Rent Officer Handbook: lettings research

Lettings research: collecting

The collection of information about lettings which may be used as evidence to support Rent Officer determinations of rent.

Lettings information for 12 month renewals

V2 2017

(This document contains active links to VOA internal documents, they are not available externally. Any broken links should be reported to RO.Guidance@voa.gsi.gov.uk)

Rent Officers should always try to ensure that any lettings information data is renewed on a 12 month basis in order to preserve the continuity of data for Local Reference Rent (LRR) and Local Housing Allowance (LHA) purposes and also to enable individual lettings to be tracked over a period of time.

All lettings information entered into VIS falls in to a 12 month timeline, which is used to compile list of rents for valuation, LRR and LHA purposes.

Renewals in VIS – timing

LI renewals should only be updated on the VIS database after the 12 month period has elapsed, that is to say if a piece of LI is entered in February 2016, that piece of LI will expire during February 2017 and therefore it should not be renewed in VIS until March 2017. If the data is reconfirmed with the same rent before the 12 month renewal date, then the quality assurance software will identify the record as a possible duplicate record and it may be deleted. It is therefore essential that Rent Officers do not renew LI data early. This way we can avoid duplicate records.

Rent Officers must renew data within 18 months of the last entry otherwise the data for that letting will be archived from VIS.

This does not affect the situation where a rent is renegotiated or the dwelling is relet during the 12 month period. New lettings or lettings which are subject to any changes, such as rent reviews, may simply be recorded afresh at any time.

Renewals in VIS – workflow

When renewing LI records it is important that Rent Officers only use the “Record Lettings Information” function. This will ensure that a piece of LI has a tracked history on VIS. The “Amend Lettings Information” function should not be used for renewals as this will overwrite the record and not provide the required tracked history. This ‘amend’ function should be used when making a correction to an item of LI.

For further information on how to differentiate between record and amend, please see “How To… Differentiate Between Amending and Updating Lettings Information” available on the Housing Allowances home page of the intranet under “Victer How tos”.

Rent Officers are encouraged to use the term ‘renewing’ instead of ‘updating’ and the term ‘correcting’ instead of the term ‘amending’, because they are clearer and less easy to confuse.

Where to find the 12 month renewal data

12 month renewal data can be found using the relevant workbook.

The workbook name starts with “Renewals Workbook” followed by the dates it covers.

  1. On opening the workbook, the user should select filter by “PI Number” in the top box
  2. In the second box, the user can scroll down to their PI number
  3. The user should then select “View renewals for selected category”

This will create a new workbook for the renewal data for that user, for LI which is due to expire over the next 3 months.

The Renewal Workbook

The workbook is in a standard excel format containing data from the VIS database under the headings below, and can be filtered by agent, by clicking on the relevant column, in order for the RO to be able to see easily in one location:

  • the data that needs reconfirming
  • who the source was
  • and their contact details

Columns in the workbook include:

  • Date Entered
  • BRMA_LHA, BRMA_LRR
  • Local Authority
  • Address
  • Postcode
  • Post Town
  • Market Rent
  • Ineligible Services
  • Rental Period
  • Source Name
  • Source Type
  • Source
  • Telephone Number
  • Property Type
  • Dwelling Type
  • Sole Living Rooms
  • Sole Bedrooms
  • Tenancy Start Date
  • MED_ID
  • Collected by
  • Team
  • Remarks
  • Used in CPIH?
  • Lettings Information – Recording

Board

(V2 2016)

Lettings where the rent includes an amount for meals. ##Board

(V2 2016)

Lettings where the rent includes an amount for meals.

Definition: Board and attendance

Board, for the purposes of collecting Category 1a lettings information (LI) is defined in the Housing Benefit Regulations (42, 52 and 75) as more than simply the provision of food. Board must include preparation and serving of food, and this must occur on the premises with the accommodation.

Exclusions

Category 1a is limited to 1 Room with Board, so any letting with exclusive use of more than one room does not fall within Category 1a. Self-catering accommodation, the provision of food for the tenant to prepare themselves or where meals are provided at separate premises is not classed as board.

Furthermore the board and attendance element must be a ‘substantial’ part of the rent, as determined by the Rent Officer dealing with a Housing Benefit referral. Case law* has indicated that this is around 15% of the total rent, and this needs to be borne in mind by the Rent Officer when exercising their judgement in collecting such evidence, especially if the total rent is particularly high.

Let as a home

Housing Benefit is only payable for costs incurred for a claimant’s home, so suitable LI is where the accommodation is let or occupied as a tenant’s home. Many one room lettings with board and attendance - such as those in commercial hotels and bed and breakfast (B&B) establishments - are made on a nightly basis and are therefore so short term as to be non-residential. These nightly arrangements rarely have any intention of the letting being of a home. It is not therefore appropriate to include this type of LI on our database.

When does a letting become a home?

The question is not easily answered and whilst we can be certain that a letting of a few days is unlikely to be a home, equally a letting of a few weeks (for example an extended holiday) may not be a home either. The Rent Officer must use judgement to determine whether or not a specific piece of LI is suitable. A letting would only qualify where it is made on a longer term basis, and most importantly, where the parties intend it to be used as a home. If the intention is there, then even if the occupancy ceases after a short period, the letting is likely to qualify as valid LI.

