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CML warns Scottish Govt that rent controls could have adverse effects
Proposals by the Scottish Government to introduce new rules for the private rented sector could have a negative impact on buy to let lending, according to the Council of Mortgage Lenders. It has sent a detailed response to a consultation document issued by the Scottish Government, and while it recognises that some of the proposals will benefit the sector, others are likely to have a detrimental effect. In particular the CML is concerned about rent controls. In its reply it says that rent levels in Scotland are complex picture and while some areas such as Aberdeen and Edinburgh may have seen above average increases in rent levels these are very much as a result of demand exceeding supply. It points out that these areas are also seeing above average house price increases for the same reason and the long term solution has to be to increase the supply of housing in areas where this is an under supply. ‘We believe that the introduction of rent control is likely to dampen appetite amongst institutional investors to invest in the sector, will impact adversely on the availability of buy to let mortgages, will result in higher rents being set at the outset to compensate for lower rent increases during the rental term and could impact on quality if a rental yield cannot be achieved to allow continued investment in the property,’ the CML says. ‘Overall we believe the introduction of any form of rent control is likely to reduce investment in the sector thus reducing the supply which is badly needed to meet housing need. Currently we do not believe there is any need for the Scottish Government to take any action as there is no evidence base which would justify it doing so,’ it adds. The CML explains that while there are a number of models which could be selected in terms of rent controls, any such model would have to be an effective, transparent and a fair way of increasing rents so that it was attractive to both landlords and tenants. ‘A careful balance would need to be struck between landlords’ expectations over future rental yields and the expectation of tenants,’ it adds. The CML document welcomes the development of a model tenancy agreement and modernised grounds for possession. ‘However we believe that a number of the proposals contained in the paper are likely to have the unintended consequences of both reducing investment in the sector and the supply of private rented sector housing,’ it points out. These include the removal of the no-fault ground for re-gaining possession, the removal of the ability to continue tenancies on a month to month basis at the end of their term and potential controls over rents. ‘We believe that landlords need to have confidence in their ability to end a tenancy when they need to do so otherwise this may discourage future investment in the sector. Existing arrangements provide flexibility for both landlords and tenants…. Continue reading
Warning over use of photos in tenancy disputes
The use of technology in inventories appears to save time and money, but UK lettings agents and landlords are being warned that in reality it is not full proof. Often technology does not allow for the inclusion of sufficient detail to provide indisputable evidence of the original condition at the start of a tenancy, according to research by My Property Inventories. The perception of inventories by some lettings agents is that inventories can be very long, time consuming and somewhat of a laborious process. As a result, several landlords and management companies opt for the use of technology in inventories believing it will save them time and money. The use of technology in inventories claims to help landlords and management companies to complete inventories in a matter of minutes, with the ability to add large quantities of photographs, which can provide evidence in tenancy, dispute claims. But according to Danny Zane, director of My Property Inventories, in many tenancy dispute cases, the adjudicators are likely to reject some technology based inventories, as they cannot deliver the level of detail required which means that the landlord can lose hundreds of pounds in lost cases. ‘Many landlords and agents are using digital evidence to replace essential written descriptions in inventories, at check-in and check-out, leaving landlords exposed to potentially costly disputes over damage and other issues. The law clearly states that the deposit remains the tenant’s money and that they are entitled to get it back at the end of their stay, provided they have met the terms of the tenancy agreement, so the onus lies with the agent or landlord to provide proof of any proposed deductions,’ he said. ‘Without an accurate and properly detailed inventory, a landlord has no evidence to prove that the property has been damaged in any way during the tenancy and therefore will find it almost impossible to withhold any deposit money from the tenants. A glossy inventory that relies heavily on photographs will be of little use in a dispute. In fact, there is no point in producing a picture book for an inventory, with very little proper description and hundreds of photographs. Inventories like these just do not provide enough detail,’ he explained. ‘Photography and video are great for large areas of damage such as carpet burns, serious damage to worktops and interior décor etc. However, they are not so good for showing really fine detail of the sort of problems that occur most frequently on a check-out, such as small chips and scratches in sinks and baths, knife marks on worktops, scratches to halogen hobs. All of which will cause financial loss to the landlord if negligence can’t be proved,’ he added. The firm points out that inventory reports should contain a full description of a property and its contents, with detail on… Continue reading
Land Registry extends its anti-fraud property scheme to companies in England and Wales
After a successful pilot scheme, the Land Registry for England and Wales has introduced an anti-fraud security measure for companies concerned property might be subject to a fraudulent sale or mortgage. Tenanted, unoccupied or mortgage free properties are known to be particularly vulnerable and property fraud can happen in many ways. For example, fraudsters may attempt to acquire ownership of a property either by using a forged document to transfer it into their own name, or by impersonating the registered owner. Once they have raised money by mortgaging the property without the owner’s knowledge, they disappear without making repayments leaving the owner to deal with the consequences. ‘Recorded incidents of forged transfers and charges are not restricted to individuals. Corporate owners such as landlords of residential and commercial properties are targeted too. Since September 2009, we have prevented frauds on over 160 applications representing properties valued in excess of £70 million,’ said Alasdair Lewis, director of legal services at the Land Registry. With fraud currently estimated to cost the economy £70 billion annually, he pointed out that it makes sense to try and deter fraudsters wherever possible. ‘Together with our top tips, our new restriction can easily be used by companies to help protect their property from being stolen,’ he added. A request by a company for a restriction can be made using Form RQ(Co). The restriction is designed to help safeguard against forgery by requiring conveyancers, for example a solicitor, to certify that they are satisfied the company transferring, leasing or mortgaging the property is the same company as the owner before any new sale, lease or mortgage is registered. They must also certify that they have taken reasonable steps to establish that anyone who executed the deed on behalf of the company held the stated office at the time of execution. There is no Land Registry fee for companies registering this restriction for up to three titles and the move follows the successful launch, three years ago, of a similar free restriction for private individuals who do not live in the property they wish to protect. Land Registry’s top tips to protect property from fraudsters include making sure the property is registered. Innocent victims of fraud who suffer a financial loss as a consequence, may be compensated once registered, so having up to date contact details on the title register is recommended. Property owners can also sign up for the multi award winning free Property Alert service which helps owners guard against property fraud on up to ten registered properties in England and Wales. Private owners and companies who feel their property might be at risk can have a restriction entered on their title register which is designed to help prevent forgery. An example is an application to register a fraudulent transfer of a tenanted property in Princes Risborough, Bucks was recently identified by the Land Registry who worked closely with Thames Valley police in their investigation of the crime. This led… Continue reading
