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How Do You Spot A Rogue Landlord?

How Do You Spot A Rogue Landlord?

With so much demonization of landlords in the press and new regulations and standards being imposed almost daily - you would think rogue landlords had been publicised and regulated out of existence, but we would argue that politicians and journalists are focussing all of their efforts on the wrong landlords, which is why they are not seeing any improvements. We could go further and say that the local council is working with, condoning and encouraging the worst rogue we have come across….

So, let"s start with what, actually, is a rogue landlord?  And then, we suggest what needs to be done

What constitutes a rogue landlord? A simple answer might be one who puts his or her tenants at risk by ignoring fire, gas or other safety legislation or one who provides substandard accommodation or may be one who breaches his or her tenancy agreements.  You could argue that failure in any of these areas does not make you a rogue - you could simply be incompetent or unprofessional, lacking the appropriate skills - but if as a result your tenants are at risk, then it is only right that the full force of the law be used to either drive you out of the business or make you step up and do things legally and correctly.

Let"s look at some facts:  In Portsmouth, nearly all of the resources of the Private Sector Housing team are focussed on student HMO"s - they have successfully reduced the number of 5-bed HMO"s by more than 130 in the past 6 months if reports are correct. Similarly, the Planning Committee have frequently rejected HMO applications against the advice of their own officers,  for no reason other than 'HMOs are bad and we don"t want any more" even when all of the local and national rules are met, which is why so many decisions are overturned on appeal.

But why the anti-HMO stance?  In the past year there were only 20 complaints about property standards in HMO"s in the city, yet in the same period, PCC received 130 complaints about their own properties and this was down from 175 complaints in the previous year. Yet no one would suggest PCC is a bad landlord…

Perhaps it is the way properties are managed…  After Grenfell it was discovered that more than half the city"s tower blocks were missing, or did not have, a valid fire risk assessment.   Of the 39 tower blocks owned by Portsmouth City Council that are six storeys or over, testing before the blaze confirmed that seven blocks of flats were missing a current fire risk assessment and 15 had an expired assessment. Figures contained in a report for the council"s governance, audits and standards committee also revealed that of the 712 council-owned properties, which are five storeys or lower, analysis found that 280 did not have an assessment date, with 171 properties overdue a review.

OK - fire risk may be a special case, how about gas safety - too many people die due to boilers that are not serviced properly. Well, the only significant example we have come across locally is a local Housing Association, then called First Wessex which the HCA stated, "the provider had breached the Home Standard, resulting in the potential for serious detriment to tenants. The regulator said there was evidence of a significant number of overdue gas servicing certificates, some of which had been expired for a long time."

If we ignore the failings of the social sector and focus solely on the private sector, we have to admit that there is an HMO landlord in the city who might qualify for the 'rogue" title.  Here is a list of his misdemeanours:

Overpriced Accommodation - you could argue that price is fairly elastic and will only be paid if the market can bear it, but it can also be argued that the reason that the average rent for a room (according to the VOA) has increased by 8% in Portsmouth in the past year is because this landlord along with others like him, have brought to market a range of overpriced property. He currently quotes student rooms at £154 per week on 51-week contracts - so £7,854 per University year (recalculated on the University"s recommended 10 month contract term that equates to £785 per month) - almost double the average in the city before this landlord and others like him arrived. So no surprise the average has jumped 8% even though most HMO landlords have not increased rents.

Undersize Accommodation - Portsmouth has the highest expectation for space in an HMO that we have come across. This landlord would not be able to offer his HMO"s if they did not meet these standards, but in the same building he also lets studios which the promotional blurb describe as "Spacious studio upwards to 20m2 to a maximum of 24m2."  Interesting as the London Plan, for example, specifies that the minimum gross internal floor area for a single person dwelling is 39m2 - so these rooms could not be let to any normal person and are only suitable as student hutches.