Experience would suggest that occupancy expected to last for weeks or months would attract a lower level of rent than a commercial nightly rate. Rent Officers must use professional judgement to decide whether a letting constitutes either a short term commercial or a long term residential arrangement.

Open market letting

For any letting to qualify as an open market letting, it must be:

  • Residential – the parties at commencement must expect the letting to last for more than a few nights and to be the occupant’s home
  • At a market rent – with neither party relying on a subsidy or premium
  • Available – to a number of potential lessees so as to provide a degree of market competition

These principles should be applied when considering all lettings information.

Support

Lettings which include an element of support are not likely to be open market lettings, because they are limited to particular client groups – such as adults in care, or rehabilitating offenders. These are not open market lettings even if the resident is paying from their own resources.

Sources

Board lettings evidence is one of the categories of evidence which is more difficult to obtain and often it is not openly advertised. Sources may include the following:

  • Major employers may have staff staying in various locations for whom they arrange accommodation, for example nurses near a hospital. These employers may be able to provide Rent Officers with contact details for such landlords
  • Schools and colleges may have a list of private B&B accommodation providers who offer longer term lettings. This may include universities and language schools for example
  • Theatres may arrange for actors and support staff to stay in local B&B accommodation, and may be able to supply sources that may be of use
  • HB referred board accommodation should be inspected as often as possible in accordance with the inspection policy as there may be occasions where landlords have other guests paying out of their own resources and living in the accommodation as their home
  • Classified advertisements from local sources may be checked as a local source of contacts for landlords providing board and lodging lettings, including shop windows and local press
  • Websites – whilst some may be of use, it is important to avoid coming into conflict with the website owners for misuse of information. The general rule is that if a website is merely a series of classified advertisements placed by the landlords with contact details openly displayed, then these are generally to be treated like any other classified advertisement. Rent Officers may contact the landlord and explain who they are and the reason for their call. If in doubt about using any website please contact RO Guidance for further advice

Hotels and commercial B&Bs

The provision of bed and breakfast accommodation by hotels and guest houses would not normally fulfil the requirement that the accommodation is let as a home. That said, it does not automatically mean that these hotels and guest houses cannot be sources of appropriate lettings information, as they may also provide longer term accommodation at reduced rates below those advertised as nightly rates on their tariff. They may also offer lettings as homes outside their normal ‘season’ - for example in seaside towns in the winter season. Rent Officers will need to ask the providers of such accommodation whether they provide reduced rates for long term residents, and if so obtain details of particular lettings where the accommodation is the occupant’s home.

Care should be exercised when applying the judgement as to whether a letting constitutes a home. Some commercial hotels or B&B establishments may offer working contractors on local construction or similar projects accommodation for 3 to 5 nights per week during the working week, where the resident returns to their main home at the weekends. These lettings could only be used as supporting evidence, and should only be recorded where no confirmed evidence is available, and after Rent Officers have discussed the matter with line management.

Hostels

Some hostels which may or may not be the subject of Housing Benefit referrals may offer long term lettings to customers paying from their own resources.

*Case Law

The cases which indicate that there is a range of substantiality points which generally indicate that an amount more than 15% of the rent would be a substantial amount, are Woodward v Docherty and another (Court of Appeal 1974), Nye v Davies (1922), Palser v Grindling (1947) and Property Holding Co Ltd v Mischeff (1947).

  • HB Determination – Board and attendance
  • LI collection – subsidies and premiums
  • LI collection – Internet
  • LI Quality – all pages

Housing Benefit data

(V1 2016)

Lettings which may involve claims for Housing Benefit.

When making determinations or compiling a list of rents under their Housing Benefit functions, Rent Officers must “assume that no-one who would have been entitled to housing benefit had sought or is seeking the tenancy”. This requirement is to prevent the availability of housing benefit subsidy inflating rents in the Private Rented Sector.

In practice this means that Rent Officers must cross check lettings information against current housing benefit claims to identify those items supported by housing benefit (HB). This does not mean that lettings information (LI) where housing benefit is paid has no value. If the letting was entered into without any reliance on Housing Benefit then the rent may represent an open market rent in the market, and an indication of this would be if there was no claim made for Housing Benefit until at least three months had elapsed from the tenancy start date. These lettings may be recorded on the lettings database.

Regulation 114a

Under Housing Benefit Regulation 114A, the Local Authority is required to provide the Rent Officer with details of claims submitted under the Local Housing Allowance (LHA) scheme, as well as referrals which are exempt from LHA. The regulation states that this data must be provided no later than the fifth working day of every month. Rent Officers refer to this as ‘datashare’, and this information is used to identify any LI that has been entered on the database where the local authority have identified LHA as being payable. Such items are removed unless it can be shown that there were at least three months between the tenancy starting and the claim being made.

