It doesn’t take long to find news articles, videos or blog posts from the media or tenant charities engaged in a furious campaign of bashing landlords and letting agents, from Shelter complaining about discrimination aimed at housing benefit tenants to Generation Rent demanding Section 21 eviction notices are scrapped.
What is shocking is the deliberate lack of cooperation between tenant charities and letting agents and landlords, instead, they’re fighting the good fight for the tenant whilst agents are sat fighting the good fight for landlords. One local agent, Harry Albert Lettings & Estates is furious with Shelter and Generation Rent and other tenant charities for they blunt refusal to engage in discussions with them or even respond to any of their comments and messages on social media or their emails, so much so that he blasted them on Facebook but as yet, there has been no response.
The agent also took to Generation Rent’s Facebook page to explain clearly to their supporters the reasons why Section 21 is a much-needed tool and actually benefits the tenants it is used against in most cases, though they agreed there was a need for reform due to the blatant abuse of the system by some landlords/agents.
The 8’000+ character response detailed the ins and outs of the impacts the Private Rented Sector faces in light of recent changes, something we feel landlords in Leicester will be exceptionally surprised by, this comment, which had to be split into two individual comments due to limitations on Facebook is detailed below:
Harry Albert Lettings & Estates say; “I agree that letting agents should not work toward increased tenant turnover because of the added profit that brings to them at the expense of the tenant and landlords (in the way of void periods as the property is empty). As a result, we don’t charge ridiculous tenant find fees; we charge our landlord clients £99 to find a tenant when the previous tenant moves out and this covers the costs associated with actually finding a tenant and our 7% management fee (which is really low compared to our franchise competitors like Belvoir, Haart, WH Brown, etc) means we are better off keeping our tenants in the property paying rent. If more agents operated like this, there would be no need for needless Section 21 evictions.
Section 21 is an important tool for landlords but I believe the rules around using them could be tightened up. An outright ban on Section 21 eviction notices would mean tenants have to go to court to be evicted and, as rents soar and housing benefit is frozen, benefit tenants will find their rent arrears increasing dramatically whilst the landlord saves up to evict the tenant under Section 8, in doing so, they will claim for the rent arrears which will give the tenant a CCJ or force them into bankruptcy meaning private renting will be off the table for 6 years due to the credit check carried out by the majority of agents. Section 21 allows a tenant to be evicted without having to suffer the consequences of their actions, they’re called no-fault evictions because the landlord is not holding the tenant at fault. There is no denying, however, that sometimes it can mean the tenant has done nothing to deserve it. For a landlord to evict a tenant using Section 21, there’s a strict process they must follow from the beginning of the tenancy, they have to make it clear they are able to use Section 21 and, if there’s a risk of the landlord using Section 21, it must be contained in the tenancy agreement otherwise, the tenant can dispute it. Section 21 is also the tool used by rogue landlords who are one legislative change away from unlawfully evicting tenants because they don’t want to pay the several hundreds of £££ to evict the tenant lawfully without the Section 21 accelerated possession order route. Then, because of the extortionate outstanding balance owed to the landlord due to the tenant being on benefits and simply unable to make up the shortfall of increasing rents, etc, they’ll struggle to even get social housing (due to the rent arrears rules with regards to tenants being given social housing).
I also agree we need to strive toward tenant retention however, it is becoming increasingly difficult for landlords to keep hold of what can be considered as higher risk tenants, of whom the risk of higher risk tenants (this includes tenants with poor credit, on a very low income/benefits, etc) is increasing due to legislative changes pushing the cost of compliance for landlords and agents higher.
The problem with housing benefit is that it is always paid one month in arrears and in the private rented sector, the landlord can only request payment be made to them if the tenant meets certain criteria, this criterion is mostly around vulnerability and the tenant being in arrears by two months (at this point, they only pay because landlords can only evict under Section 8 when the tenant is 2 months or 8 weeks in arrears – it’s to prevent the landlord from being able to evict if they pay the rent directly to the landlord bringing the rent account into balance). Would you rather have cash up front now or the same amount (or less) next month? The private rented sector is in demand at the moment and tenants aren’t difficult to find, we can’t blame landlords for being human and wanting payment now rather than later – this is something local authorities and the DWP need to address, unfortunately, if housing benefit was paid in advance like rent is usually paid in the private rented sector, landlords will be more open to accepting it.
However, though they might be more open to accepting it, the fact still remains that housing benefit has been frozen until the year 2020 meaning rents are soaring and housing benefit (and other benefits) are staying the same making the private rented sector even more unaffordable for tenants on low incomes or on benefits. Job seekers can get jobs, is one way to look at it but the disabled and unable to work, they’re the ones who are going to be worse of as a result of the benefits freeze.
There is also an increased risk in some areas of benefit tenants being drug addicts, criminals and simply not looking after the property and this stigma spreads across the whole of the UK however, the notion that housing benefit tenants are discriminated against is an unfortunate necessity due to the measures in place by the government and the stigma it carries. The public image can change but the cap can only be lifted by government intervention with regards to the austerity measures put in place in response to the last recession.
Whilst most benefit claimants are also in paid employment, this actually makes it more complicated for landlords in the sense that it takes just one legislative change or one hour of overtime or a small change in circumstances that could make the tenant lose their benefits – claimants who work are more at risk of losing their benefits than those who don’t work whatsoever because of the strict rules around the amount you can earn, the number of hours you can work, etc, is the cause for this – universal credit is supposed to simplify this but from what we’ve seen, that’s a massive shambles too! A £1 wage increase per month could be enough to push you over the earnings threshold making you ineligible for housing benefit, that’s no good if your housing benefit is £100 – where will the tenant find the extra £99?
