Deposit and Rent mag July 2019

Property Managers

Landlords

Tenants

Cost and time savings for the administration of deposits.

No cost to landlord with faster claims procedure and pay-out than TDS.

No need to find 6-8 weeks worth of rent for a deposit.

0800 281 235 www.depositandrent.co.uk info@depositandrent.co.uk

What is Deposit and Rent, and how can it help you?

In recent years, government initiatives regarding the property market have been focused on giving more power and stability to tenants.

Since addressing the protection of tenant deposits in 2007 with the implementation of the 2004 Housing Act, the law has leaned more towards alleviating the pressure put on tenants regarding initial payments and providing financial protection during their tenancy.

The most recent legislative action, has been the implementation of the Tenant Fees Act. This article, however, will look at the growing popularity of deposit replacement schemes, discussing why they were introduced, what they do, and how they affect not only tenants, but landlords as well.

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Deposit replacement schemes Deposit replacement schemes have made a strong impact on the property market in the past couple of years. They were introduced as a way of combatting the extensive costs of deposits, as this has become a real struggle for prospective tenants, particularly in London. A deposit replacement scheme, in basic terms, replaces a deposit with an insurance policy, with a deposit replacement firm acting as the middle man between landlord and tenant.

Usually, deposit replacement schemes require the tenant to pay either: • a non-refundable fee of (normally) one weeks' worth of rent; or, • a small fee alongside their rent every month.

These schemes provide landlords with the same protection as a deposit, but effectively remove the requirement of an expensive lump sum in upfront fees, making it more affordable for tenants to move, but not at the expense of their landlord's protection. These schemes hold the tenant responsible for any damages during their tenancy and will recover this cost for the landlord.

Deposit and Rent At Residentsline, we have developed a deposit scheme which requires neither one weeks' worth of rent nor a monthly fee. Instead, we have designed a bespoke policy: Tenant Deposit Legal Protection.

This insurance policy provides all the same benefits of a deposit replacement scheme, but for a more competitive price, as well as including added extras such as Rent Guarantee and Landlord Emergency Assistance.

Rent Guarantee provides cover for landlords against any unpaid rent.

Should a landlord find themselves in a position where rent is overdue for at least one month, Residentsline will shoulder the cost to ensure the landlord is paid the full sum. Their policy will also pay the landlord the value of one months' halfrent for a subsequent three months if the property is damaged and cannot be immediately relet.

As well as this, Deposit and Rent protects against any difficulty the landlord may face when repossessing the property.

This policy will provide cover for up to £175 per day towards the cost of alternative accommodation, plus £15 a day towards the cost of storing possessions. They will also provide legal expenses cover for rent recovery, property damage, alleged breaches of contract, eviction, and legal nuisance and trespass disputes.

And, should these disputes reach the court, Residentsline will even cover the value of lost salaries for the time taken off work.

Landlord Emergency Assistance ensures that the property is protected against any unforeseen accidents or emergencies, providing cover for any failures to the property's heating, electric, plumbing or gas supplies, as well as cover for pest infestations and damage to windows, doors or locks. Should you break the keys to the property or lock them inside, Residentsline will appoint an authorised repairer to carry out emergency repairs and cover any damage caused in gaining access to the property, as well as paying the repairer to make the property safe and secure. The policy also covers any damage to the roof caused by adverse weather conditions or fallen trees, as well as the cost of one night's accommodation should the property be uninhabitable following an emergency.

In terms of legal expenses cover, Deposit and Rent also provides the following: • Up to £50,000 to negotiate settlement of any dilapidations claims.

• Up to £50,000 to pursue your legal right if your tenant has absconded before the dilapidations inventory was completed.

How does this benefit you?

The common factor across Residentsline's Deposit and Rent scheme is that is beneficial to all involved. For tenants, the policy takes away the stress of paying a small fortune for a deposit before moving in, therefore removing the financial barriers many face when being able to afford upfront costs of a property. For landlords, this policy gives all the cover of a standard deposit, as well as providing cover for unpaid rent, conflict over payment, any damages to the property and legal expenses incurred.

With a claims line available 24/7, Deposit and Rent is one of the most comprehensive policies in the insurance market.

At an incredibly competitive price with gold standard customer service, you can trust that you're always getting the best product at the best possible price.

Call Residentsline for a quote on 0800 281 235 or visit www.depositandrent.co.uk

Deposit and Rent was developed to provide an alternative to taking a deposit by Landlords of rental properties.

We offer three products which include: • Deposit Legal Protection – up to £50,000 to negotiate and settle dilapidations costs and removing the administration burden of holding a deposit.

• Landlord Legal and Rent Protection Policy - up to £50,000 to pursue your legal rights to gain vacant possession of your property, to cover unpaid rent due or for damage to your property.