Open market rents

Open market rents are defined as:

“The estimated amount for which a property would be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.” (RICS Red Book)

Open market lettings should be should be negotiated freely and the lettings information should not be affected by evidence where the parties have not freely negotiated or entered into an agreement regarding the passing rent. On some occasions a letting may have a premium or subsidy included in the agreed rent. Where an additional amount is included for a premium or subsidy this evidence may need to be excluded from the lettings information as it may not be an open market rent.

Premium

A premium is a one off up-front payment in order to obtain a tenancy, where an amount would be paid from the tenant to the landlord. One example of this would be where a tenant pays an initial premium to the Landlord to secure the leasehold for a period of time and the rent for the remainder of the tenancy is subsequently reduced. This means the actual rent paid is not a true open market rent.

Subsidy

Subsidies include payments from the landlord to the tenant in order to let the property. For example the landlord may agree to rent the property for 12 months at £400 per calendar month but gives the tenant 1 month free i.e. a rent free period. This means the rent paid over the total tenancy will actually be less and the subsequent rent will not be a true open market rent. Another example would be landlords offering a very low or peppercorn rent as incentive to rent a property that is undergoing refurbishment. The rent would only reflect an open market rent once the refurbishment was completed and the landlord increased the rent.

Another type of subsidy is where rents are paid by employers. In these areas the employer may set an amount of rental subsidy that it is prepared to offer, and this could distort the market because there is no incentive for the tenant to negotiate and rents will tend to reflect whatever amount is set by the employer. In these cases extra consideration should be given as to whether this represents a true open market rent before entering the evidence on to the database. If Rent Officers are in doubt, they may consult the guidance team.

Similarly, where rent is funded in whole or in part by a claim for Housing Benefit, the incentive to negotiate is compromised, and the rent could not be said to be a true open market rent, hence its exclusion from the database of LI. Only where the claim was made after three months have elapsed from the date of the tenancy starting would the evidence be acceptable as LI.

In respect of a Housing Benefit claim where there is a rent free period, the claimant would not receive any payment for that rent free period because his eligible rent for that period is nil as the tenant has no rental liability for that period.

It is important that Rent Officers recognise where a premium or subsidy is included in the rent because evidence that includes such an amount could have an effect on the lettings information and ultimately the LHA.

Where it is found that a premium or subsidy is included in the rent, the Rent Officer should use their judgement to decide whether the evidence should either be excluded or converted to the appropriate figure. In the majority of cases the evidence will be excluded but if the item is being considered for inclusion then there should be further discussion with a line manager before deciding to record that evidence. Where the evidence is to be included it may be appropriate for the premium or subsidy to be annualised over the period, so it will be divided over the length of the tenancy.

Other uses of Housing Benefit data

Pre-Tenancy Determination applications provide Rent Officers with landlord contact details. Whilst the PTD case itself may not be suitable LI, the Rent Officer should ask the landlord for details of any other lettings they may have, which may be suitable LI.

When visiting HMOs, Rent Officers should take the opportunity of asking landlords if they have other lettings, or any occupiers paying from their own resources, which may be suitable LI.

Market intelligence

Rent Officers need to be aware of the role that housing benefit can play in the Private Rented Sector. They should therefore examine the latest DWP private sector housing benefit caseload figures compared with the private sector tenure figures in the latest census.

For a Broad Rental Market Area where the proportion of tenancies supported by housing benefit constitutes most of the area’s PRS, it can be a constant challenge to maintain a robust list of rents. Rent Officers need to work together to adopt the most effective way of capturing lettings information unsupported by housing benefit.

Where these areas of relative weakness in the data available are identified, Rent Officers should discuss the issue with team colleagues and line management, and a strategy for addressing the issue should be agreed and recorded. Lettings research teams have a wealth of experience in maximising the LI collected in areas where little is available, so successful strategies used elsewhere may be appropriately replicated in an attempt to address the deficiencies identified.

As a last resort, where a category remains deficient, despite the adoption of different strategies to address the deficiencies either in number of items or range of rents, the Order provides for extrapolation from a comparable BRMA though this is rarely found to be necessary in practice.

  • Housing Benefit – all pages
  • Local Housing Allowances – all pages

Internet

(V1.1 2016)

Lettings information discovered through use of the internet.

Websites

Rent Officers may use the internet to seek out Lettings Information (LI) sources and confirm data. Websites themselves will not give confirmed LI, and generally will only give advertised rents with limited property details and no full address. Rent Officers must treat agent websites and advertised lettings as “raw data” and must aim to confirm the details of the dwelling including numbers of living rooms and bedroom, date of letting and agreed rent before entering LI on the database. There are a number of websites that give access to raw lettings information data, and also a number of websites that allow Rent Officers to “view” the property from the outside which may help to identify individual cases. Websites should be seen as a source of landlord or agent contacts for LI, rather than a specific source of confirmed LI.

Terms of use

Rent Officers must avoid coming into conflict with website owners for misuse of their information. Rent Officers must never register to use a website posing as a potential landlord or tenant in order to obtain information. The terms of use of websites should be reviewed carefully. The general rule is that if a website is merely a series of classified advertisements placed by the landlords with contact details openly displayed, then these are generally to be treated like any other classified advertisement. Rent Officers may contact the landlord and explain who they are and the reason for their call. If in doubt about using any website please contact RO Guidance for further advice.

