UNIVERSAL CREDIT, CHALLENGING TIMES FOR LANDLORDS – I’m not sure if people are aware but one of the largest changes to the welfare state is occurring next year, a whole host of different benefits are being merged into one single payment called the universal credit. This will mean Housing Benefit / Local Housing Allowance will be rolled into this credit which will have a massive affect on landlords, due to the limited provision of direct payment.
The Government have announced new procedures as to how payment will be made under the Universal Credit system when it is rolled out from 2013 onwards. It means the end of direct payment to landlords for rent as we have known it. The intention for the new procedures will apply across the board including the private rented sector. To some extent it is “work in progress” because the Government are conducting pilot schemes in the social sector between now and June 2013. At the heart of the new procedures is the idea of promoting tenant’s abilities to manage their own finances and to bring the benefit system in line with conditions that affect working people.
UNIVERSAL CREDIT, CHALLENGING TIMES FOR LANDLORDS (Part 2) –
Last week we discussed the changes to Housing Benefit / LHA and the new payment of Universal Credit. We explained in detail the new criteria for direct payment and how landlords may struggle to obtain it. In this second article we are going to discuss the problems landlords may face, such as increased arrears, what they can do and our key concerns.
Universal Credit what does this all mean for private rented sector landlords?
The Green Deal is a brand new initiative implemented by the Government to facilitate the fitting of energy saving measures to millions of homes across the UK. It has been designed to revolutionise the energy efficiency of properties throughout the UK.
Under the scheme, households will be able to improve the energy efficiency of their properties by taking out loans to have their properties made more energy efficient. Householders would pay back the loan over the course of 25 years through additional charges to their energy bills. The savings on bills would be more than the additional cost. So for example if you were a landlord renting your property to tenants, any improvements would be paid by the tenant through their heating bills and the tenant would save money since the improvement should reduce their bills beyond the actual cost.
Squatting in a residential property becomes a criminal offence from tomorrow in England and Wales.
The maximum penalty will be six months’ prison and/or a £5,000 fine.
Trespassing will be where someone knowingly enters a residential building as a trespasser, and is either living there or planning to live there without the owner’s consent.
There will no longer be a requirement for the property owner to ask the trespassers to leave before being able to involve the police.
UNIVERSAL CREDIT: A CLOUD OF UNCERTAINTY? WHAT WE KNOW SO FAR:
Over the last couple of years we have tried to keep our landlords upto date with the on-going changes to housing benefits.
In late 2010 we started to publish articles about the pending reductions in LHA that were to take effect from April 2011 and in late 2011 we published further articles about additional changes that affected under 35’s from January 2012 onwards. As a company we try to attend as many local council/private landlord association meetings as possible in order to stay ahead of pending changes and pass our knowledge onto our clients.
The vast majority of tenancies end with the landlord and tenant agreeing over the return of the deposit. Deposit disputes are rare but it makes sense to be prepared, so here are some tips to help you get started:
- Prepare from the start of the tenancy
Ensure you have a clear and concise AST agreement. Conduct thorough, check-in and check-out reports, take photographs and keep invoices and receipts. Remember it is the responsibility of the landlord to prove a deposit should be returned to them, legally the deposit belongs to the tenant until the landlord can prove otherwise. This requires the landlord to prove the starting and finishing condition of a property through a thorough inventory, as part of our tenant find and management service we provide a 366 point inventory.
As all Landlords should be aware, in April 2007 it became Law that all Assured Shorthold Tenancy deposits must be protected in a Government authorised tenancy deposit scheme.
There are three schemes to choose from; the most used probably being the free custodial scheme; the DPS (Deposit Protection Scheme). Whilst it is important to remember the key elements when protecting the deposit, such as making sure it is protected within the set time frames and ensuring tenants are given copies of the Prescribed Information, what is more important is ensuring that you have put the processes in place to ensure that if there is a reason to utilise the deposit at the end of the Tenancy you are able to.
Basic tenant referencing checks are not sufficient to protect a landlord against the possibility of future arrears, research from NGU can confirm, we found 5% of tenants we’ve vetted have one or more CCJ recorded at an undisclosed address.
While this information shows up in basic references – which verifies that the tenant is who they say they are and highlights any background information about the tenant’s history – there is a far more alarming picture which emerges from full referencing checks.
A majority of private landlords have rejected the Government’s welfare reform plans for housing benefit, saying there will not be enough accommodation available.
Releasing details of a survey of over 1,000 landlords across the UK, the Residential Landlords Association and the Scottish Association of Landlords found that 65.2% of respondents do not support the Government’s plans for Universal Credit.
Asked whether there are sufficient numbers of shared properties in their areas to cope with the extra demand as a result of a decision earlier this year to increase from 25 to 35 the age at which housing benefit claimants can claim only for a room in a shared property, 54.6% said there was not.
Avoid burst pipes in a cold freeze-make sure you give this information to your tenants!
How to avoid burst pipes in a cold freeze
1. Know where your stopcock is and how to turn it off
2. Check existing insulation and replace areas showing wear and tear
3. Fully lag all pipes if possible but especially those in unheated areas such as lofts, garages or gardens
4. Get advice about insulation thickness from the experts at a DIY store
5. Isolate and drain outside taps
6. On very cold days, leave the loft hatch open to allow warm air to circulate and prevent pipes from freezing