No visa, no tenancy?

As widely publicised, the government is proposing to force private landlords to check the immigration status of prospective tenants before agreeing to let to them.  

The new measures were announced in the Queen’s Speech last week as part of a package of legislation aimed at making Britain a less attractive destination for illegal immigrants.

It is not clear how the checks are intended to work, or indeed how they will be enforced.  In a debate on the Queen’s Speech, Labour branded the measures “unworkable”. The Labour party is pressing for a compulsory register of private landlords (as is the case in Scotland) and argues that, without such a register, it will be impossible to know whether landlords are complying with the new immigration requirements (RentFair have argued that a landlord register would itself be unenforceable as appears to be borne out in Scotland).

The truth is that enforcement is not much of an issue. There are already plenty of regulations that landlords have to comply with with regard to health and safety, gas checks, HMO’s and the like, and for the most part these rules are adhered to. Adding yet another regulation does not make enforcement any more or less of an issue than it is now.

But getting back to the proposed immigration checks, and leaving aside the problem of enforcement, an obvious question immediately springs to mind.  How would a landlord know whether a prospective tenant was here illegally?   

RentFair’s Christian Duggan considers this question from a landlord’s point of view.

“As a landlord myself, my thinking goes something like this. It is possible to envisage a situation where landlords would be required to check an applicant’s passport and perhaps be required to make a copy of the passport for their records. That would not be too onerous and would be easy enough to do as part of the normal reference checks. Within the European Union I know there is freedom of migration so if the applicant was a citizen of an EU country it would be safe to assume that they were here legally. It is fair to say that most people could probably not name all 27 EU member countries but it would be easy enough to look this up. So far so good.

But, hold on, isn’t there some issue with Romanian and Bulgarians until January next year? Does that mean I can rent to them? Or is it just that they can’t work here until 2014?  And then there are countries like Switzerland and Norway. They are not part of the EU but I think I am right in saying they don’t require visas. Does that mean I can let my property to a Norwegian without any further checks? Such a beautiful country. Not sure though.

And what about people from outside the EU.  What if the nice young couple wanting to rent my flat were, say, from Japan? Personally, I would have no idea what the visa requirements are for Japanese citizens, whether they even require a visa, or how to check whether those requirements had been met. Isn’t there some rule for certain countries that they can stay here for up to 3 months without a visa? If so, how would I know whether they had exceeded that period. Or maybe there isn’t such a rule at all.

I have let to Australians before. Very good tenants they were too, even sticking back some of the loose tiles in the bathroom themselves to save me calling out a tiler.  I am vaguely aware (I think) that citizens of Australia can come here for a year or so on a work permit. Or am I getting muddled up with UK citizens travelling to Australia on a work permit. Perhaps it’s not reciprocal. On second thoughts, aren’t Australians and Kiwis allowed to come here indefinitely? And what about the US? Can I let my flat to an American without being fined?

Then there is the whole issue with student visas. If someone proves to me that they have a student visa to study on a course, which ends in 5 months’ time, am I allowed to rent them a property for a year? If they show me their passport and a letter from the University of Bristol to say that they are on a degree course is that sufficient? Do I have to find out when the degree ends and make sure that they are safely evicted by that date, or will my obligations not extend to that? Do I have to call the University to confirm the letter is genuine? My flat is in London, so isn’t there something suspicious about them studying in Bristol? Am I legally obliged to follow that up?

At the moment, I am inclined to agree with the Labour party’s view that the proposals are unworkable. Without taking a lengthy course in immigration law, it would be almost impossible for the average landlord to know whether prospective tenants are entitled to stay in this country or not.

What is required perhaps is a simple way of checking someone’s immigration status:  a clear stamp in the passport of all non-EU citizens, stating clearly when they are expected to leave our shores. No stamp, no tenancy. Seems a bit harsh, but that might work. But even then I can see some of those stamps becoming smudged and illegible. Hmm. Further thought required, Mrs May.”

Dozens of angry demonstrators gathered outside the Foxtons office, claiming that they were being priced out of the area by gentrification, encouraged by letting agents charging “extortionate” fees. It is not the first time that the branch, which only opened in March, has been the subject of protests. The office was given a “worst letting agent” award by the protesters.

The activists now appear to be getting more organised. The scenes on Saturday were part of a day of co-ordinated action across London.

In Upper Street, Islington, members of a coalition calling themselves London Renters – dressed up as Monopoly characters and invited members of the public to play “Housing Crisis Chance” and compete for a flat in East London.

In Haringey, protesters dressed-up as “Community Housing Inspectors”, wearing high visibility jackets. They had previously “inspected” local letting agents in October 2012, claiming to have uncovered high rents, high fees and lack of secure tenancies.  The “inspectors” carried out a “re-inspection” on Saturday to find out if their demands for change had been met.  They served “Cease and Desist” notices on 8 letting agents which they claimed were engaging in greedy and anti-social practices:  Wilkinson Byrne, Easy Properties Ltd, A1 Estates, Hane Estates, Kings Lettings, Winkworth, Bairstow Eve and Brian Thomas.  The self-styled inspectors then cordoned off the offices with tape, declaring them to be crime scenes and handed out leaflets to passers-by.

Protests against letting agents have been gathering momentum in recent months.  The key demands include an outlawing of agent fees charged to tenants (following the example of Scotland), an end to discrimination against people on housing benefit and for letting agents to stop encouraging landlords to drive up rents to unaffordable levels.