The PRS Stakeholder team may be able to assist in contacting the proprietors of websites directly in order to obtain lettings information by electronic download.

Contacting sources

Whenever Rent Officers contact any potential source of lettings information, they must:

  • Clearly identify themselves as Rent Officers
  • Explain the reason for their call
  • Explain what we do, why they are seeking lettings information and why it is important for them to assist

Use of email

Whenever contact is made by email, it is essential that email addresses are recorded accurately, and validated so as to ensure information is not accidentally sent to the wrong recipient. Validation should be by Rent Officers sending a message to the email address to confirm the identity of the recipient before sending them any of the LI data (which they previously supplied) to review. Rent Officers should communicate with landlords and agents through their business email addresses wherever possible, so private email addresses, particularly for agents, must be avoided. There are data protection risks for example where the agent moves to a different employer and so they no longer deal with the subject LI.

Data Protection Act

Potential sources of lettings information may have reservations about divulging it to any outside body. Often a reassuring letter explaining our role is sufficient to quell their concerns. Whilst we cannot give them legal advice, we can confirm that any information they do provide will be processed for our purposes only and in accordance with our registration with the Information Commissioner’s Office. We never share name and address details with anyone except our statisticians.

Market knowledge or market intelligence

Websites are useful sources of a variety of market information, from advertised rents and landlord contact details to planning authority decisions for new infrastructural works or new housing estates. Local knowledge of current accommodation issues, rental trends, shortage of available housing or other housing related matters will help better inform the Rent Officer as to the issues affecting the local market, and this in turn will help inform their discussions with property professionals, landlords and agents when attempting to collect LI. Information obtained from the internet may also help to explain any anomalies in LI collected, and also help to focus LI collection planning in the future.

  • LI – quality – market intelligence
  • LI – collection – all other pages
  • Data Protection

Sites and moorings

(V1.2 2016)

Lettings of site rents where caravans may be placed, and moorings where houseboats may be placed.

Sites defined

Sites are areas of land where the occupier places their caravan or mobile home. In the case of mobile homes these sites may be grouped together to form a small community such as Park Home Sites. At its simplest the site may be part of a field with few amenities, ranging to the more organised sites where there may be a network of roads, services available including drainage, electrical hook up and on some sites other shared facilities like a laundry or a site shop.

In holiday resort locations sometimes the sites are part of a mixed holiday/residential complex, and these can include additional leisure facilities (e.g. swimming pools).

The individual spaces for caravans are often called ‘pitches’, and they vary in size, sometimes referred to as single or double pitches, or their size may be described by reference to the size of the dwelling. There is a vast variety of dwellings available to locate on these sites but they rarely exceed three bedrooms (4 rooms).

Site rents

The ‘pitch’ belongs to the site or park, for which the dwelling owner pays a ground rent, often called a ‘site rent’ or ‘pitch fee’. It is these site rents which Rent Officers require as evidence or Lettings Information. Such lettings are eligible for Housing Benefit and as such the collection of this LI is crucial to the RO role.

The protection offered by the Mobile Homes Act 1983 (Amended 2006) applies to licensed mobile home residential parks, and is not available to holiday parks. There are also important differences between a residential park home, which is designed and built for year round residential living, and a caravan holiday home, which is constructed to different standards to reflect its use as, often seasonal, leisure accommodation.

The Mobile Homes Act 1983 (Amended 2006) gives owners of park homes security of tenure - and that is probably its single most important safeguard. It also gives the owner of the dwelling the right to sell it to a new occupier, leaving it ‘in situ’ on the park, and the right to leave the dwelling to certain members of the family.

Site rent renewals

Importantly the Act also limits the amount of rent increase which the site owner may charge for pitch fee reviews. These rent reviews are often annual and are limited to an RPI (Retail Price Index) based figure. (Such rent reviews may also be increased or decreased by an amount to reflect the landlord’s costs where amenities have been increased or decreased for the site.)

Rent Officers must take care to collect LI for newly negotiated pitch fees and site rents, and record these lettings as confirmed data. Renewals not subject to limited rent increases, or where less than the statutory rent limit has been applied where that is all that the local market supports, may also be recorded as confirmed data. Renewals which are limited to RPI increases by statute do not represent freely negotiated market rent rates, and so may only be recorded as supporting information.

Separate let

Eligible LI for site rents must have a separate landlord from the caravan itself. Where the site owner also owns and rents out the caravan, then this would not be suitable site rent LI. It may however form suitable LI of the caravan (inclusive of site rent).

Pitch attributes

Site rents tend to be standard charges for each site. However, if there is evidence that the charges are different for different sizes of dwelling, this may be recorded on the LI database. RO’s must reflect this in their Significantly High Rent determination, but not for the Local Reference Rent, because this must include all site rents for all sites and all fees in the BRMA(LRR) or in any extrapolated lettings information from outside the subject BRMA(LRR).

