A battle has broken out in a university city after students complained that they are having to sign rental agreements and hand over large sums of money almost a year early to secure their homes, because of pressure from landlords and agents.
About 1,500 students from both Oxford and Oxford Brookes universities have signed a petition calling on agents to adopt a new code of practice. They accuse agents of exploiting students and raking in thousands of pounds up to ten months before they will be moving in to rental accommodation.
But one agent said that rogue agents were refusing to agree to the code – and that students were partly to blame.
He said he had even been offered bribes to release accommodation early.
Brookes student union adviser Jo Cox said first-year students were pressured in October and November to sign up for houses for the following academic year. She estimated students were paying up to £775 each in administration fees, a holding fee, a deposit and at least the first month’s rent up-front.
She said some international students, without UK-based guarantors, are asked for six months’ rent in advance.
Wendy Dant, from the Brookes student advice centre, said: “It really is not fair on the students to make them make big financial decisions when they’re not ready to. No-one else would be asked to sign up for a property ten months in advance.”
The proposed ethical code of practice would ask letting agents not to pursue students to sign contracts early, and not to advertise properties for the next academic year until February 1.
Chris Shahab, of letting agents Hutton Parker, said: “I know of one letting agent this year who put out their list of properties (for the following academic year) at the beginning of October, when tenants had only moved in in September. Landlords are scared they’re not going to let their properties out.”
He said the company would be happy to sign up to an ethical code of practice, but it needed all firms in the city to agree for it to work.
Simon Tyrrell, manager of Finders Keepers student letting division, said: “We are in a difficult situation.
“I have tried to get consensus between the various student letting agencies on a launch date. Currently, we are proposing February 1 to release properties for the following academic year.
“As usual, though, the reputable agents are all for it but the rogue agents won’t agree to it.
“Matters aren’t helped by the fact that Oxford Brookes Student Accommodation is one of the letting agents who will not agree to the date and in fact, release their properties far ahead of the others. I feel Oxford Brookes, of all organisations, should be leading from the front.
“Many agents and landlords point out that the early start dates are not being driven by the agents but by the students themselves. One landlord came up to me and said that he’d been approached in October by four students wanting to rent his property the following academic year. Was he supposed to tell them no?
“I have been offered bribes on many occasions by students trying to get into their choice of houses. We;re a reputable agency so of course I said no, but how many others wouldn’t?
“It would be great if we could come to a consensus on a date and the Oxford Brookes Students Accommodation could publish a list of accredited agents. So far, however, they have been reluctant to take this step.”
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Comments
Perhaps the reason no-one is listening to, or engaging with this dialogue is because their respectiove heads are stuck firmly in the sand.
Let's wait and see
Robert
Funny thing you should say that but my guru has commented that once it gets to May 1st and especially if LA2011 does cover all exisiting ASTs that this is exactly what will happen.
That there will be an advert from a legal firm offering to take a class action for students who have paid money in advance but which hasn't been treated as a deposit - which will be almost 100% of all such payments!!
Sadly these stories are being covered in the relatively hidden depths of LAT and already this particular story has drifted off the home page with a very low read score.
Nothing will happen until a whole Pandora’s box is opened and the current plague of LPI adverts are replaced with Litigation solicitor adverts chasings mis-handled tenant deposits and tenancies.
Robert
See similar posting on today's LAT and watch for responses to mine (if any).
The plain truth is that the vast majority of agents simply do not know. They will be blissfully unaware of s45 of the 1988 Act (as was I until two weeks ago and I've been in the business 20 years and are allegedly a legal processesexpert!!) until a real guru fglagged it up to me.
It is the same with the rent in advance. The tenancy agreement section on rent has to be worded in such a way that the 6 month tenancy is created for 7 months with the rent lump sum stated as covering Jan 1st to June 30th "and thereafter on a monthly contractual tenancy at £600 pcm" etc.
Students are a real danger because of the attraction of the fines
Industry Observer, in a way I wish you hadn't said all that, I was looking forward to the next roasting simply to prove my point that many of the new and a few of the more established agencies are operating a pseudo compliant process that in PR and Marketing sounds great but in terms of genuine protection of both Landlord and Tenant monies is woefully inadequate.
There is a very fat can of worms about to be opened with this case that is going to bring into question the correct handling of deposits ( conventional or inadvertent)
In the first draft of my post I too also estimated 95% of agents will be handling this incorrectly but decided that the flamers would question a gut instinct for the level of mis-practice that is going on.
I suspect that a good percentage of the Oxford agents will be holding the advanced rent as "unallocated money" meaning that its status is ambiguous from the point of Bank reconciliation and hidden as a deposit requiring registration, the money as you correctly point out is a deposit but there is no need to wait for the localism act it is very clear that these monies "could or should" be returned to the students and so should have been lodged as a deposit several months ago.
Far too many agents are using software functionality, designed to ring fence pre 2007 advanced student rents as a means to; deliberately avoid deposit protection legislation, are naively using it because they have been told that is what they should do by a software trainer or because they have not realised that their world changed in April 2007.
It will be interesting to see who now claims they were not aware of this particular problem and more interesting to hear the explanations why they ignored it.
It is all a joke if it wasn't so serious.
Sorry meant to post this guidance yesterday as it is critically important
When I moved here 22 years ago Leaders made a big fuss of their student let release list with an advertising campaign in the local property paper of the type you see on bus shelters for new chocolate bars - 28 days to go, 21 days to go, 14 days to go etc.
