Passion for Property is an independent UK Estate Agent in Chester specialising in short-term and long-term residential lettings in Chester and the North West.

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Unauthorised subletting “a major problem” facing landlords and agents - 10.10.2014

Unauthorised subletting “a major problem” facing landlords and agents

 

Friday 10th October 2014

Escalating rents and a shortage of affordable property have led to a buoyant, but illegal sub-letting market, according to LetRisks, a leading specialist provider of property insurance and referencing services for landlords and agents.

Just last month, Oxford Council warned tenants who were illegally subletting their homes, to hand back the keys to the properties during a two month-long amnesty, or risk prosecution for fraud. This is part of a drive to crack down on tenancy fraud, the majority of which is illegal subletting. The amnesty campaign is a warning that illegal subletting is now a criminal offence punishable by a prison sentence and a fine.

It is estimated 3.3 million people are living as unofficial tenants – that is as many as one in every 10 rental homes. Almost half of residential lettings agencies have found multiple occupants living in a home unofficially after checking the properties under their management (according to Direct Line research last year).

Michael Portman, managing director of LetRisks, said: “Although the problem is more prevalent in the social housing sector, it is a risk for private landlords. When there is multiple occupancy in a property, wear and tear and damage is dramatically accelerated – a big problem for landlords and agents. Very often, the obvious damage to the property are iron burns on carpets; cigarette burns; heat damage to polished wooden furniture; scuffs, marks and dents to walls; stiletto heel imprints on wooden floors and vinyl.

“There can also be considerably more mould and condensation with more occupants.  Landlords can also face expensive repairs for damage and redecoration costs, to bring the property up to the standard it was at check-in.

“Illegal subletting falls under tenant fraud and it’s undoubtedly a growing problem. Renting a property makes landlords vulnerable to fraud. Hence it is vital that landlords and agents carry out thorough pre-letting checks.The purpose of referencing a tenant is threefold - to check the person is who they say they are; that they can afford the rent; and that they have honoured past commitments. Information collected on the tenancy application can be used to trace them, should they abscond, or leave owing money. In addition, should the applicant make false statements, this document provides evidence for eviction.

“It is important not to take everything at face value. Don’t believe anything that you are told or what you read in on the application. It is vital that prospective tenants provide employment references and if there is in any doubt, the applicants should be asked to provide further proof for example copies of payslips or sight of bank statements.

“Extra precautions, such asking for three months’ bank statements can help catch out potential fraudulent tenants. Also take the time to compare addresses shown on the application with those shown on the ID documents. Ask for previous utility and telephone (including mobile phone) bills and statements, and check if the name and address and other information matches up with the information on the application form.”

LetRisks has put together some tips on what evidence to look for if you are suspicious that a tenant is subletting:

• Remember it pays to make regular checks on the property – every three to six months is advisable.
• The tenants will be hiding evidence of extra tenants, so look out for additional clothing and shoes; excessive rubbish for the number of registered tenants; additional bedding like sleeping bags and pillows; suitcases and rucksacks; and extra toothbrushes.
• Before taking on a new tenant, make sure you carry out a thorough reference to ensure you know who your tenant is.
 

Wear & Tear Allowance (WTA) for landlords - 02.10.2014

Wear & Tear Allowance (WTA)

If a property is let furnished - with sufficient furniture, furnishings and equipment for normal residential use - landlords can only claim tax relief for the furniture and equipment by way of the WTA. Prior to April 2013, landlords had the option of claiming the cost of replacement furniture instead.

The WTA is calculated as 10% of the gross rents less any tenant's costs (e.g. water rates and council tax) met by the landlord.

WTA does not cover repairs, which continue to be tax deductible. The question is then raised can replacement of an item be counted as a repair? In this respect, landlords that let furnished property need to distinguish between:

    Replacement of items that are integral to the building, and
    Replacement of items that are not integral to the building.

Needless to say there are grey areas!

Replacement of items that are integral to the building

Fixtures integral to the building are those that are not normally removed by either tenant or owner if the property is vacated or sold. Examples include:

    Baths
    Washbasins
    Toilets
    Immersion heaters
    Fitted kitchens and fitted white goods.

This list is not intended to be complete but gives an idea of the assets that are integral to the building and fall outside the wear and tear allowance. As these items are integral to the building, the cost of replacing these items is normally an allowable expense as a repair to the building.

Replacement of items that are not integral to the building.

Expenditure of this type will be covered by the WTA. Examples given on HMRC's website in this category include:

    movable furniture or furnishings, such as beds or suites,
    televisions,
    fridges and freezers,
    carpets and floor-coverings,
    curtains,
    linen,
    crockery or cutlery,
    beds and other furniture

Unfortunately, these examples are not definitive: is a carpet glued to the floor a permanent fixture, or not part of the integral features?

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Letting fees information

The asking rent does not include letting fees. Depending on your circumstances and the property you select, Passion for Property may also apply the following up front fees.

  • Administration fees / Reference fees (including credit checks, bank, previous landlord, etc) covers up to 2 applicants - £285 per Application
  • Additional occupant fees - £65
  • Guarantor arrangement/application fees - £65
  • Pets disclaimer fees/additional pet deposit
  • £300 per Company let

The above fees will be refunded if the Landlord withdraws from the let.

In the event the tenant withdraws after paying the fees these will be non refundable.