For example, if a site charges £20 per week as a site fee for a 2 bed dwelling, and the same site has larger pitches for which it charges £30 per week for 3 or 4 bed dwellings, then the LI for both types of letting may be recorded, along with the number of pitches available on the site. Care should be taken to ensure that confirmed lettings information excludes any site rents which are limited by the operation of the Mobile Homes Act which restricts the rent increase to an RPI based figure for existing lettings which are being reviewed. (See site rent renewals, above.)

Moorings defined

In simple terms it is a place to tether a vessel on water. There are many different types of mooring including:

  • Pontoon berth – pontoons (floating walkways) are generally constructed in sheltered areas such as river estuaries, often forming the bulk of marina berths. Electrical supply may be available. These tend to be some of the most expensive berths available
  • Swinging mooring – Here the vessel is tethered to the sea bed via a chain to a ground anchor or heavy weight; it is able to move with the tide wind and currents. This type of mooring is further divided into deep water where the vessel remains afloat at all times and drying or mud berth where the vessel will dry out, or ‘ground’ dependant on the tide (sometimes called half tidal). Moorings that dry out tend to be cheaper than those that do not
  • Trot – the vessel is moored/ tethered between either two anchor points on the sea bed or between two posts sunk in the sea bed. These are invariable used where a swinging mooring could cause problems as it ‘swings’ or where space is at a premium
  • Bank side – here the vessel is moored fore and aft to the river or canal bank

Residential moorings

Residential moorings, which are often pontoon or bank side types, have an element of security attached to them, a proper address, the ability to use this on legal documents and accessibility to local services – council tax may also be payable. Residential lettings may include those which are let or used as the occupier’s home.

It is these mooring fees which Rent Officers require as evidence or Lettings Information. Such lettings are eligible for Housing Benefit and as such the collection of this LI is crucial to the RO role.

Marinas often comprise a mixture of mooring types, not all will be suitable for every kind of vessel dependant on size and type.

Inland and coastal moorings

Moorings can be found not only on the coast but also on the many inland waterways throughout the country, the two are very different with only certain types of vessel able to use each category. Other than smaller motor boats there are relatively few vessels that can realistically use both.

  • Inland waterways – these comprise mainly canal and river courses which are usually used by shallow drafted vessels such as canal boats or barges, (collectively often referred to as narrow boats), motor cruisers and smaller sailing craft (for example on the Norfolk broads)
  • Coastal moorings – These are to be found all around the coast of Britain occupying river estuaries and natural harbours. They are used primarily by sailing craft and motor cruisers

Separate let

Eligible LI for moorings must have a separate landlord from the vessel itself. Where the mooring owner also owns and rents out the vessel, then this would not be suitable moorings LI. However it may be suitable to record as a letting of the boat if used as a dwelling (inclusive of the mooring fee).

Sources

The majority of marinas seem to have websites where mooring charges and facilities are readily available. The rates tend to be reviewed at the end of March each year. Internet research will reveal a vast amount of available data. For inland waterways The Canals and Rivers Trust (formerly British Waterways) have details of moorings and restrictions on size for canals in various parts of the country.

The evidence used must cover the range of charges for varying lengths of boat, and because of this there may be a number of entries for each data source. It is also important to record the type of mooring, the type of vessel capable of occupying the mooring and any unusual features or benefits within the charge.

Moorings data must be recorded on the Moorings Database Spreadsheet, and guidance about its use can be found in the shared drive.

Most moorings are charged according to length of vessel and are therefore usually expressed in pounds per metre (£/m), and should be recorded as such on the Moorings Lettings Information spreadsheet in the shared drive. Some moorings are charged by the berth; these should be recorded as such on the spreadsheet so that when dealing with a valuation case, the Rent Officer can input the boat length to ensure the list of rents produced reflects the charge for the vessel in question at the various locations, to enable like for like comparison of charges.

Licence fees

On many waterways it is necessary to pay a (boat or craft) licence fee to the navigation authority, often the Canal and River Trust (formerly British Waterways), or the Environment Agency on many inland navigations, to use a boat on that waterway. On coastal moorings similar charges, known as harbour dues, are payable to the harbour authority.

These separate fees and dues are also eligible for housing benefit and are therefore of importance when compiling and comparing Lettings Information and determining value.

Let as a home

Housing Benefit is only payable for costs incurred for a claimant’s home, so suitable LI is where the mooring or site is let or occupied as a tenant’s home.

Residential v leisure

Moorings or sites may be classified as residential or leisure. Residential lettings are those with planning permission to be used for permanent living, whereas leisure lettings are intended for short term weekend or holiday purposes. Charges paid exclusively for holiday or leisure purposes must not be entered as Lettings Information, however, where there is evidence that leisure lettings are being used for residential occupation, then these may be used. An example of such use would be where the Rent Officer is aware that the lettings in a location are leisure lettings, but there are a number of HB claims being submitted.

Special cases: treatment under RO Order

Referrals for Site Rents or Moorings are exempt from the Local Housing Allowance, and are treated as special cases under the Rent Officers Order. The main difference to note is that the “Size and Rent” determination does not apply to such cases.