We disagree with rent controls. The government cannot possibly understand what landlords are spending their money on. One of our landlords was ready to throw in the towel, he owns a property in a rough area of the city and the tenant was being bullied by some kids on the estate – his windows were put through 8 times in one month, each time costing the landlord nearly £1000 – the rent for the whole year was £7200. The landlord was able to claim all the damage back from his insurance but his premiums went up by £400 (surprisingly low considering the number of claims) and as a result, he raised the rent by £20 to cover this cost – yes it’s not the tenants fault but landlords need to be able to control their losses. Rent controls will eliminate this and every landlord in the land will demand the absolute most if rent controls were in place because let’s face it, landlords are struggling to make a profit as it is, especially with the repeal of mortgage interest rate tax relief. The tenant fee ban, deposit cap and 3-year minimum tenancies are also going to cause rents to increase at a faster rate than they are now (as it stands, in several parts of the UK, it’s now cheaper to own and pay a mortgage than it is to rent). Landlords will increase rents to make up for the increased risk they’re forced to shoulder by taking a lower deposit. The tenant fee ban will see tenants paying 4x the amount in extra rent as agents recover their fees over a three-year tenancy
Landlords will certainly struggle to make a profit when all the legislative changes are fully in effect if landlords (and agents) do not increase rents. This is why we need proactive, collaborative action between agents, even (and especially) those who charge ridiculous fees,
landlords, most importantly tenants and tenant charities if they can get their priorities in order, to come up with a plan that actually works. We need tenant fees to be capped, financial incentives for landlords in exchange for 3-year tenancies to avoid exorbitant increases in rent and changes to the housing benefit system, and that’s just a start. We need to find a middle ground without attacking the opposite sides of the same coin (landlords need tenants and tenants need landlords, agents enable the process to go smoothly and remain on the right side of the law – excluding rogue agents, of course).
We don’t pretend to hold the holy grail of answers to fix the private rented sector but there’s certainly a better way to fix it than what we’re all currently doing.
I hope this in-depth response helps to understand our position but again, we really do encourage discussion from all sides with regards to this matter.”
At this point, Hannah Slater of Generation Rent hit back at the agent with:
It appears Generation Rent are entirely reluctant to discuss the issue openly with all those concerned making the general public wonder whether Generation Rent are just merely seeking attention, after all, Hannah Slater, an authoritative figure within Generation Rent point blank refused to address a single one of Harry Albert Lettings & Estates’ points, intead she was quick to defend themselves and inform us most of her colleagues are away on holiday instead of dealing with this important matter at hand.
Harry Albert Lettings & Estates explains in a comment left on Generation Rent’s homepage;
“Section 21 is a much-needed tool for landlords and agents to be able to use to prevent tenants from being evicted from properties with unmanageable rent arrears preventing them from being able to secure rented accommodation in future, even local authorities will not rent to you if you have rent arrears under the social housing act. Without Section 21, benefit claimants will be forced to fall into arrears without being able to be legally evicted unless the landlord uses Section 8 which will leave the tenant further in debt as a result of court costs and it will damage their credit file due to the CCJ they will receive, this will make it impossible in many cases to secure private rented housing, a mortgage or any other form of credit.
Section 21 needs reform but to ban Section 21 would be a massive, cataclysmic mistake that will impact low-income tenants who it is used against properly far more negatively than it does now.
Nobody wants to be evicted and nobody wants to evict a good tenant. When a good tenant is evicted using Section 21, it’s hardly ever for “no reason”, there’s always a reason whilst the tenant may not always be to blame.”
Whilst this argument over scrapping Section 21 continues, though it’s important to note, Generation Rent have failed to respond since the last comment left by Harry Albert Lettings & Estates, Shelter is on the offensive against landlords who “discriminate against DSS tenants” because they’re on benefits whilst failing to realise the downsides of accepting rent paid via benefits. The primary reason why landlords and agents do not accept benefits is that the DWP or local authority can claw back overpayments from the person the payment was paid to, in many cases of vulnerable tenants who are otherwise unable to adequately budget to pay their rent where the rent is paid directly to the landlord or agent, it can be clawed back from them with the advice that they should seek to recover the rent from the tenant who could have moved out years prior to the local authority clawing back the payments made.
The other reasons agents and landlords often don’t accept housing benefit tenants is because it is always paid in arrears. Would you rather have your rent now or your rent for this month at the end of next month? You’d take the rent now because there’s no further reward for waiting until the end of the second month when the payment is released to you. Alongside this, landlords who let their property to tenants on benefits may see their insurance premiums rise and mortgage lenders often include a term in their consent to let that the landlord must not let to tenants on benefits. Shelter’s argument was posted on Twitter about how it is unlawful to outright refuse tenants on benefits due to indirect discrimination of women and disabled people, the landlord and letting agent community had this to say;
There is clear sentiment across social media from landlords and agents alike expressing exasperation at the fact they’re not being considered with regards to these tenant charity campaigns, government legislative changes, etc.
Shelter, whilst writing this article, have since replied to Harry Albert Lettings & Estates and discussions have begun to open up. You can follow the conversation below.