Welcome to the first news post of February. What has been happening news wise?
Fergus WIlson Litigation
You may remember that Mr WIlson was suing vlogger Danny Hyde for £10,000 under the Malicious Communications Act as he objected to comments made by Hyde criticising his policy to ban non-white tenants “because of the curry smell they leave behind,”
Helped by Giles Peaker of Anthony Gold and counsel Gerard Clarke of Blackstone Chambers, acting on a pro bono basis, WIlsons case was thrown out and he was ordered to pay £3,000 costs.
“I’m delighted the claim was dismissed. It had no legal basis and was brought simply to threaten a young man who had said something that Fergus Wilson didn’t like.
“Danny Hyde was simply exercising his right to free expression. The award of pro-bono costs against Fergus Wilson will hopefully make clear that threatening people with baseless claims is no way to behave.”
According to Housing Minister Dominic Raab, in response to a question in Parliament:
“The Government proposes to extend the scope of mandatory houses in multiple occupation (HMO) licensing, so that a licence is required for HMOs with five or more occupiers.
“We published our response to our HMO reforms consultation in December 2017, and we plan to lay the necessary regulations before Parliament shortly with a view to bringing them into force (subject to approval) in October 2018.”
The new rules are expected to change the requirements for mandatory HMO licensing removing the ‘three storey’ rule meaning that it will apply to all HMOs with 5 or more tenants in two or more households bringing some further 160,000 more properties into scope.
As explained by Sarah Cummins of Anthony Gold here there will be a six months grace period for landlords to register after which they will be vulnerable to the various fierce penalties for non compliances which include fines and rent repayment orders.
There will also be new minimum room sizes. Rooms used for sleeping by one adult will have to be no smaller than 6.51 sqm and those slept in by two adults will have to be no smaller than 10.22 sqm. Rooms slept in by children of ten years and younger will have to be no smaller than 4.64 sqm.
This further increase in regulation is expected to drive further landlords into selling up. One problem is the huge variation in license fees, and the high cost of many:
NALS research, conducted by London Property Licensing, shows that in 2017, licensing fees for a three-storey HHMO with five unrelated occupants can range from £125 (City of London Corporation) to £2,500 (Lewisham Council).
It found that in 23 of London’s 33 boroughs licensing fees are over £1,000 for a similar sized property. Overall, average fees have climbed every year since 2014 and the average cost has risen by 12.9% in 2016/17 and a further 5% this year (standing at £1,119).
Still, even so I suspect that if managed carefully, a buy to let property will still be more remunerative than many other forms of investment.
Problem with foreign owners register
I mentioned in my last Newsround that government were considering setting up a reigster reveal foreign ownership of British land and assets.
It is now being claimed by tax expert Gary Heynes, of RSM that this could be a ‘criminals charter’.
“What is extremely concerning is the inference in the Government’s announcement that this register will be publicly available.
“The use of offshore companies to acquire property in the UK is not solely for tax, or even criminal, reasons.
“Celebrities not wanting a stream of paparazzi camped outside their house, those with wealth, who perhaps live in politically unstable countries under fear of kidnapping and attack, vulnerable persons and a wide range of politically exposed individuals would all prefer not to have the precise location of their home in the UK revealed.”
“The UK already suffers from title theft where fraudsters assume false identities to pass off as property owners, enabling them to offer security for a loan or sell the property to third parties.
“While the Government is right to seek to clamp down on tax evasion and criminal activity, a public register which reveals highly confidential information is not the way the way to go about it.
He has a point.
Committee stage on tenant fee ban bill
Some telling points are being made by people giving evidence to the Communities and Local Government Committee.
David Cox, CEO of ARLA is worried that lack of clarity in the bill could result inn courts potentially holding that default fees were unlawful at some point in the future, possibly resulting in what he called a “PPI moment” for letting agents.
He later told Property Industry Eye:
“We are worried that as the tenant default fees clause in the Bill is so widely drafted that there is the possibility that if agents do charge such fees, a court could find in a few years time that such fees are unlawful which would require all such fees to be repaid across the industry (hence the PPI analogy).
“We are asking for absolute clarity on the face of the Bill as to whether such fees will be lawful.”
He has also called for clarity on deposit replacement schemes and suggested that the new rules should not come into force until client money protection has been made mandatory.
Isobel Thomson, chief executive of NALS has also warned that it is likely that rents will go up, plus disallowing the cost of referencing tenants would mean that certain types of tenants, in particular tenants on benefit or Universal Credit will find it still harder to find accommodation.
Challenges to Right to Rent
Two challenges are being brought against the Home Office to the controversial right to rent scheme introduced in February 2016.
- The Camden Community Law Centre (CCLC) is representing a woman who claims she failed a Right to Rent check as her passport was lost by the Home Office
- the Joint Council for the Welfare of Immigrants (JCWI) is bringing a judicial review of the rules themselves.
There are many problems with these rules, not least that they prejudice the aprox 17% British people who do not have (and may not be able to afford) a passport. The JCWI research has found that landlords are 48% less likely to rent to someone without a British passport – particularly since criminal sanctions were introduced.
The challenge is being supported by the Residential Landlords Association. RLA Policy Director, David Smith, said:
“When this policy was first discussed we warned the Government of the unintended consequences of the Right to Rent scheme. How can a landlord be expected to know what every passport in every country is supposed to look like?
“For the overwhelming majority of landlords it makes no commercial sense to limit their access to a large proportion of the prospective tenant market. It is the fear of criminal sanctions for getting it wrong which is causing many simply to want to play it safe.
“Landlords should not be used as scapegoats for the failures of the border agencies. It is time to suspend this controversial and unwelcome policy.”
Here are a few more news items for you:
- The Guardian is reporting on new Labour plans to force landlowners to sell land to the state for a fraction of its value
- Property Industry Eye report on a landmark case where a Council has suceeded in getting a ruling that the Proceeds of Crime Act (POCA) can be used against landlords for breaches of licensing conditions
- The government is being urged to introduce new rules for short stay wbsites such as Airbnb
Newsround will be back next week.