  • Caravan site fees
  • Mooring charges
  • LI recording – dates

Housing Associations

Lettings where the landlord is a Housing Association.

Housing Associations are also known as Private Registered Providers (see glossary).

Whilst traditionally, Housing Association accommodation was generally let at subsidised rents in a closed market Social Rented Sector, with the reduction in central grant funding, many Housing Associations have now diversified their lettings policy and may rent accommodation at a variety of different rent levels to specific tenant groups such as “key workers” and to comply with various initiatives such as “Affordable Rents”. Social rents are less affected by market fluctuations than the Private Rented Sector, although many will be loosely based on a proportion of market rents and local incomes. Affordable Rents are set at no more than 80% of their market rent equivalent, for example. In order to enable Housing Associations to offset any subsidised rents, and also to raise capital to build new homes, some also let accommodation at full “open market” rents, and these lettings provide suitable Lettings Information for collection by the Rent Officer.

Definition: Open Market lettings

Open market rents are defined as:

The estimated amount for which a property would be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion. (RICS Red Book) Reference to the phrase “in an arm’s length transaction, after proper marketing“ will help in deciding if the property was made available to all in the open market, or whether it was limited to a few persons only, such as staff of the Housing Association.

Verbal confirmation that a rent is “at an open market rent” or the accommodation is “let on an Assured Shorthold Tenancy” is not conclusive evidence that a letting qualifies as lettings information. Further enquiry is necessary to establish whether it was available in the open market and let, unsubsidised, at a market rent. Rent Officers need to be clear on what is required, so that an appropriate line of enquiry can be made to identify lettings information suitable to meet the quality standards required by the Rent Officer.

Openly available

It is essential that a letting has been made on the basis that it has been available to all, or at least to a wide group of potential tenants, and marketed adequately to ensure full exposure to the market forces of supply and demand. In that way, the rent ultimately achieved will be the maximum that a willing lessor and lessee have agreed.

Appropriate questions need to be asked to establish the relationship between landlord and tenant and whether the rent charged is influenced by anything other than market forces. An appropriate line of questioning to establish this may include:

  • Is the property owned or held on a head lease by the Housing Association?
  • How was the property marketed? Was it advertised for others in the open market to rent?
  • Is the letting targeted at a specific category of tenant or does it have a planning restriction on the type of occupier?
  • Could I have rented it, at the same rent?
  • Is the tenant employed by the organisation?
  • Is the rent deducted from the employee’s salary?
  • Do other employees at the same grade without accommodation receive the same gross salary?

If the rent differs significantly from those of similar properties in the locality, this may trigger the Rent Officer to make further enquiries along the above lines. There are many scenarios which cannot be covered here. It could be that the landlord owns the property and lets it to an employee at a subsidised rent, or the employee may have responded to an advert in the open market; in this instance enquires should be made to establish if the employee receives any allowance which may permit him/her to pay more than a market rent for the premises. There may however be no relationship between landlord and tenant apart from the letting. For example the organisation may have a surplus of stock which they let in the open market. However it should be established whether they are truly let at open market rents. Again, Rent Officers should ask the question ‘would you have let it to me?’, and compare the rent with other reliable sources in order to question any differences. Open market lettings information from Housing Associations, and other organisations such as Hospital Trusts, is likely to be exceptional and scarce - so Rent Officers should scrutinise it carefully and thoroughly until there is certainty that all doubt has been removed. If Rent Officers are unable to get all their questions answered, the data should be disregarded as lettings information, rather than accepted without all the necessary facts.

Sources

The stakeholder team hold a central list of all Housing Associations which have been approached as data sources by Rent Officers collecting lettings information, and this should be consulted before fresh approaches are made at a local level.

The spreadsheet has been populated with some known existing contacts. Rent Officers should add any relevant contacts not already listed, then maintain the list with updates and revisions as necessary. Rent Officers working with or intending to work with a Housing Association should check for an entry and where necessary liaise with colleagues. Rent Officers maintaining the contact list will help to:

  • Agree collection strategies
  • Coordinate contact across Rent Officer teams
  • Target and manage collection to minimise the impact on the HA and avoid duplication of effort
  • Monitor and audit collection
  • Evaluate and share information

Glossary

Below is a glossary of terms used in the Social Rented Sector. They will help the Rent Officer to have informed discussions with Housing Associations they may approach as data sources.

A key worker: is a public sector employee who is considered to provide an essential service. The term is often used in the United Kingdom in the context of those essential workers who may find it difficult to buy property in the area where they work. Those defined as key workers generally include:

Social Housing: Social housing is defined in the Housing and Regeneration Act 2008 sections 68-77. The term covers low cost rented housing, low cost home ownership housing and ‘legacy’ stock owned by social landlords that were registered prior to 1 April 2010.

Private Registered Provider (PRP): previously known as Registered Social Landlord (RSL). This is the name for not-for-profit independent social housing providers approved and regulated by Government and often referred to as Housing Associations. These organisations provide homes for people in need, at rents below the market rent, and many offer shared ownership schemes where tenants can part-buy and part-rent their home. Most local authorities have now transferred all or part of their housing stock to these organisations. This term excludes local authority registered providers.

