House For Sale With Tenants Subject To Fair Rent Act

[JayneyJR]

Hi everyone.

I've been a loyal fan of HPC for the past five years. My husband and I, both in our thirties, live in rented accommodation in rural Suffolk with our one-year-old son and dog. My husband earns slightly above the national average and I earn slightly below average pro-rata for two days/week. We would like to buy but can't justify the high mortgage repayments. Can't believe it has taken me until now to finally sign up and post!

Anyway, enough of me, whilst doing my usual trawl of the estate agents offerings I came across this house that has secure tenants:

http://www.clarkeandsimpson.co.uk/more_details.php?profileID=100098000369

Reading further I was shocked to see how much the rent is (just short of £300/month) as the tenants have been renting since the 80s when the Fair Rent Act was in place. I estimate that this house would be 'worth' around £550-£650/month at market rent around here.

VOA's website states:

Fair Rents are a form of rent control applicable for most private sector rented accommodation without a residential landlord and which was let before 15 January 1989. The Rent Act 1977 provides the rules for setting Fair Rents and the Rent Acts (Maximum Fair Rent) Order 1999 limits the amount of rent that can be charged by linking increases to the Retail Prices Index.

Perhaps I'm missing something as I don't know the full ins and outs of the Act. I suspect that the current owner has charged them below what he/she could. Does anyone have any figures for controlled rents as opposed to non? Of course I hope the elderly tenants end up with a decent landlord. I also appreciate that rents here are far cheaper than some other parts of the country, but just thought I'd highlight this.

[Freeholder]

Rent Act rents were always low. Back int hte day when almost all residential tenancys were subject to the Rebt Act virtually no new tenancies were being created. The Rent Officer who was responsible for determining rents in the abscence of agreement did so on the basis of a fair rent ignoring any element of scarecity. If you don't know what that means you are in good company. Back in the 1970s and 1980s we used to value a house subject to a Rent Act tenancy at 35% to 45% of its value vacant. Rent Act tenants had total security of tenure and could pass the tenancy on to a resident relative on their death.

[porca misèria]

That kind of tenancy is pretty-much equivalent to council housing.

It also basically killed off the rentals market. There was no money in it for landlords, and a huge downside if they got problem tenants. Hence the truly dire situation of the 1980s before the AST kick-started a market: would-be renters were forced into an underworld of licenses (no tenancies), where they were at the mercy of the borderline-gangsters who were the only landlords available.

[edit to add] Come to think of it, £300/month would've been a low rent for a house or a self-contained flat even back in the 1980s.

Edited February 7, 2012 by porca misèria

[pete.hpc]

My Mum rents on this sort of contract, and it's absolute bliss.

Landlord tries to put the rent up as often as he can, which is I think every 2 years, rent officer steps in and tells him to sod off. It's generally capped at inflationary rises.

She's been there since the 70's and has completely made it her own.

Shame we can't all get contracts like that, I'd have never have bought if I could.

Of course landlords hate them, there's no massive profits in it for them, and they can't just sell the placem from under the tenants and threaten them with eviction like the utter cowboys can under ASTs.

What landlords can't get their heads around is; this is how it should be. It shouldn't be easy for you to use housing for quick speculative gains.

The emphasis here was always the security and well-being of the tenant, not the ability for landlords to ruthlessly push up the rent and sell the house for quick profits.

Imagine that eh?

[Guest tbatst2000]

Imagine that eh?

Ah, the blissful communist utopia! Only one drawback, if people can't make a profit from it, they won't do it, hence the almost total lack of private sector rented housing in the 80s when, as PM says, the only way to rent somewhere was via some dodgy license or 'holiday let' from a gangster type landlord (the only ones who could be sure of getting you to leave if they wanted the place back). Of course, the AST swung the balance of power far too far in the opposite direction, with all the pain and suffering that causes. I can't help thinking it can't be beyond the wit of man to come up with rental laws that allow landlords to make a reasonable return on their investments and tenants to stay put for longer than 6 months should they want to.

Edited February 7, 2012 by tbatst2000

[Lennon]

Ah, the blissful communist utopia! Only one drawback, if people can't make a profit from it, they won't do it, hence the almost total lack of private sector rented housing in the 80s when, as PM says, the only way to rent somewhere was via some dodgy license or 'holiday let' from a gangster type landlord (the only ones who could be sure of getting you to leave if they wanted the place back). Of course, the AST swung the balance of power far too far in the opposite direction, with all the pain and suffering that causes. I can't help thinking it can't be beyond the wit of man to come up with rental laws that allow landlords to make a reasonable return on their investments and tenants to stay put for longer than 6 months should they want to.

