[Ben Reeve Lewis is in Cassandra mode this week…]
So a man is on his hands and knees under a street light looking carefully at the ground.
A copper comes along and asks him what he is doing. “Looking for my car keys” he replies. “Oh I’ll give you a hand, where did you drop them?” and the man points 100 yards away to where his car is parked. The cop says “If you dropped them over there, why are you looking under this street light?” and the man replies “Because the light is better here”.
Life’s a joke …
I met a real life version of that yesterday. A man came into our reception and told me that he had paid £2,500 to a letting agent to move into a property but when he turned up it was already occupied. When he went to the agent they wouldn’t give him his money back.
I said I didn’t recognise the street name and asked him where it was, “Barnet” he replied cheerily, which is about 25 miles north of Catford. I asked him why he had come to South London for help with a problem on the edge of North London and he replied “Well, I was in the area, so I thought…….”.
How dodgy agents do it
I mention this because we have agents in our area who do the same thing as his letting agent. How? You may well ask, when they have a walk-in shop front?
Well they employ 2 way mirrors and CCTV to spot disgruntled customers coming through the door and nip out the back when they come in.
They stay in business for a few weeks, dodging irate tenants whilst raking in huge amounts of cash and then disappear before the council can get their arse in gear.
Looking into subletting
Which is why I was surprised to read in the Telegraph this week of a massive and proactive project looking into just how many homes may be being sub-let. I stopped being surprised when I read the project was in fact run by a private company, HJK Investigations not a council. That explains it.
For once even I was shocked. I wrote last week somewhere that I thought the government’s estimate of 160,000 unlawful sub-lets was probably on the conservative side but this report suggests the problem could be even bigger than I thought.
HJK ran the details of a mere 27,000 London social tenants in 2 out of the 33 boroughs and 4 housing associations and compared them against things like mortgage accounts, utility bills and active credit accounts and found in 5,300 cases they didn’t match up. What HJK call “Fraud indicators”
Are one fifth of social tenants fraudsters then??
That’s a fifth of the group surveyed, and there are 8 million social tenancies in the UK. Quite sobering huh? [Course it depends on which 27K they checked – was it random? Ed]
One of the useful things of being a front line housing worker, especially when like me you also write about housing, is you become a very effective thermometer of subtle changes in housing world and pick up trends long before many others do.
Writing this column I regularly read shock-horror news stories about something that we have been seeing for the past year. Letting agents and landlords will be able to see the same things, most journalists are latecomers in many respects.
High rents = high risk of default
I have been writing for a long time now about the effects of high rents on tenants and the way that this is setting up problems for landlords in future.
I have been rubbished, ridiculed and attacked on many occasions for either being a party pooper, ignorant of landlord’s true costs or a good old fashioned tenant whinger [we don’t do that here though Ben – Ed]. But I interview people everyday, tenants mainly, and I get to examine their finances closely.
Last week I mentioned the Shelter report that showed a third of tenants are cutting back on food and fuel to pay rent and this week I noticed a marked increase in concerns being expressed about rent levels from the landlord press.
Landlord support service website Property 118, who Tessa and I also write for, ran a story “Landlords ready for massive rise in rent arrears” The article took on board Shelter’s figures as a warning to landlords. I predicted before Xmas that many tenants, sick of living so austerely for so long may well splash out and not worry about the rent. The article says:-
“Landlords are bracing for a flood of rent arrears cases as renters struggle with their bills over the festive period”.
Landlords, not being every tenant’s favourite people, come low down on the list of priority debts for many at Xmas time. The Property 118 article reported figures from Britain’s largest landlord LSL Property Services that rent arrears jumped by 10% from November to December and shows rent arrears are at highest level since 2009.
Landlords mortgage default
This report on “Letting a Property” website quotes Paul Jardine of LPA Receivers Templeman, who would normally take back properties from buy to let landlords, talking about problems with rent arrears and their knock on effect to the mortgage market. Mr Jardine said:-
“The growing level of severe tenant arrears has yet to filter through into mortgage payment problems for landlords. Mortgage rates have kept monthly payments low, but there has also been a change in landlords’ behaviour.
With capital gains falling by the wayside in the past six months, rental income has become the most important component in an investor’s annual return – but it also pays a landlord’s mortgage cheque”.
Tenants have been complaining of being crippled by high rents, particularly in London for some time now but as I have also been urging, there will come a time when tenants inability to keep up with these rents will have a knock on effect to a landlord’s ability to pay the mortgage.
I find it interesting that these concerns are now starting to be raised from the landlord’s side.
And finally a tale to warm the hearts of many a PRS landlord.
Government announced this week they will be piloting the rent bit of universal credit where benefit rents will no longer be going direct to the council or housing association.
They will be running 5 pilot schemes with social landlords for a few months from June this year to see if they go out of business through non payment of rent. Something PRS landlords have been enduring for some time now.
Of course, regardless of the true findings of the pilot scheme, payments will be going straight to the tenants anyway. The government are as pig-headed and blinkered as any government and intent on having their way regardless of any inconvenient negatives that the pilot scheme may throw up.
The big difference however is that social landlords don’t have the option of moving away from benefit tenants, in the way that PRS landlords did to protect their investment, so it has the potential to be even more disastrous.
