Tiny administrative errors could leave landlords lumbered with nightmare tenants – one property boss is warning.
Most landlords and letting agents use Section 21 of the 1988 Housing Act to terminate tenancies in the event of severe rent arrears or significant damage to a property – so-called Section 21 orders.
But Ajay Jagota of deposit-free renting solution Dlighted and sales and lettings firm KIS believes changes the law – which was recently amended by the Deregulation Act 2015 - could leave property owners powerless to kick out the terrible tenants ruining their neighbour’s lives and ransacking their properties.
Possession claims are currently likely to fail if landlords or their agents fail to place tenancy deposits in authorised deposit schemes within 30 days of receiving them.
They could also fail if tenants – or the people paying their deposit for them - are not provided with a leaflet detailing prescribed information relating to their deposit within that time.
Dlighted’s unique deposit-free rental solution gives landlords property damage protection, rent cover and covers their legal expenses – while also making it easier to find and keep good tenants.
Ajay Jagota said: “I know people tend to start playing the world’s smallest violin when they hear about problems being faced by landlords, but these rules could see someone’s much-loved family home or pension jeopardised by tiny administrative errors.
Changes in the legal and taxation system mean that if you have any sort of investment in property, protecting that asset is a priority – not something you can do on the hoof.
Usually the answer is a reputable letting agent, but they aren’t necessarily legal experts and the rising number of failed Section 21 applications implies that what landlords really need to invest in is good insurance. That way when the worst happens they can get the experts in rapidly and affordably.
It’s clear at the moment that both agents and landlords are getting it wrong. If you’re a landlord and you don’t have the sophisticated insurance you need, you’re leaving yourself wide open.
There’s also the matter of the impact on the wider community. It only takes one family to ruin a street or village, and most landlords want to be able to take action, not just to protect their investment but on the community’s behalf. This situation could leave them powerless to help because they forgot to give those tenants a leaflet they probably wouldn’t have read anyway.
The saddest thing is that deposits are a relic of a bygone age. There is absolutely no need for landlords or letting agents to be using them at all when there are significantly more effective insurance-based solutions available.”