A North East lettings specialist is pressing the importance of new and ‘do it yourself’ landlords to follow the right procedures in order to avoid things turning sour.
Ajay Jagota, managing director of KIS Lettings, is sounding the warning after a series of instances of landlords being taken to court and penalised for not following the law.
In one case, a landlord was found guilty of illegal eviction and was sent to prison for his wrong-doings. He has enlisted the help of a friend to physically push out a tenant, who ran up £900 of arrears. As the landlord had no court order to evict his tenant, he was sentenced to six months’ imprisonment along with a tagged curfew.
Ajay says: “This landlord committed a crime by evicting his tenant without obtaining a court order. It’s a prime example of where not following the letter of the law gets you. At KIS, we make sure landlords go through the correct procedures to avoid things like this happening.”
Another landlord was landed in court after falling foul to the complications of letting a property.
The case, titled Johnson-v-Old, happened when the landlord took six months’ rent from a tenant who did not satisfy a credit check. Under law, a landlord should protect money they take from a tenant with a scheme such as the Deposit Protection Service (DPS). As the advanced rent was not protected, it was considered a deposit.
However, on appeal, the judge overturned the original judgement, stating the rent in this case could not be deemed as a deposit. The case is in the process of going to the appeal.
Commenting on the case, Ajay says: “In this instance, I have to agree with the second judgement. Taking rent in advance is a way of reducing risk for the landlord, say, if the tenant fails credit checks.
“KIS is aware of the traps that landlords can fall in to, and we have put a lot of time and effort against ensuring landlords don’t get caught up in the ambiguity of the law.
“We don’t take a deposit and our insurance requires every tenant to provide a homeowner guarantor, which offers a rent guarantee as standard.”
Although in the above instance, the landlord was caught out by complex legislation, landlords can sometimes be susceptible to means beyond their control.
A recent scam saw one fraudster steal his landlord’s identity and use it to sell his £300,000 house without his knowledge.
The fraudster was able to check the Land Registry to see which rental properties did not have mortgage held against them. He then signed a tenancy, paid six months’ rent in advance and began using the owner/landlord’s name to create a false identity. He eventually sold the house and was only caught when the landlord turned up and found a gardener working at the property who said he was employed by the owner. The fraudster was jailed for three years after being traced by the police and convicted of fraud.
Ajay says: “All three cases outline the risks that you take when you’re a ‘do it yourself’ landlord. Heavy fines, loss of property and, in worst case scenarios, custodial sentences are all realities.
“Using a letting agent like KIS helps minimise the risks. We have a robust business model which ensures both the tenant and landlord are protected should anything go wrong. And where any issues do occur we work to resolve them quickly and effectively without the need for courts to be involved.
“Our tenant guarantor scheme and landlord insurances give a high level of protection and we also make regular inspections every three months to ensure everything is satisfactory.
“Landlords who do not already have the support of a letting and management agency should certainly consider how certain they are of the processes and procedures that they should be following. The expertise of an experienced and committed letting agent does not have to cost the earth, KIS charges a 5% management fee and it could save thousands for inexperienced landlords, who are more likely to end up in sticky situations.