Owned stock: Stock which is held freehold or on a lease of any duration, and where 100% of the equity is held by the PRP.

Managed stock: refers to properties that the PRP manages on behalf of another owning organisation.

Supported housing: This applies to purpose designed or designated Supported Housing. The delivery of support under the Supporting People framework does not necessarily result in the categorisation of housing as supported if the property is not purpose designed or designated for a particular client group; in the absence of either of these two conditions, housing is General Needs. The fact that a tenant receives support services in their home does not make it Supported Housing.

Housing for older people: This is defined as stock intended for older people (regardless of the actual characteristics of each tenant) and it either incorporates a range of basic facilities and special design features or is specially designated Supported Housing for Older People.

Intermediate rent: This is social housing provided to tenants at rent levels which are above Social Rent (target) levels and below market rent levels. This housing includes (but is not restricted to) key worker accommodation and the Intermediate Rent housing funded by the Homes and Communities Agency (HCA) and its predecessor bodies. Typically levels of rent for these properties are set at no more than 80% of the comparative market level.

Affordable rent: This is the main type of new housing supply. Affordable Rent homes are made available by providers to households that are eligible for social rented housing at a rent level of no more than 80% of local market rents. Affordable Rent homes cover both newly built and conversions from existing social rented homes to Affordable Rent homes, but only where this forms part of a new supply agreement with the Homes and Communities Agency. Affordable Rent homes may be for General Needs, Supported Housing or Housing for Older People. Homes let on Affordable Rent terms fall within the definition of social housing, but are exempt from the full requirements of rent restructuring.

Low cost home ownership (social leased housing): This is defined in the Housing and Regeneration Act 2008 as being that occupied or made available for occupation in accordance with shared ownership arrangements, equity percentage arrangements, or shared ownership trusts; and it is made available to people whose needs are not adequately served by the commercial housing market. The landlord retains the freehold interest in the property where the purchaser has not acquired 100% of the equity in the property. The purchaser may have the right to staircase their ownership of equity over time but has not yet stair cased to 100%.

Large scale voluntary transfers (LSVTs): These apply where a local authority transfers whole or part of its housing stock to an independent Private Registered Provider (Housing Association). An LSVT can only take place after tenants in the housing stock to be transferred have voted on the proposal to transfer the stock. All tenants have a right to vote and the result of the vote is decided on the preference of the majority of tenants that exercise their right to vote.

Arm’s length management organisations (ALMOs): These apply where a local authority has established a fully owned and controlled organisation to manage a function or operation for which the local authority retains responsibility. In terms of housing ALMOs deliver the landlord functions under a management contract with the local authority, and in the majority of cases, are not the landlord, the local authority being the landlord of the stock to which the management contract applies.

Rent restructuring or the rent influencing regime: This was introduced in 2001 following the publication of the Social Rent Guidance by Government. A key part of this was the introduction of a formula to calculate target rents for properties let at social rents. The target is based upon relative earnings, property valuation and number of bedrooms and it is intended that similarly sized properties in the same area of the country should have similar rent levels.

Extracts from the Homes and Communities Agency Statistical Release August 2012

  • LI collection – all other pages

Students

(v5 2016)

Lettings to students.

Students are accommodated in:

  • On or off site “halls of residence” which are owned and run by the university or education establishment themselves. In some cases these may be provided by an external body. These are exclusively available to students, and so are not open market lettings
  • Private rented housing either renting a specific room alone or perhaps a whole house or flat together with other students as joint tenants. These may be recorded as open market lettings
  • Rooms with private resident landlords which may include board. These may be recorded as open market lettings

Contacting Accommodation Officers

Rent Officers should maintain regular contact with accommodation officers at universities and higher education establishments to collect landlord contact details, lettings lists and market intelligence, and then follow this up with direct contact to the landlords of the accommodation. The aim is to find confirmed LI which may be entered on the database.

The accommodation office of the university may be acting as though it were a letting agency, where it arranges the lettings on behalf of the landlord. However it may be just a referral service between the landlord and the student as a potential tenant, where the actual letting is made directly between the landlord and the tenant(s).

Rent officers should also ask accommodation officers whether they have details of properties and rents let to staff and postgraduate students. These may not always be on the student lettings list, but may be information available to the accommodation office, and would help inform the rent officer about local lettings on open market terms.

At certain times of the academic year there may be more market activity, such as January to April when existing students may agree lettings for the coming academic year. Properties not let at this time are usually let in September when there is less choice. Such information may help to inform market intelligence in relation to supply and demand, and possible effects on the wider market, and this research should be recorded in rent officers’ market reports.

Open market lettings

The Rent Officer must establish that lettings are open market lettings. This means that the accommodation is available to all, has been marketed, and a rent agreed between a willing landlord and tenant. For clarity, whether a residential rent is negotiated or not, if the RO is satisfied that the rent is being paid by a willing tenant to a willing landlord without recourse to premiums or subsidies, then it may be recorded as LI.

