The year ahead for PRS and deposit protection
Just a few weeks in to 2012 and several studies and surveys have been published predicting some new trends and attitudes in the private rented sector. Although TDS may not feel the impact in the short term, there are things which everyone in the PRS should be mindful of.
According to ARLA’s latest survey, there has been an increase in the number of properties coming onto the rental market with “reluctant landlords” – those who have reluctantly put their properties onto the rental market because they have been unable to sell them for an acceptable price. The Chartered Institute for Housing also recently released figures, which predict that the new caps on local housing allowance will make 800,000 rental properties unaffordable to people receiving housing benefit, meaning a movement of low income families to “benefit ghettos”, and an increase in rent (and subsequently mortgage) arrears.
It is interesting to note that there is a negative correlation between the geography of the CIH and ARLA findings – areas with a higher number of properties predicted to become unavailable to LHA tenants (e.g. inner London) have a lower number of ‘reluctant landlords’. Does this mean that LHA tenants will begin moving towards areas harder hit by falling prices and hence to “reluctant landlords”? Is it a problem? A recent survey by spareroom.co.uk revealed that 87% of landlords who accept LHA tenants had had problems with late rent and 11% said they had payments stop altogether. With 59% saying they stipulate no LHA tenants, the wariness of existing landlords is clear.
Two points are relevant here. Based on these figures there is a strong possibility that rent arrears disputes will increase, which currently appear in 16% of cases. TDS highlighted the issue of rent arrears back in November 2011, when we published a summary analysis of a dispute in which an LHA tenant claimed she was unaware of outstanding payments, because the local authority should have been paying the landlord (see the November adjudication digest).
Secondly, a rise in reluctant landlords may mean a rise in inexperienced landlords. We are constantly promoting to agents, landlords and tenants, the importance of strict processes for detailed record keeping and we need to make sure that all landlords are prepared. The above case demonstrated this – the landlord had not kept rental statements and only had emails as a record; however the tenant didn’t provide any evidence that the local authority that was responsible. Because the tenant agreed that money was indeed owed, the deposit was awarded to the landlord.
Both parties were ill prepared for a dispute. If the tenant’s claim was true, some evidence may have sent the adjudication in her favour. If the landlord had been in a dispute with a tenant who denied that they owed money, his poor record keeping would have made it difficult to prove otherwise.
The growing number of inexperienced and reluctant landlords need to be clear on what their rights and responsibilities are and how to be prepared, not just for rent arrears, but for the multitude of problems which can cause disputes with their tenants.
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