Heather Kennedy, of campaign group Digs, part of London Renters, said “Our message to letting agents is that private tenants have had enough.  Right across the country private tenants groups are springing up, demanding an end to the destructive impact of letting agents on the housing market.”

“We call on letting agents and MPs to follow the example of Scotland by scrapping rip-off fees. And we must remove the totally unacceptable discrimination which bars housing benefit tenants from accessing a home in the private rented sector. This has a devastating human cost, particularly because social housing and home ownership are simply not an option for many Londoners”

The protesters have vowed to continue to inspect and monitor letting agents and have said that Saturday’s action was just the start of a series of planned demonstrations and events across the capital.

The peak was reached in 2001, when 69% of homes were owner-occupied. That figure has now dropped to 64%.

The Census reveals that the number of owner-occupied homes remained steady over the decade at about 15 million, while the total number of households increased, leading to a fall in the proportion of owner-occupied homes.

Historically, the trend has been for more people to buy their own homes, with ownership increasing for over 100 years.  In 1918, the majority (77%) of households in England and Wales rented, with the remaining in ownership. Ownership has increased since then, reaching half of all households by 1971. The Thatcher years saw a continued rise as council house sales and subsidies on mortgages encouraged more people to buy their own homes, reaching an all-time high of 69% in 2001.

More people rent in London

In London, almost half of all homes are rented.  The Office for National Statistics put this down to four factors:

- high house prices in the London area making ownership a distant dream for many

- a younger population, less likely to be able to afford their own home

- labour mobility

- high migrant population

The picture also varies significantly within London, with Hackney, Tower Hamlets and Islington having more than 70% of their households in rented housing.

In England and Wales as a whole, renting from private landlords almost doubled over the decade, up 1.7 million to 3.6 million in 2011, driven largely by the buy to let boom.  In contrast, the number of households socially renting decreased by 100,000 to 4.1 million in 2011.

Expect more Security for Tenants

The huge increase in the number of people renting long-term has led to much talk from politicians on ways to reform the sector to give tenants more security and make landlords more “professional”.   See our article on Ed Milliband’s recent speech and the approach being taken by Boris Johnson in London.  Expect manifesto commitments from both parties on this topic leading up to the next election.

You can read the full ONS report on Home Ownership and Renting here.

Your Move: in breach

Letting agents have been ordered to disclose their fees upfront when they market rental properties.

In a landmark ruling earlier this month, the Advertising Standards Authority ruled that agents would be in breach of advertising rules if they did not clearly display on any property advert what compulsory fees they charge in letting a property. Guy Parker, chief executive of the ASA, said: “Hidden fees are not only unfair, they hit those who are struggling hardest. Our ruling today makes it clear that letting agents need to get their houses in order and treat potential tenants fairly.  Renting a property is a significant commitment.  And for those who are new to the rental market, like students, navigating it can be particularly difficult.  That’s why the ASA is clamping down on letting agents who hide fees.”

The ruling was against Your Move, but applies by implication to all letting agents. The complaint related to the agent’s ads for rental properties on RightMove. The ASA told Your Move to ensure that their ads made clear when non-optional fees and charges, that could not be calculated in advance, were excluded from quoted prices, and to provide enough information to allow the consumer to establish easily how further charges would be calculated.

Most agents are still ignoring the ruling

A quick check on Rightmove and Zoopla today suggests that most agents are still not complying with the ruling. Rightmove has added a disclaimer stating “Administration fees may apply when renting a property in England, Wales or Northern Ireland.  For more details, please contact the agent”  and Zoopla has added a note “Tenant fees may apply. Details available on request from agent”.  In our small (unscientific) sample, however, we did not find any agent ads making reference to fees with the exception, unsurprisingly, of Your Move.

Blowing our own Trumpet.

RentFair has always insisted that letting agents advertising with us clearly display any fees charged to tenants and we welcome the ASA ruling.  You will find fee information in the box at the bottom of every RentFair ad where the advertising is a letting agent.  For example, The Property Tree, an agent based in North London, states “£35 admin fee per applicant”.  You can’t get clearer than that.

Knowsley Housing Trust is to re-classify nearly 600 family homes as smaller properties from 1 April. Knowsley says that demand for the 2 and 3 bedroom flats and maisonettes had dwindled and that they no longer provided suitable modern accommodation for families with young children. Rather than leaving them empty, the housing association had offered them to single people and couples without children.

However, many of these tenants had been faced with the prospect of paying extra rent from April 2013 when the government’s under-occupancy rules take effect (the so-called “bedroom tax“).  Having taken legal advice, Knowsley is to re-classify these homes as smaller properties, reducing the rent accordingly and exempting the properties from the effects of the welfare change.  The re-classification will cost the housing association £250,000 a year in rental income.

Under the new welfare rules, anyone living in social housing with one or more spare bedrooms would have a suffered a reduction in their housing benefit payments. They would either have to downsize or pay the shortfall themselves. The government reforms are designed to (a) save money and (b) free up larger homes for families on the housing waiting list.

The bold action by Knowsley means that where there is little demand for larger homes from families on the waiting list, existing tenants can stay put without having a reduction in their benefit. The government saves money through the decrease in rent, the housing association does not have to re-house tenants and those living in the re-classified properties can sleep at night without worrying about how to pay the rent come April.

Knowsley Housing Trust is a not-for-profit organisation which owns and manages around 14,000 homes in Knowsley, Merseyside.