With just about everything I see our government doing with housing I get a strong image in my head of someone studiously sawing through the branch of a tree whilst sitting on the wrong side of it.
IDS, Gobbels and Stalin
Oh and another finally, and on the same subject of Universal Credit, I listened to Ian Duncan-Smith on Radio 4 the other morning fending off concerns by Evan Davis, who was in effect pointing at the branch and waving, only to be shooed away by IDS and noticed he repeatedly referred to people on benefits “Doing the right thing”. A curiously vague phrase in itself but the fact that he must have used it 10 times tells you someone has told him to.
I am now officially on an IDS “Do the right thing” count in his interviews
If you want to know why he uses vagueness to communicate, read ‘Propaganda’ by Edward Bernays (Sigmund not Lord) Freud’s nephew, written in 1928 on how to hoodwink a nation.
The book was a favourite of Dr. Goebbels and Uncle Joe Stalin and you could always count on them to do the right thing.
Ben Reeve Lewis
Ben’s runs Home Saving Expert, where he shares his secrets on defending people’s homes from mortgage repossession Visit his blog and get some help and advice on mortgage difficulties, catch up with him on Twitter and check out his free report “An Encouraging note on Dealing with your Mortgage Lender” and have it sent right to your inbox.
CCTV pic by lydiashiningbrightly, house of cards pic by King of the Ants
I’ve said this before and I’ll say it again – whoever came up with the idea that HB should be paid to tenants to make them take responsibility for their own rent can only be described as a “galactic idiot.”
Moving on to subletting, though, I do know of HJK Associates. They do benefit fraud investigations as well, it seems. However, just because the paperwork doesn’t match the address doesn’t mean that the house is automatically sublet or that they’re not living there. For instance, my shoebox of a place in East London is my only or principal home yet my Bank has Slough in Buckinghamshire as my “home branch” because that’s where I opened it as I was growing up round there.
Also, wouldn’t a private fraud investigation team have reason to try and inflate the number of people allegedly subletting, by, for example, playing with the parameters of the study, to drum up more business? I think we need to see that study in more detail before we can say “25% of all social tenants are evil taxpayer-fleecing subletters!”
I agree JS, many of those people will have genuine reasons for there being different credit adress details but by no means all.
Unlawful sub letting is rife in my borough, always has been. I remember back in the 1990s the going rate in the local pub for a set of keys to a council house was £8,000. Whenever I get invovled in them you find different names on different utility bills and a bit of digging usually reveals several changes of tenant over several years as the property gets passed on. I often find it goes on among different communities who all let to each other in the same community (but thats London for you) and overcrowding is almost the rule. I once attended a 3 bedroom council house that had 23 African students living in it. The actual tenant being long gone. All their mattresses were lined up in the hallway and up the stairs.
Frazzy’s Brother who lives in a council flat in a block says of some of his neighbours that he rarely sees the same person leaving the flat twice
Two way mirrors and CCVT to dodge tenants who have paid them? When will somebody professionalise this class of parasites and make them have a relevant degree and start an effective professional body?
Oh Penny if only I could tell you of all the scamming agents we have in our borough. It would be enough to keep the Daily Mail busy for a year but I would get disciplined for bringing the council into disrepute.
I know it’s South East London and therefore more prone to fraud and scams than most areas but even taking that into account you cant countenance what we see on a daily basis.
Until letting agents are forced to be regulated and behave professionally this will go on and what irks me the most is it isnt the well heeled who get ripped off, its the people with little in their lives in the first place. People with drink and drug problems or mental health issues who never ask any questions about who they are renting from, most dont even know their landlord’s name and never ask for receipts for rent. The rest are immigrants with little spoken english or asylum seekers who have no choice because they have no recourse to public funds, all ripped off by their own countrymen usually. It makes me so angry to see it and yet without regulation nothing will happen.
But who cares? they’re all just foreigners or nutters arent they????? GGGGGRRRRRRRRRR!!!!!!!
Me father used to joke, when I was a student, that he was going to bolt up some bunk beds four tall on every wall and let it out to illegal immigrants. Then I got a job and encountered people who actually did that. It wouldn’t surprise me if the perpetrators had links to human trafficking rings.
I suspect that the recent case of Tower Hamlets councillor Shelina Akhtar, who on 9 January 2012 pled guilty to three counts of benefit fraud in that she dishonestly failed to disclose material information to Tower Hamlets Housing Benefit and/or the DWP, namely that she’d sublet her Housing Association flat, will be held up as more reasons why dodgy subletting should be criminalised. However, will criminalising subletting necessarily deter people? The council or CPS will have to show beyond reasonable doubt the premises was sublet, which may be difficult without a written agreement between tenant and sub-tenant or large scale witness evidence. More to the point, a lot of subletting goes through the criminal courts because the real tenant’s been claiming Housing Benefit over the place so subletters by dint of how they operate are risking being nicked anyhow.
I suspect “sending a message” is in order here.
However, today in came a new client who the Council have accused of subletting his flat so maybe it’s super widespread. I know that I looked at one place in Bethnal Green when I first moved up to East London which was obviously a dodgy sublet…
Interesting our first office had a 1 way glass window and the agent before us did vanish. I think you are on to a tell-tale sign.