• Residential Landlord Emergency Assistance – covering failure, blockage or leak from internal plumbing or drainage, bathroom fittings. Damage to roof due to adverse weather and failure to function or damage to external doors, windows or locks.

The Tenant Fees Act

In the property industry, there have often been issues surrounding tenant fees. From unfair letting fees to excessive deposits, tenants have often been given little choice but to pay. However, thanks to new legislation, this is all set to change.

On 1st June, the new Tenant Fees Act came into force. Having initially been announced in the Autumn Statement in 2016, the Tenant Fees Bill was given Royal Assent earlier this year on 12th February, and has now been accepted as law. From June, the Act will include all new tenancies, as well as renewed tenancies.

As stated by Minister Rishi Sunak MP, the Act is a result of government aims to “make renting fairer and more transparent for all.” According to the official government press release, the Act is expected to save tenants around £240 million per annum, making it a massive step towards fairer tenant fees.

So, what will the Tenant Fees Act do?

There are many facets to the Tenant Fees Act, all geared towards offering tenants financial protection and support. It is also hoped that it will improve the relationship between tenants and landlords or agents.

The Act will place a ban on letting fees paid by tenants in the private sector. These fees will instead be paid by the landlord, thereby reducing initial costs for tenants and encouraging an improvement of the services provided by letting agents, as they will have to compete for landlords and will be unable to impose excessive fees.

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The Act will also implement a cap on tenant deposits at 6 weeks' worth of rent, further reducing tenant costs from the outset. As of last September, moves were made by the government to stop landlords being able to incur excessive fees for minor damages.

From June, landlords will have to provide evidence of the costs incurred by any tenant damage and will only be able to charge accordingly.

In addition to this, the time period landlords are given to pay back any fees they have unlawfully charged has been reduced, meaning tenants will get their money back in an appropriate timeframe.

What can landlords or agents charge?

According to Landlords Guild, these are the limits to what landlords or agents can charge tenants, and each one has restrictions in place to avoid any unnecessary costs.

• • • • • • • • • •

Rent Tenancy deposit Holding deposit Payment in the event of a default Payment on variation, assignment or novation of a tenancy Payment on termination of a tenancy Payment in respect of council tax Payment in respect of utilities etc.

Payment in respect of a television licence Payment in respect of communication services

What is the difference between a tenancy deposit and a holding deposit?

As mentioned above, landlords will retain the right the charge for a holding deposit and a tenancy deposit. So, what's the difference?

The holding deposit (or holding fee) is an amount of money the prospective tenant pays towards to the landlord prior to signing the tenancy agreement. The Act has now capped the amount a landlord can charge for a holding deposit at one weeks' worth of rent. The purpose of this is to hold the property whilst referencing checks take place and the relevant contracts are brought up, and acts as a sort of application – it shows the landlord that you are invested in the property. Should the landlord reject your 'application', the deposit will be refunded in full. Likewise, if you are accepted for the property and sign the documentation, your holding deposit will also be returned. However, if you change your mind and pull out before accepting the tenancy, the landlord can keep the deposit as forfeit.

Unlike a holding deposit, a tenancy deposit is paid at the start of the tenancy. This is usually between 4-6 weeks' worth of rent (although as of June this will be strictly capped at 6). The landlord is obliged to hold the deposit in a government-approved deposit protection scheme. When the tenancy ends, the landlord can deduct any costs for damage incurred by the tenant during their tenancy from the deposit (although this can be contested by the tenant) and furthermore, landlords will have to provide evidence of these costs so as not to charge any excessive fees.

What happens if a banned fee is charged?

Whilst the Tenancy Fees Act will be widely circulated around the property industry, it is possible that mistakes will be made or even that landlords could take advantage of unaware tenants. Should costs that have been banned under the new Act still be imposed, there are strict penalties in place.

For an initial offence, landlords or letting agents could face fines of up to £5,000. Furthermore, a second offence within 5 years would incur fines of up to £30,000, as well as being considered a criminal offence. Furthermore, tenants who have been made to pay banned fines will be allowed to apply to the First-tier Tribunal to ensure the landlord or agency pays back the fees in full.

A happy ending?

The recent efforts of the government to construct the Tenant Fees Act will not go unnoticed. By diminishing initial costs and stopping unfair payments, the Act will help in improving both the tenant experience and the relationship between tenant and landlord.

However, property expert Phil Spencer claims that it could take up to a year for the dust to settle as the new rules filter through the system and warns tenants to be vigilant in understanding their rights within the new law. These improvements were well overdue, but it is nonetheless refreshing to see that the government are keeping in step with the requirements of renters. The Act will surely prove to be a big step in the progression of the property industry but, as said by Spencer, only time will tell.

