More regulation? No, thanks! More enforcement, please!

Over the past year, many stories on landlords and buy-to-let property investors dealt with newly introduced regulation, aimed to help ‘good landlords’ and prevent so-called ‘rogue landlords’ from operating. Do we need more regulation? No, we don’t. What we need is proper enforcement of the existing regulations as opposed to more registration, regulation and landlord-related schemes.

The idea of finding and getting rid of ‘rogue landlords’ is a bit old hat: looking back over the past decade or so a few examples come to mind. In 2006, the Scottish Government introduced the Landlord Registration Scheme (LRS), making it mandatory for landlords to register their properties. Ongoing changes to Scotland’s Private Rented Housing Panel (PRHP) are another example.

Figures obtained by the Scottish Conservatives now show that over the past two years, only 11 rogue landlords were 'found out' under the LRS regulations. Since the scheme started, 200,000 landlords registered successfully, whilst 40 ‘rogues’ have been revealed. Hardly an impressive success rate. All of this comes at a cost of £11.2m to the registered landlords. Annual running fees for the scheme’s website alone are estimated to be around £300,000.

The Scottish Conservatives call the scheme “farcical” – and I have to admit I agree. There is simply no benefit in tight regulations when there is no provision for policing and enforcing the scheme. To a degree, this is where the new Tenancy Deposit Scheme comes into play.

In theory, only registered landlords can place their tenants’ deposits with one of the approved schemes. If the deposit hasn’t been placed by a landlord within a set timeframe, tenants have the right to take their landlord to court and may be awarded up to three times the value of their deposit. In theory, this should encourage landlords to register, or should it?

As with so many other bits of regulations in our industry, there is no system of policing the regulation. In fact, the system relies on the tenant to (a) know about the regulations and their existing rights and (b) take the initiative and do something about them. It’s unrealistic and not very fair on the tenant.

What do we need? We do need regulation, but just as much as that, we need the Scottish Government, local councils or an independent body to enforce the rules they make. Otherwise, all regulation is just a waste of money. 

Cullen Property chosen to provide management service for ESPC Lettings

We're proud to announce that Cullen Property has been chosen wo provide a full management service to the newly launched ESPC Lettings division. Click here for more information.

Stay on the safe side

A recent survey found that almost 20% of landlords are not properly ensuring their rented properties, instead relying on standard home insurance policies. It seems like a simple way to cover yourself, but there are a number of pitfalls.

Read the small print and you will see that not only do most of those policies specifically exclude properties permanently rented out, but they're also missing a few areas of cover essential to landlords.

One of the most likely issues with rented property is water ingress or flooding which may require a tenant to be housed elsewhere until the problem is fixed. This is something landlord policies will cover, but ordinary home insurance usually doesn't.

A solid landlord insurance policy will also cover public liability insurance for the landlord. Why do you need that? It covers injuries sustained on your property and damage to neighbouring property. In practice, the Cullen Property team has seen claims varying from a tenant attempting to pull cupboards of a wall, which fell onto him and hurt his back to a postman slipping and falling in a communal stairway and claiming against every flat in the stairway.

As a worst case scenario, regular home insurers may refuse claims outright when they discover a property has been rented out without their permission.

Looking on the bright side, there are plenty of great deals available as it's a very competitive market. Shop around for a good deal - it won't take too long.

Tenancy Deposit Schemes start NOW

Are you ready to change how you deal with your tenants' deposits?

As of today, Scottish landlords are obliged to place their tenants' deposits in one of three approved tenancy deposit schemes.

These schemes, which have been the norm in England and Wales since 2006, are said to offer tenants the security of knowing their deposit is kept safe for the duration of their stay in a property. Should disputes arise when a tenant moves out, they provide an independent person to decide what repairs need to be done following 'ill treatment' of a property and what constitutes fair wear and tear.

In Scotland, landlords have so far been obliged to keep their tenants' deposits safe, but it was up to them how they dealt with deposits in practice.

The Scottish Government has approved three tenancy deposit schemes and as of today, all landlords need to have transferred their deposits into a scheme of their choice.

It's come as a surprise to us how little information has been made available about the impending changes, especially as consequences for landlords could be drastic and they could be fined up to three times the value of the deposit for missing today's deadline.

A recent ruling has shown that the courts are prepared to be strict on the issue, imposing the maximum penalty on a residential landlord for 'minor' omissions.

We're not about to start scare-mongering. However, this is a huge change for landlords, so if you do need additional information, please contact us directly.

It's back - the 90% LTV mortgage

Today, the Co-op has announced it's preparing to make 90% LTV mortgages available to first time buyers. Part of the Co-operative's commitment to lend £360million to first time buyers this year, it's also another definite step forward for the mortgage market.

Is it a step in the right direction, though? A lot of that will depend on how first time buyers are assessed and how conservatively the properties they are interested in are valued. Add to that the length of the mortgage deal, the security of the buyer's job etc and it only becomes harder to make an assessment.

If today's news from Castle Trust are anything to go by, first time buyers are still being rigorously assessed and 60% have been turned down for a mortgage. Good news for landlords to a degree as people continue to stay in the rental market.

Also in mortgage news, HSBC has increased its share of the mortgage market by nearly three percent over the first nine months of this year. Altogether, whether it's in residential or buy-to-let mortgages - and we've said this in this blog before, raised activity across the property industry can only be good for all of us.

Renting out your flat - who would you trust?

Whether you've bought a rental property as an investment from day one or are now finding yourself a more or less reluctant landlord, who do you trust with your property?

We're predicting that there will be a bit of a change in the lettings & management 'scene' following new legislation that outlaws any premiums charged to (prospective) tenants - except deposit and rent.

What that means for lettings agencies is that they need to look at covering their costs elsewhere - or cutting their service to you. Whilst higher charges to you as the landlord might not sound like a great option, don't forget the alternative may be that your property is less well looked after.

Scare mongers, I hear you say! Far from it, but now is the time to ask your lettings agent how they are adjusting to the situation. To find out about our solution, visit us at the National Landlord Day at Edinburgh's Our Dynamic Earth on Tuesday, 6 November or drop us a line.

National Landlord Day - We're here to help

It's less than a week until the doors open to the Scottish Association of Landlords' National Landlord Day next Tuesday, 6 November.

There's hardly ever been a better time for the UK's largest national landlord conference: whilst the private rental market continues to grow, a few new developments and regulations mean landlords have got to make sure they have the right information available to them.

Over the next few days, we'll be highlighting some of those developments in the market. If you'd like more information, please just come and see one of our team at the National Landlord Day on Tuesday.

The biggest change facing Scottish landlords are the new Tenancy Deposit Schemes (TDS). Introduced over the summer to safeguard tenants' deposits, many landlords have not had to act on TDS until this month, when placing deposits with your chosen TDS operator becomes mandatory for all deposits received from 7 March 2011 to 2 October 2012.

If your tenant has moved in since then, the deposit must be placed within 30 working days of the lease commencing. But where to place it? Three schemes have been approved by the Scottish Government, each offering different benefits.

If all this sounds somewhat confusing, please contact us or see us on Tuesday and we'll be happy to advise you on your specific situation.