Joint tenancies and room lettings

A joint tenancy is one where a group of tenants jointly rent the whole dwelling. They are not allocated a specific part of the dwelling for a specific rent share. They are all named on the same tenancy agreement, and they have taken the tenancy together, and are jointly and severally liable for the whole rent. This means that all joint tenants are entitled to occupy all of the dwelling, and if one tenant moves out, then the remaining tenants are still liable for the whole rent for the whole dwelling. The LI here will be for the whole house or flat.

This is distinct from the situation where several tenants occupy a dwelling together but are allocated separate rooms under separate contracts, whether written or verbal. Each pays a specific rent for exclusive use of a specific room and they share the rest of the facilities. Here each tenant has a tenancy of a room in a shared property. The LI here will be for a room. Each room letting may be recorded separately.

The vital aspect to remember is to record the letting according to the contractual arrangement between the landlord and the tenant. If there is a single tenancy agreement between the landlord and all the tenants, then the letting must be recorded as a single letting of the whole house at the total rent. This rent is a market rent even if it is more than a family letting would sustain. If however each tenant has a separate agreement with the landlord for a rent for their room in the house, then this must be recorded as room evidence. Rent officers must record the contractual arrangement.

Collecting and recording student lettings information

Halls of Residence, whether run by the educational establishment or an external provider, are open only to students. The institution sets the rent and the accommodation is only available to its students, and as such these lettings are not part of the open market. These lettings must not be recorded on VIS, because such lettings must not be used in the Lists of Rents for production of Local Housing Allowances.

Where educational establishments rent the property from a private landlord and then sub-let to students under a head lease, the letting to the student may not an open market letting if the educational establishment is subsidising the rent, and if this is the case it must be excluded from VIS and from the Lists of Rents.

Where an educational establishment is formally acting as though it were a Letting Agent, this data should be recorded as the source being the educational establishment. This needs to be differentiated from where the educational establishment is not acting as though it were a Letting Agent, but is simply introducing landlords to potential tenants.

  • Where the educational establishment administers or manages the tenancy as though it were a letting agent, Rent Officers should record Source Type as Educational Establishment. The Source Name field is not enabled but a suitable note to clarify the name of the educational establishment should be entered into the remarks field
  • Where the educational establishment merely provides the student with the landlord’s contact details, and the tenancy is administered or managed by the landlord, either direct or through an agent, then the source type should be recorded as the landlord or agent as appropriate, and not as the educational establishment

Other issues

Council Tax

Students are exempt from paying Council Tax (CT) but this does not affect open market status. A tenancy agreement may say that the rent is exclusive of any CT element, but, whether the tenant is a member of any CT exempt category, this is not an indicator of a closed market. The only time a landlord becomes liable to pay CT on their property is when it lies empty, that is, for void periods.

Proportionality

Rent officers should study the operation of the lettings market locally and try to ascertain the proportion of the lettings market which is made up of students with joint tenancies, student lettings of rooms, etc. The lettings database should as far as possible reflect these proportions. RO’s should discuss the volumes of data collected with their line manager and ensure that the recorded data properly and fully reflects the Private Rented Sector.

Category 1a Board

Student lettings lists may also be a source of board and attendance information where the landlord is resident. The vast majority of these rooms will be the students’ main residence. English language schools have been found to be a good source of information in this regard.

  • LI collecting – Board
  • LI recording – rooms
  • LI recording – VIS
  • LI recording – all other pages

Closed Markets

(v1.1 2017)

Our handbook page on Lettings Information from Housing Associations stresses; It is essential that a letting has been made on the basis that it has been available to all, or at least to a wide group of potential tenants, and marketed adequately to ensure full exposure to the market forces of supply and demand. In that way, the rent ultimately achieved will be the maximum that a willing lessor and lessee have agreed.

The page on Board data says;

For any letting to qualify as an open market letting, it must be:

  • Residential – the parties at commencement must expect the letting to last for more than a few nights and to be the occupant’s home
  • At a market rent – with neither party relying on a subsidy or premium
  • Available – to a number of potential lessees so as to provide a degree of market competition. These principles should be applied when considering all lettings information

The page on Students says;

The Rent Officer must establish that lettings are open market lettings. This means that the accommodation is available to all, has been marketed, and a rent agreed between a willing landlord and tenant.

What is a Closed Market?

A closed market is any form of marketing which excludes a significant proportion of potential tenants from being able to obtain the accommodation. This may be because it is available;

  • Only to students
  • Only to people employed by a certain employer, or in a certain location or industry
  • Only to people over 50 years of age, or any other age restriction
  • Only to some other sub-section of the potential market

Such resulting lettings cannot be said to be open market lettings and should not be recorded on the rent officer’s list of rents. As such they must only ever be recorded on the supporting data spreadsheet maintained by the Central Support Team, and never on VIS.

What is not a closed market?

This is not the same as a restriction placed on the potential tenant’s circumstances or treatment of the dwelling, such as the landlord advertising a property for let to people, and saying:

  • Non-smokers only
  • No pets
  • No-one claiming benefits

Any individual could meet these requirements and so this would not represent a closed market.

  • All pages on Lettings Information – Collecting