Rent Guarantee f

For only £95 inc IPT, cover inclues: Repossession costs Up to £50,000 to pursue your legal rights to gain vacant possession of your property

Rent Protection and Rent Recovery To cover unpaid rent due to you under the terms of your tenancy agreement

Damage to your Property Pursuing your legal rights against a tenant or another party who has caused damage to your property

Call us for a quote on 0800 281 235

Deposit & Rent is a trading name of MYB Solutions Limited who are an Introducer Appointed Representative for Residentsline Limited who are Authorised and Regulated by the Financial Conduct Authority FRN 305998 Registered Office: 29 Waterloo Road, Wolverhampton WV1 4DJ Registered in England & Wales CRN 11784970

0800 281 235 www.depositandrent.co.uk info@depositandrent.co.uk

The legal responsibilities of landlords.

There is a vast array of responsibilities which are directly attributed to the role of a landlord, many of which can be challenging if not managed properly. From health and safety measures to tenancy deposits, this article will discuss the multifaceted requirements of every successful landlord.

Gas and Electrical Safety As part of their responsibilities, landlords much manage the safety standards of all gas and electrical appliances within their properties.

According to The Health and Safety Executive, the 1998 Gas Safety (Installation and Use) Regulations define a landlord as “anyone who rents out a property that they own under a lease that is shorter than 7 years or under a licence”.

Landlord responsibilities include: • Providing annual maintenance checks to assess the standard and possible repair of flues, appliances and pipework provided for tenants in both private and communal dwellings.

• Making sure an annual gas safety check is carried out within 12 months of the installation of a new appliance or flue and annually thereafter by a Gas Safe Registered engineer. Landlords must keep a record of the safety check for 2 years and issue a copy to each existing tenant within 28 days of the check being completed and issue a copy to any new tenants before they move in.

• Making sure that any electrical appliances or devices in the property are safe to use. According to Your Move, it is recommended that the property undergoes an Installation Survey or Portable Appliance Testing (PAT) to ensure compliance.

Housing health and safety rating system (HHSRS) It is the landlord's responsibility to maintain health and safety standards within their property. Introduced in 2004 as part of the Housing Act, the HHSRS is a system designed to “help local authorities identify and protect against potential risks and hazards to health and safety” from any identified deficiencies within the property. It was introduced as part of efforts to maintain “good standards in the private rent sector” and it is geared specifically towards providing guidance to private landlords.

Tenancy Deposit Scheme Since 2007 there have been laws in place which require landlords to place tenant deposits in Tenancy Deposit Protection scheme (TDP).

According to government housing services, landlords can register a tenant's deposit with either: • Deposit Protection Service • MyDeposits - including deposits that were held by Capita • Tenancy Deposit Scheme The deposit MUST be registered with one of these services within 30 days of the landlord receiving it. At the termination of tenancy, landlords are entitled to deduct costs for damages, and must return the deposit within 10 days of agreeing the returned amount. Should a conflict occur over this amount, the deposit will remain in the scheme until it is resolved.

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Paying Tax Landlords both overseas and UK-bound are liable to pay tax on their properties. There are three types of tax in the UK: VAT, National Insurance and income tax. The type of tax a landlord pays is dependent on their employment status: if a landlord is employed outside of managing their property, they will likely only pay income tax on profits made from tenants. However, if being a landlord is a full-time occupation, this is counted as a business and will be calculated differently.

If the property is occupied, the duty of paying council tax rests with the tenants. However, should the property be unoccupied, this responsibility will be turned over to the landlord.

Energy Performance Certificate (EPCs) Landlords have a responsibility to purchase an EPC for their property before they rent it out to tenants. The certificate is valid for ten years and is used to establish an energy efficiency rating for the property which must be shown to tenants. The EPC results are displayed using a scale from A to G: A is most efficient, and G is least efficient. Should the landlord neglect to purchase an EPC or display this to tenants when marketing the property, they risk incurring a fine.

Smoke and Carbon Monoxide Alarms In the interest of tenant safety, landlords are legally required to have at least one smoke alarm on each storey of their property. According to Your Move, landlords are additionally required to ensure there is a carbon monoxide alarm in any room which contains a “solid fuel burning appliance”, i.e. a wood burning stove, a coal fire, or an open fire place.

Carbon monoxide is especially dangerous as it is odourless, meaning it would otherwise be practically impossible to detect. In the interests of health and safety, landlords must ensure that these standards are met for the safety of their tenants.

The landlords must check the alarms are in functioning order on the first day of tenancy, but throughout the tenancy it is the responsibility of the tenants to maintain regular checks on their alarms – the Department for Community and Local Government recommend these checks take place once a month, and should any issues be found they must be reported.

