PRS Landlords Need To More To Protect Themselves

Wednesday, August 20, 2014

Landlords Are Not Doing Enough To Protect Themselves

Landlords Are Not Doing Enough To Protect Themselves

PRS Landlords Not Doing Enough To Protect Themselves

Thousands of UK private rental sector landlords are leaving themselves exposed to some of the worst tenants around by failing to carry out basic tenant reference checks, periodic inspections and enforcing the terms of tenancy agreements, according to a national survey conducted by insurance firm AXA.

The research revealed that almost 60% of tenants admitted to breaking the terms of their assured short-hold tenancy agreement (AST), and a 30% had broken the law in relation to their rental property.

The survey discovered that:

  • 26% of tenants admitted to paying rent late (equivalent to 2,158,000 tenants across the UK).
  • 10% of tenants admitted to having done a moonlight flit to avoid paying the landlord money (equivalent to 830,000 tenants across the UK).
  • 18% of tenants admitted to keeping pets in the property without the landlord’s permission (equivalent to 1,494,000 tenants across the UK).
  • 15% of tenants admitted to receiving complaints from neighbours for excessive noise (equivalent to 1,245,000 tenants across the UK).
  • 8% of PRS tenants admitted that they had sub-let to someone else without the landlord’s permission (equivalent to 664,000 tenants across the UK)

At the most serious end of the scale,

  • 8% of tenants admitted to committing a crime on the landlord’s premises, (equivalent to 750,000 tenants across the UK)
  • 10% of tenants admitted that they’ve had the police called to the property.

While troublesome tenants remain in the minority, UK private rented sector landlords do have a legal responsibility to ensure that their rental properties are not used for criminal purposes.

Under the Misuse of Drugs Act, UK PRS landlords could face prosecution if a tenant is found to be producing cannabis or banned substances in their property. Ignorance is no defence when it comes to the letter of the law.

AXA warned that while it is the landlord’s responsibility to keep their rental properties in order and regulations are becoming stricter, with the introduction of new legislation intended to place more onus on landlords, including the new requirement to conduct immigration checks on prospective tenant applicants. Many landlords are still failing to carry out basic tenant reference checks on their tenants or even visit their properties at all during the term of the tenancy.

Despite many landlords relying on the income generated by rental property to cover expenses such as mortgage payments and basic living costs, very few of them bother to check if their prospective tenants had the means to pay their rent, the AXA research also found that:

  • 38% of landlords carried out no checks at all on prospective tenant applicants
  • Only 5% carried out a criminal record check
  • 30% of landlords never visited their property during the term of a rental
  • 31% of landlords did a credit check on tenants before accepting them for a tenancy
  • 27% of landlords checked employer references
  • 29% of landlords asked for tenant references from previous landlords

However, the research did discover that many UK PRS landlords are improving some of their working practices, with an increase in the number of tenancies granted on a formal assured short-hold tenancy agreement (AST) rising to 75% compared to just 52% recorded at the beginning of 2013.

Some interesting trends emerged when the survey’s results were analysed by region, gender and rental bracket, providing a generalised profile of the UK’s riskiest tenant types:

  • Male – 18% more likely to have infringed the law in relation to their rented property by committing a crime on the premises, leaving without paying or theft.
  • Tenants under the age of 24 – Become gradually better behaved with age, 64% of tenants under this age had broken the terms of rental agreements,
  • Tenants over 55 – Only 30% of tenants in this age category had broken the terms of tenancy agreements. A similar pattern emerges when asked about outright criminal behaviours.
  • Under £700 pcm rent – just 2.5% of tenants said they’d committed a crime on the landlord’s properties, this figure rises to 25% where rental prices are over £700 pcm and the instance of absconding tenants and excessive complaints are double the UK average.
  • The West Midlands region had the highest proportion of tenants (16%) who admitted to breaking the law or breaching the terms of their tenancy agreements, compared to 8% across the whole of the UK and just 3% in the most crime-free region of East Anglia, tenants in the West Midlands also came out worst on noise complaints, sub-letting and smoking.

Managing Director at AXA Business Insurance, Darrell Sansom commented on the research’s findings, stating: “During the recession, we saw a significant increase in the number of accidental landlords, people who never expected to rent out their property, but couldn’t sell a former home or needed the additional income. With a booming rental market, they aren’t going anywhere. When you first start renting out property, you may not realise all the legal implications and duties involved. Last year, for instance, we found that a third of these landlords are, often inadvertently, breaking laws on safety checks, and a quarter have the wrong or no insurance. In addition, landlords are under more scrutiny and subject to heavier legal penalties than ever before. HMRC launched a crackdown on landlords whose tax affairs aren’t in order this March, and May’s Immigration Bill introduced fines for landlords who fail to check a tenant’s right to be in the country. While legislation toughens, we need to make sure that enough is being done to inform and educate landlords too. Certainly, our experience is that many new landlords aren’t wilfully failing in their duties, they simply aren’t aware of all their obligations and commitments.”

This was written by Mike Clarke. Posted on at 11:30 am. Filed under Referencing. Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink. Follow comments here with the RSS feed. Both comments and trackbacks are currently closed.