The release date was ( from 22 years ago memory), May 1st. How the hell can it possibly be appropriate to release properties for proposed tenancies on July 1st and occupancy in late September, on January 1st of that year? Beggars belief - and I don't think any amount of waving access clauses at the existing students will allow you access for viewings anyway.
Anyway that's all by the by my interest in this is rent in advance and deposits.
I can guarantee that probably 95% of the agents in Oxford or any Uni town are handling this incorrectly and committing an offence. After 1st April and the Localism Act section relating to TDP comes into force (30 days to protect and serve the PIN) it will be an indefensible offence after those 30 days.
Any agent that has not protected what at Law is a deposit but that is being treated as rent in advance or anything else you want to call it would be well advised to protect all such deposits they have collected already this year - for that is what they are - by April 30th.
The definition of a deposit in the 2004 Housing Act is very wide and deliberately so mainly to prevent what the Law regards as a deposit as being something else just because an agent or Landlord gives it another name - such as holding fee or reservation fee etc.
In very simple terms any money held in contemplation of the discharge of a fuure obligation by the tenant the HA 2004 says is a deposit.
All agents handling any rent in advance for any reason, overseas workers who cannot be referenced or students or whatever need to be EXTREMELY careful.
Read s45 of The Housing Act 1988 and it gets even worse. In almost all cases unless the wording of the tenancy agreement is amende correctly all rent in advance will be a deposit. Doesn't matter what you think or prefer, or what the Landlord or agent want to call it, doesn't matter.
But how can you cater for that in the agreement and defend yourself in a scenario where you are taking money in January for an agreement that presumably won't be created and signed until July?
Issue a receipt and mention the word deposit and you are sunk too
Enter into a pre tenancy agreement and you are totally sunk as that confirms s45 of the 1988 Act.
It is a miracle, truly a miracle that no Landlord has ever been done dor this under the TDP regulations but with the Localism Act if they ever are then they are sunk as there are no more loopholes like late registration.
You seemed to think I have a Professional Axe to grind Ray and still not understanding quite how you were trying to insult/discredit me I thought I would involve you in this thread. It is a perfect example of how a solid respectable agent could find themselves in a professionally embarrassing situation through their use of software and the advice given to them by their software trainers or software support team.
A very high proportion of agents will not know how to handle or account for the monies received from these students. There is no guidance from on this from RICS/ARLA/NAEA and the legislation that controls this scenario is not widely understood. I know from dialogue with the ICAEW that they don’t understand it and I know from correspondence with DCLG that it took a week to go through the fine print of the legislation (I was correct). Both Hutton Parker and Finders Keeper s might do well to take Professional advice on how this cash is administered. While I am sure it will be apparent and reconcilable in whatever system they are using I would wager that more than 1 agent in Oxford is not accounting for this correctly, not because they are dishonest but because they have been mis-informed or misinterpreted very vague legislation.
A bunch of angry students with time on their hands and the University required ability to research stuff is an adversary I would not go into battle against on this matter. It could well end up with egg all over the faces of the agents involved, the Professional bodies and auditors that are supposed to oversee them and the software suppliers that agents are reliant on.
Leaving the word students out of the scenario how would/does your firm handle advanced rent and fees?
This is not just happening in Oxford. When I first encountered student lettings in Bristol the “start date” for the release of properties for the next academic year (the previous year ending 30th June) was April the same year. Gradually year-by-year that date moved forward until this year we were releasing our properties on 2nd January 2012 for a tenancy from 1st July 2012. This is NOT driven by the agents but the tenants. Our first student enquiry was on 4th December 2011 and my comment was that if this trend continued then as soon as one year’s tenants moved in, the next year’s would be viewing.
The problem seems to be that student tenants are fluid. What was a group of eight one year evolves, for various reasons into two groups of four or, at the last minute, resolves their differences and decides to stay one another year. It is neither the agents nor the landlords that are driving this, but the students themselves who, understandably, want the BEST accommodation which tends to go first. Can we blame them? No, why should we. Agents KNOW which properties will let first and we can persuade, suggest etc that students look at A rather than B but as the saying goes, “You can lead a blonde to Uni but you can’t make her think”
Perhaps instead of licensing agents, it is landlords who should be licensed. A SIMPLE system of £5 or £10 per student property would be sufficient. There could be a check list of basic needs to qualify and a “property licence number” could be displayed on ANY advert, even the card in the Newsagents’ window or a penalty large enough to deter “rogue landlords” could be imposed.
To sum up, it is not always “Greedy Buy-to-Let” Landlords or “Grasping” that are to blame. Sometimes it is the customer.
@Robert May on 2012-02-21 13:18:53
I have no experience of student lets and do not recollect
making any comments on this matter or previously said you are a "delusional crackhead".. Why have you included my name?
Attention, Matt, Ray Evans and the anon bloke who reckons I am a delusional crackhead.
This is a nice simple client accounting issue, if you three or any of the Oxford agents would like to answer the following questions I will probably provide a perfect example of what I was mauled for last week.
How would you account for the monies received from these students? when would you take your fees? What is the VAT due date? What would you do with the money retained?
I'm an estate agent and also have a daughter studying chemistry at Oxford Uni. She was in college for the first 2 years of her 4 yrs course, but from this coming October she has to 'live out'.
It was a bit of a shock for me to see the agent getting all this money 10 months before the start of the tenancy, not only from me but from 4 other parents of students sharing the house.
We had to have everything sorted by Christmas from recollection, but the veiled threat was - if you don't do it, someone else will!!
In addition the first month's rent plus Tenancy Deposit of 6 weeks equivalent was also handed over!
However, in my business, while we do 'lettings and management ' we don't do stooodents, and that suits me fine!.