There are a wide variety of issues and steps that landlords must address to ensure a well-maintained property and tenancy. And, whilst the duties landlords face are substantial, if they are met to an adequate and lawful standard, they will go a long way in ensuring the safety, comfort and protection of both the property and tenants alike.

Prices start from £150

Emergency Assistance f

Residential Landlord Emergency Assistance is designed to provide emergency assistance to prevent damage to your property, make your property safe and secure.

To include, but not exclusive to: • Failure to function or breakdown of heating, domestic electric or gas in your property • Failure, blockage, leak or damage to your internal plumbing, drainage and sanitary ware • Failure to function or damage to the external doors, windows or locks cistern • Damage caused to the roof of your property due to adverse weather conditions or fallen trees

Call us for a quote on 0800 281 235 Deposit & Rent is a trading name of MYB Solutions Limited who are an Introducer Appointed Representative for Residentsline Limited who are Authorised and Regulated by the Financial Conduct Authority FRN 305998 Registered Office: 29 Waterloo Road, Wolverhampton WV1 4DJ Registered in England & Wales CRN 11784970

0800 281 235 www.depositandrent.co.uk info@depositandrent.co.uk

Homes Bill and Right to Rent Act

What is the Homes (Fitness for Human Habitation and Liability for Housing Standards) Bill?

Karen Buck's Homes (Fitness for Human Habitation) Bill was introduced in 2017 to address the issue of modernising the legal standard of tenant habitation in rented accommodation. The Bill received Royal Assent on 20th December 2018 and the Act came into force on 20th March this year.

The Bill ensures that landlords keep their properties up to a habitable living standard by maintaining or repairing the structure and exterior of their properties, and ensuring there is an adequate supply of water, heating and sanitation.

The purpose of the Bill, according to a government briefing, is to extend the obligations of the current Landlord and Tenant Act 1985 to “cover almost all landlords and to modernise the fitness for habitation test”. The Act has not actually created further duties for landlords, however, it does ensure that landlords are fulfilling responsibilities that are already in place – that is, to provide suitable living accommodation which is up to a modern living standard. So, whilst it has not created additional laws, the Bill has reinforced practices that were already there, as well as reinforcing “tenants' means of redress” against those landlords who do not comply with these legal standards.

These changes are much-needed when considering the current issues with living standards in the private rented property sector. Between 2016 to 2017, research

conducted by the parliamentary English Housing Survey (EHS) found that the private rented sector had “the highest proportion of homes [38%] with at least one indicator of poor housing”. Even at the beginning of this year there were reports across the West Midlands area of landlords not being penalised for allowing the standards of their properties to fall way below the legal standard. According to Birmingham Live, the Private Rented Sector Housing and Selective Licensing Working Group deduced that there simply aren't enough resources to penalise landlords for renting out properties that fall below habitation standards.

It is important to note that whilst the Bill extends to Wales and England, it currently only applies to tenancies within England as the Welsh government have already made the necessary improvements to the Renting Homes (Wales) Act 2016.

The Right to Rent Act – what is it?

Having first been introduced across the West Midlands in 2014, the Right to Rent Act was extended across the rest of England on 1st February 2016.

It requires all landlords to check that all their adult tenants are legally eligible to live in the UK by checking some form of identification prior to the commencement of their tenancy.

This also applied to those subletting or only renting temporarily. Additionally, the Act also requires landlords to re-check documentation if a tenant's eligibility to live in the UK is impermanent.

What is the correct procedure for a Right to Rent check?

According to the UK Home Office, there are four steps to completing a Right to Rent check, which all landlords must abide by.

1. Check the property will act as the tenant's main home.

2. Ask for documentation that demonstrates their eligibility to live in the UK, i.e. a passport or birth certificate. (A full list can be found at GOV.UK) 3. Check the documentation is valid whilst the tenant is present, i.e. name, photo and expiry date.

4. Make copies of the documentation and record the date you made these copies and checked the documentation.

It is important to note that landlords who fail to comply with undertaking Right to Rent checks risk paying a penalty of up to £3,000 per tenant.

Whilst this may seem like a large task for some, it is an important step towards immigration efforts which is exclusively relevant to the property industry and landlords operating within the private rented sector. As such, it is necessary for those who can to help the government in maintaining legal immigration procedures across the country.

For more information, please contact Residentsline on 0800 281 235.

For information about anything contained in this guide call 0800 281 235 or email info@depositandrent.co.uk Deposit & Rent is a trading name of Residentsline Limited who are authorised and regulated by the Financial Conduct Authority: FRN 305998 Registered Office: 29 Waterloo Road, Wolverhampton WV1 4DJ Registered in England & Wales CRN 3874789

0800 281 235

info@depositandrent.co.uk