It's not - the Germans have a pretty sensible system that seems fairly balanced from an outsiders perspective

[SarahBell]

Ah, the blissful communist utopia! Only one drawback, if people can't make a profit from it, they won't do it, hence the almost total lack of private sector rented housing in the 80s

Didn't it help keep house prices lower?

[porca misèria]

Ah, the blissful communist utopia! Only one drawback, if people can't make a profit from it, they won't do it, hence the almost total lack of private sector rented housing in the 80s when, as PM says, the only way to rent somewhere was via some dodgy license or 'holiday let' from a gangster type landlord (the only ones who could be sure of getting you to leave if they wanted the place back). Of course, the AST swung the balance of power far too far in the opposite direction, with all the pain and suffering that causes. I can't help thinking it can't be beyond the wit of man to come up with rental laws that allow landlords to make a reasonable return on their investments and tenants to stay put for longer than 6 months should they want to.

Yep.

The AST was needed back then to kick-start any kind of market.

Now is different: there is a functioning private rentals market. From where we are now, I'm pretty sure we could improve protection for (good) tenants without killing it off. AFAICS the stumbling-block is that we seem to have difficulty separating out rights for good tenants from landlords rights against those who trash the place and don't pay.

Outline recipe for improvement: revise Section 21 in favour of tenants, and at the same time give landlords fast-track court procedures against the tenant-from-hell.

[RufflesTheGuineaPig]

Ah, the blissful communist utopia! Only one drawback, if people can't make a profit from it, they won't do it

You make out like that's a bad thing.

Didn't it help keep house prices lower?

Well that and abundant council houses.

The AST was needed back then to kick-start any kind of market.

Now is different: there is a functioning private rentals market.

The AST idea only worked while there were enough council houses to give people a choice... rent a crappy council house cheaply or pay a little more for a nice private rental. Now the choice is between 2 overprices sh!tholes both old by private landlords because there are no council houses available and the nicer private rental will go to those on housing benefit who can outbid you.

[porca misèria]

The AST idea only worked while there were enough council houses to give people a choice...

"Gee, why'd they build Windsor Castle so close to Heathrow?"

There were no council houses. There was no choice. The AST was a massive improvement for everyone when it was introduced. You clearly weren't there.

[bill65]

Tap the post code in here: https://ebusiness.voa.gov.uk/err/

[@contradevian]

"Gee, why'd they build Windsor Castle so close to Heathrow?"

There were no council houses. There was no choice. The AST was a massive improvement for everyone when it was introduced. You clearly weren't there.

I was and you are right if you ignore the small fact that houses were cheap and could be bought easily on 3x single income ( a lot less in many cases).

Edited February 7, 2012 by "Steed"

[R.Evans]

There were no council houses. There was no choice. The AST was a massive improvement for everyone when it was introduced. You clearly weren't there.

Quite.

[porca misèria]

I was and you are right if you ignore the small fact that houses were cheap and could be bought easily on 3x single income ( a lot less in many cases).

When was that? 1981 maybe, but the spanner in the works there is that mortgages were 2.5x income and required you to have a deposit.

Certainly not in 1983 when I got a job in London. Let's see now: the kind of thing I could've bought for under 4x income then ... hmm, yes, there are still places for sale under £100k in the same postcodes I lived in (just checked SE15 and E10, my first two rentals). Altogether more affordable today than 1983 - or 2005 - for an FTB flat!

[Guest tbatst2000]

You make out like that's a bad thing.

You think communism is a good thing?!

[Freeholder]

Didn't it help keep house prices lower?

No. It just removed the existing rental properties from the market and left people who were not going to get a council tenency with no option but to buy. or subsist in a dodgy bedsit. I am not aware of any contemporary research into its effect on prices but any such effect there was would have been upward.

edit typo

Edited February 7, 2012 by Freeholder

[R.Evans]

Certainly not in 1983 when I got a job in London. Let's see now: the kind of thing I could've bought for under 4x income then ... hmm, yes, there are still places for sale under £100k in the same postcodes I lived in (just checked SE15 and E10, my first two rentals). Altogether more affordable today than 1983 - or 2005 - for an FTB flat!

