The report published by the English Housing Survey covering April 2014 to March 2015 found that 69% of tenants living in poor quality homes are discouraged from moving out because of agent fees. In addition to complaints about fees, the report also found that private sector renters are less satisfied with their tenure than owner-occupiers and council housing tenants: overall 65% of private renters reported being satisfied with their current tenure compared to 98% of owner occupiers and 82% of social renters.
Important findings of the report include:
40% of private rented sector households were charged agency fees in 2014-2015, up from 34% in 2009-2010.
18% of private renters said that they felt some of the fees charged were hidden. 65% of private renters reported paying an administration fee
33% paid a finders’ fee, 7% of tenants paid a non-returnable holding fee, 5% paid a returnable holding fee and 4% paid an ‘other fee.’
The number of private renters who lived in non-decent dwellings rose from 1.1 million households in 2006 to 1.2 million households in 2014.
Surprisingly, despite the entry into force of deposit protection legislation in 2007 as part of the 2004 Housing Act, the Housing Survey found that only sixty four per cent of renters with a Assured Shorthold Tenancy reported that their deposit had been protected despite penalties existing for non-compliance with deposit protection rules.
Under deposit protection legislation, landlords must place tenancy deposits in one of three government-backed deposit protection schemes within thirty days of receipt or face a penalty of between one to three times the deposit amount with the penalty value determined by the seriousness and intent of the landlord’s non-compliance deposit rules. In general greater penalties for failing to protect deposits are awarded against experienced landlords or against landlords who have attempted to avoid protecting deposits for financial gain.
Despite charging for protecting deposits being against the spirit of the deposit protection legislation the Renters Alliance has encountered numerous examples of landlords and letting agents charging renters extra fees to protect their deposits. In one landlord’s forum for example, one landlord reported charging £120 for protecting tenants’ deposits recommending to other landlords that they call similar fees “Admin fees” rather than “deposit fees” for legal reasons.
Since the entry into force of the Tenancy Deposit Scheme many landlords and letting agents have devised ways of evading and ignoring deposit protection rules.
One common tactic which renters should be aware of is issuing tenants with a “licence to occupy” in place of an “Assured Shorthold Tenancy”.
A licence gives the right to occupy and is typically used for bed and breakfasts, hotels, holiday lets and some HMOs. Often tenants only discover that a license has been issued when attempting to recover their deposit at the end of their occupation. However, despite being called a license, you may still have an Assured Shorthold Tenancy (AST) in the eyes of the law. In this event it may be possible to use typical AST measures to recoup moneys owed.
Do I have a License or a Tenancy?
A tenancy is created automatically if someone moves in and starts paying rent. Some landlords incorrectly issue licenses, either through inexperience or design to give tenants less rights than they would usually expect with an AST. A tenancy cannot be turned into a license merely by both parties signing a piece of paper headed ‘license agreement.’ A landmark case which defined the requirements for a tenancy as opposed to a license was Street v. Mountford in 1985. This stated that one has a tenancy if one:
pays a rent
occupies the property for a term
enjoys exclusive possession of land / property
These conditions do not apply if one does not pay rent or if the occupier does not enjoy exclusive possession such as in a shared room or if cleaning and meals are provided as in a hotel.
The clearest way to identify the difference between the two [license and Assured Shorthold Tenancy] is exclusivity. If a tenant has exclusive use of at least one room in the property, and that room(s) is specified, this will usually be classed as a Tenancy Agreement. If the property is shared with more than one individual, this is more likely to be a Licence.
I believe I have been incorrectly issued with a license and my landlord has not protected my deposit, what should I do?
It may therefore be possible to claim damages from your landlord if they incorrectly issued you with a licence and failed to protect your deposit. According to current deposit protection rules, your landlord must register your deposit in one of the three government-approved deposit protection schemes within 30 days of the start of your tenancy. The penalty for non-compliance is a fine of between one and three times the deposit amount.
New research has shown that London renters looking to save money by moving into shared accommodation are paying an average of £2,000 in agency fees. The figure, mostly made up of up-front deposits and letting agent fees is almost £1,000 more than the national average. On average London renters moving into a flat-shares have to pay £2,043 on top of their deposit compared with the national figure of £1,175. Around 20% of these fees are paid to letting agents according to the flat-sharing website Spare room.
A further impediment to moving also includes a six-week deposit which is now normal across large parts of the UK, up from an average of a four week deposit a decade ago. Often tenant cash-flow problems may be exacerbated by deposit disputes between landlords and tenants despite the introduction of deposit protection dispute resolution schemes in 2007.
Foreign tenants are at a particular disadvantage also in this regard with many reporting being required to pay a holding deposit in addition to paying six months’ rent in advance. The National Renters Alliance is particularly concerned that this may encourage letting agent intimidation of tenants who have sometimes committed the equivalent of 8 month’s rent and substantial agency fees before occupying a new rental property.
Despite calls to ban or impose tighter regulation of letting agent fees as in Scotland, the government has been unwilling to impose new legislation in this area. Letting agent charges can include drafting and amending tenancy agreements, credit checks, references and administration costs. Across the UK 95% of people who used a letting agent paid fees. Many letting agents also charge prospective tenants holding fees for reserving rooms in shared houses.
The issue of letting agent fees is leading to more tenants to look for properties managed directly by landlords. However, this might be a luxury for some with many areas particularly in places with high student populations where managed properties dominate the rental housing stock.
Despite the pessimism of most young people who voted to remain in the EU in June, there have been some suggestions that Brexit may be good for British renters.
Whether brexit is good or bad for renters depends fundamentally on whether house prices fall relative to the earnings of renters.
Following the referendum result, Zoopla predicted that house prices may fall up to eighteen per cent. KPMG envisages a more modest decline of 5 per cent with London hit harder than the rest of the country. Both cite possible limited future access to the European market which might make British property less attractive to overseas buyers. Others speculate that there will be no house price fall since demand has far outstripped supply over the past few decades. However one ought to bear in mind that over optimism in the Housing market is a constant feature of house price predictions in the UK. Few for example predicted the 2007 sub-prime mortgage crisis and subsequent recession.
The devaluation of sterling might also offset any reduction in the attractiveness of UK property due to exclusion from the single market for international investors.
On the side of earnings; before the referendum, the Treasury warned that Brexit would cut economic growth by 3% to 6%. The TUC also warned that leaving the EU could reduce average earnings by £1976 per year by 2030. However, it is still too early to say whether wage decreases offset house price falls.
Fundamentally the most important cause of Britain’s housing crisis is British government policy, not international investors or the EU. The remedy, liberalization of planning laws and regulation of the letting sector, is opposed by most English and Welsh MPs. It is therefore unlikely that Britain’s decision to leave the EU will improve or worsen the lot of private sector renters.
The private rental sector in England has the highest proportion of poor property standards of any tenure type according to a research published in Parliament. This finding follows the 2014/15 English Housing Survey which found that 29% of private rented properties would fail the Government’s decent homes standard for social housing, compared to 14% of social housing.
Despite numerous regulations in the private letting sector which govern repairs and maintenance requirements such as the Housing Health and Safety Rating System, a risk-assessment based regulatory model introduced in 2006, there are effectively no minimum property standards for rented housing in England.
The parliamentary report on the state of housing in England follows recent failed attempts to establish minimum housing criteria such as a Private Member’s Bill proposed by Karen Buck, the member of Parliament for Westminster North.
The proposed Fitness for Human Habitation Bill sought to amend the Landlord and Tenant Act 1985 to require that residential rented accommodation be provided and maintained in a state of fitness for human habitation, was adjourned on its second reading debate on 16th October 2015.