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Newham could be first borough in the country to license all private landlords

July 9, 2012 | Landlord News  

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Newham councillors have approved what they have described as a pioneering scheme, in which they would become the first borough in the country to license all private landlords. It is estimated to affect 35,000 private tenancies when it is due to be enforced on 1 January, 2013.

The National Landlords Association (NLA), however, is not best pleased. David Salusbury, Chairman of the NLA, said, “It is deeply disappointing that the London Borough of Newham has taken the decision to license all landlords in its area.

“The NLA realises that there are significant issues present in Newham, which the council is right to want to address. But, Selective Licensing of landlords is designed to address distinct problems relating to housing management by targeting specific areas.

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“Newham’s blanket approach goes beyond the intention of the legislation and has not gained the support of local landlords.

“Newham Council has provided no solid evidence to support their argument that such drastic proposals will have the impact it expects. Indeed, they will only increase the burdens on those who already comply with the law, without having any bearing on those who blatantly ignore it.

“The NLA offered an alternative strategy which would have enabled the council to focus their resources squarely on the rogue operators.

“This decision has wider implications for the supply side of the private-rented-sector. The NLA will be consulting with other stakeholders to assess the potential impact and how best to respond as an industry.”

Residents and private tenants, however, do not agree with this assessment, with 74% and 76%, respectively, supporting the borough-wide licensing scheme.

Private landlords who register before 1 January, 2013 will pay £150 for a five year license. The full fee after that date is £500. Those who fail to license face fines of up to £20,000.

Sir Robin Wales, Mayor of Newham, said, “It is clear from our consultation that our residents, including tenants in private sector homes, back our plans.

“This scheme shows that Newham is leading the country when it comes to tackling bad landlords who flout the law.

Although the NLA has reservations about the scheme, it has been welcomed by national housing charity Shelter, which is urging other councils to follow Newham’s lead.”

Only time will tell on whether this scheme has any real positive impact on the most vulnerable tenants, until which, judgement should be reserved by both private landlords and councillors.

Something else that has landlords scratching their heads, but for very different reasons, is the problem of dealing with their growing number of properties. As previously reported, mortgage lender Paragon found that the average landlords buy-to-let property portfolio grew in the second quarter of 2012. Now Rushbrook & Rathbone, a company which provides property management services to both private landlords and letting agents, has seen a 20% rise in interest, attributable to the fact that landlords have been taking on more properties and now need support in order to maintain a proper service for their tenants.

Sarah Rushbrook, MD of Rushbrook & Rathbone, said, “With so much economic unrest, landlords are taking the opportunity to capitalise on the one growing market, buy-to-let, where demand for rental properties from those who cannot afford to enter into home ownership has increased tenfold.”

Many landlords, some of whom initially entered into the buy-to-let market as accidental landlords, have been very successful and are now reaching a level where they require additional resources and manpower to help manage their portfolio.

“Many still work full time jobs and simply don’t have the time to deal with tenant or agent issues. These can include anything from rent collection and arrears, to maintenance issues and inventories.”

But it is not just experienced landlords with too much to handle by themselves that are seeking support. As the buy-to-let market continues to become an ever more enticing business prospect to people, new landlords are beginning in to take the plunge, but need help.

Rushbrook continued, “Inexperienced landlords run the risk of becoming too emotionally attached to the properties and over friendly with their tenants, making delicate negotiations much trickier. Landlords must recognise letting a property is a highly regulated business venture with great potential rewards but also many possible pitfalls.

This is where a managed service can ensure landlords remain compliant and do not have problems at the end of the tenancy getting their properties back.”

“We decided to offer landlords and agents the option of a fixed price service which covers all the legal and financial aspects of setting up and running a tenancy ensuring that they comply with all current legislation.”

But the really big news this week is the BBC investigation that has uncovered landlords in London and Birmingham posting advertisements that target tenants of a specific race, religion, and/or sexual orientation.

According to the Equality Act 2010, this is illegal. The act covers England, Wales and Scotland. It aims to protect people from discrimination, harassment or victimisation on the basis of age, disability, race, sex and other “protected grounds”.

Dr Nuno Ferreira, an expert in discrimination law at the University of Manchester, says, “It doesn’t make any difference if the landlord lives in the premises or not. This distinction will have a bearing on discrimination on other grounds, but not in relation to race or ethnicity.” He also believes that the same applies to tenants looking for housemates.

But Chris Norris, head of policy at the NLA, is less certain, “It is not clear whether tenants who do the same are breaking the law or not, although such behaviour is discriminatory against other potential housemates.

“Tenants looking for new housemates should focus on describing the house’s current occupants so that potential applicants can judge for themselves whether they would be a suitable fit or not.”

The finding are not at all surprising, given the tribal nature of human beings, but will force society to take a good long look at itself and ask some very difficult questions about diversity and community cohesion.

 

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