That sounds familiar. Even the idea of a choice between buying or renting from was just fanciful then.

[Freeholder]

You make out like that's a bad thing.

Well that and abundant council houses.

The AST idea only worked while there were enough council houses to give people a choice... rent a crappy council house cheaply or pay a little more for a nice private rental. Now the choice is between 2 overprices sh!tholes both old by private landlords because there are no council houses available and the nicer private rental will go to those on housing benefit who can outbid you.

You make it sound as if there was a blissful time when council housing was abundent. No such time existed. Council houses were always severely rationed. Back in the early 70s I was told that as a single man with a job I would be waiting effectively forever.

[@contradevian]

When was that? 1981 maybe, but the spanner in the works there is that mortgages were 2.5x income and required you to have a deposit.

Certainly not in 1983 when I got a job in London. Let's see now: the kind of thing I could've bought for under 4x income then ... hmm, yes, there are still places for sale under £100k in the same postcodes I lived in (just checked SE15 and E10, my first two rentals). Altogether more affordable today than 1983 - or 2005 - for an FTB flat!

Thats is London. London has always been expensive. Watch The Sweeney made in the mid 70;s they frequently include conversations saying how hard it was to buy a place in London on Police pay.

[Guest tbatst2000]

Didn't it help keep house prices lower?

Not that I noticed - the peak of the last housing boom was 1989, before the AST came into being.

[@contradevian]

I was told that as a single man with a job I would be waiting effectively forever.

They told me that too, last year and I got a HA place within 3 months. They told me that in Leicester too back in the mid 90's and they found me a council place straight away, and no I wasn't homeless (or jobless).

Having said that, a despite the Fair Rent Acts, people managed to rent (especially in London) and were not under constant threat from a violent Rachman type of landlord.

Edited February 7, 2012 by "Steed"

[Guest tbatst2000]

They told me that too, last year and I got a HA place within 3 months. They told me that in Leicester too back in the mid 90's and they found me a council place straight away, and no I wasn't homeless (or jobless).

Having said that, a despite the Fair Rent Acts, people managed to rent (especially in London) and were not under constant threat from a violent Rachman type of landlord.

Interesting, do you have any other reason for getting somewhere quickly? (e.g. disability)

[@contradevian]

Interesting, do you have any other reason for getting somewhere quickly? (e.g. disability)

Nope, other than being single. However in London you can forget it. I get the impression that for some single occupancy council dwelling in certain areas of the country, mainly the Midlands and the North (not London/SE) are not in high demand, and for young people, a secure tenancy has less allure over a nice new BTL apartment with nice halogen lights and en suites, which the typical council place, doesn't tend to have.

Something changed quite recently with the way councils allocated or dealt with homeless people and possibly immigrants. Can't remember what it was now (they did tell me) but the ability for them to queue jump seems to have been curtailed.

I've attended public viewings of council property and you would be amazed at how potential tenants turn their noses up at them.

Edited February 7, 2012 by "Steed"

[Guest tbatst2000]

Nope, other than being single. However in London you can forget it. I get the impression that for some single occupancy council dwelling in certain areas of the country, mainly the Midlands and the North (not London/SE) are not in high demand, and for young people, a secure tenancy has less allure over a nice new BTL apartment with nice halogen lights and en suites, which the typical council place, doesn't tend to have.

Something changed quite recently with the way councils allocated or dealt with homeless people and possibly immigrants. Can't remember what it was now (they did tell me) but the ability for them to queue jump seems to have been curtailed.

I've attended public viewings of council property and you would be amazed at how potential tenants turn their noses up at them.

I guess those are also areas that don't necessarily have growing populations, maybe that has an impact? On a similar note, a number of people I was at university with in the 80s in London put their names down on council housing lists in their first years and had flats by the time they graduated. I doubt that would happen now.

[@contradevian]

I guess those are also areas that don't necessarily have growing populations, maybe that has an impact? On a similar note, a number of people I was at university with in the 80s in London put their names down on council housing lists in their first years and had flats by the time they graduated. I doubt that would happen now.

I guess so. Birmingham and Leicester demolished a lot of their tower blocks. No one wanted them. Also I guess the new trendy BTL apartments give the humble council flat a run for its money these days despite higher market rents and AST's. You might be successful even in London over a period of time. People put themselves on the list but it doesn't mean they are motivated, they might turn their noses up at whats offered, or can't move and someone else gets a chance.