Unlicensed HMO - Much of the accommodation this landlord offers in Portsmouth is 4 bed HMO"s, which means that it comes under the bar set by mandatory licensing  but there are dwellings within their prime site which are 6 or 8 bed HMO"s, yet none of them are licensed and for some reason, PCC shows no willingness to enforce this breach of national regulations.

Badly Managed - A subjective area, but if you ignore your contract with your tenants or choose to overlook details within it to their detriment, one can argue that constitutes bad management?    Talking to disgruntled tenants, we have examples where rent was requested on September 1st then a statement that accommodation would not be ready on time and could tenants delay their move in by 2 weeks (with no admission that the landlord was duty bound to house these tenants, having taken their money to do so). As the situation worsened, many student tenants were 'released from their contracts" - can you imagine that?  I have taken your money, you have organised your move in and you are totally dependant upon me for somewhere to live, but at the last minute, I release you….  Surely this is breach of contract and many claims for damages should be forthcoming, yet the landlord continues blithely onward ignoring responsibilities and commitments with apparently no downside other than a short-term loss of rent.

So who is this rogue who seems to ignore all the rules without anyone taking any notice?

That is where it gets difficult. The site is Stanhope House in Commercial Road - the yet to be completed student hall. It is owned by Pineapple Corp, but they are just a Real Estate Investment Trust (an organisation that marries developers with investors, typically your pension fund, and buys sites that can be developed).  Much of the funding comes in the form of a mortgage from Barclays Bank but the company responsible for building this hall and others like it around the country is Crosslane Student Developments (Stanhope) Ltd based in Manchester.  This is just a shell company with negligible assets put together to build this one hall and it probably makes more sense to look at Crosslane Group which sets up companies like this using borrowed money at low rates and constructs blocks  which are then managed by Prime Student Living (which is owned by the same people as Crosslane Group). None of the Crosslane companies appear to have any real assets but that is hopefully just a reflection of their low interest, easy credit business model rather than an indicator of their potential longevity.

The good news is that in the Section 106 all of these parties signed with PCC before construction began is the statement that, "During the University of Portsmouth Academic Terms, not to occupy nor permit occupation of or use nor allow the use of any Study Bedroom for any purpose other than as temporary residential accommodation for a Student during their period of study".  Too many of the halls in the city breach this rule and unfairly compete with our members as is evidenced by the rooms available on booking.com all year around.  Henceforth, the PDPLA will be asking PCC to enforce these clauses with the same level of commitment that they go after innocent landlords of small HMO"s.

Also in the Section 106 is the requirement that the management company provide a Register of Residents - we hope this is to allow the appropriate calculation of Council Tax due, as to date, student halls have been misclassified and most have yet to receive any Council Tax bills for the periods between academic terms even though small HMO landlords are chased for every individual day that PCC suspects ANY ONE of the residents is not a student.

Some suggestions on what PCC should / could do with future student halls to ensure that developers don"t take advantage of current rules to build overpriced, low quality student accommodation with no potential longer-term use for other types of resident or any contribution to the city in the form of council tax, business rates or affordable homes.

  • Firstly, do what Oxford have done and adopt a policy which states that planning permission will only be granted for new student accommodation that includes 20 or more bedrooms if a financial contribution is secured towards delivering affordable housing elsewhere in Oxford. (With the sum in Oxford amounting to £140 per sq m, a notional PBSA scheme of 5,000 sqm would need to pay £700,000 in financial contributions)
  • Secondly, many of these purpose-built student accommodation (PBSA) are classed as planning use C5 locally whereas elsewhere they are sometimes classed as C2 (residential institutions), C3 (Dwelling Houses) or C4 (HMO). We would recommend that Portsmouth seriously consider C4 classification and in this way, all of the rules applicable to smaller HMO"s will automatically apply to PBSA including the collection of council tax during void periods.
  • And finally, PCC need to enforce breaches of existing S106 agreements and collect Council Tax fairly across the sector before we take them to task for not doing so.

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