Rent Officer Handbook: lettings research

Lettings research: recording

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

Number of bedrooms

(V1 2016)

Recording the appropriate number of bedrooms for the letting.

Bedroom definition

There is no statutory definition as to what constitutes a bedroom or a room suitable for living in. A bedroom is a room where someone usually sleeps, however they may also use it for other activities such as working. A living room is a room for sitting or eating or watching the television. Sometimes one can be used as the other, and in general lettings can take different forms depending on the nature of the locality and the type of tenant in occupation or the way in which the property is marketed for letting by a landlord.

Under the Housing Benefit Scheme, Rent Officers treat ‘bedrooms and rooms suitable for living in’ interchangeably, and Local Reference Rents are based on the total number of such rooms (bedrooms and living rooms, but also including dining rooms, and some conservatories and kitchens where they are combined into living or dining rooms).

Under the Local Housing Allowance Scheme, the LHA is based on the number of bedrooms alone. Therefore it is vital when collecting lettings information to understand precisely how the property is being let or marketed for letting, to ensure the lettings information is used accurately so as not to distort the LHA.

Under fair rent case work, evidence of a letting of as similar a property as possible (market comparable) is used, so accurate recording of lettings is important where it is known, and assumptions should be avoided. There are some physical limitations on what can be realistically used or marketed as a bedroom, such as floor area, head room, whether it has natural light and ventilation, and the room shape, which Rent Officers should be aware of. However Rent Officers may not have access to such information about the properties which are the subject of collected lettings data. Should they become aware of such issues when conducting cross checking and quality assurance, they should account for this when recording the item of lettings information.

Bedrooms v living rooms

Generally most landlords and lettings agents market rental properties based on the number of bedrooms they have. The way in which a property is marketed can vary depending on the location of the property. The nature of the lettings market in the area where the property is located determines how it is marketed and consequently how we then record the information.

A common example of this would be in a university town or city where properties may have 3 bedrooms and two living rooms, but where they are let as 5 bedroom properties because the living rooms are actually used as bedrooms in order to maximise the occupation of the property and hence the potential rental income. It is important to have local knowledge of the area, or market intelligence, to ensure that evidence is entered accurately onto VIS in accordance with the manner in which it is marketed and let.

How to record on VIS

It is important to enter the advertised number of bedrooms into VIS, or rarely, the adjusted number where more accurate information is known about the property. Where the number of bedrooms is not given in the raw data collected, Rent Officers should never assume that it is the same as other properties on the street as the property could be let in a different manner. In the absence of information in relation to how a letting was marketed, further enquiries should be made of the data source to ask how the tenant found the property and how many bedrooms it was said to have had at the commencement of the tenancy. This is part of the process of converting raw data into robust lettings information.

If lettings are not recorded accurately in terms of the number of bedrooms they are marketed and let with, it may affect the local housing allowance. For example a terraced house let at £300 per week could be assumed (from its location and similarity with the neighbouring properties) to have 3 bedrooms. This could cause subsequent problems with the 3 bedroom LHA in that area because the rent of £300 per week may be high for a 3 bedroom letting in the area. The property is in a university area where the lettings market is dominated by lettings to students and it has been let as 5 bedroom property to students. So the evidence should have been entered onto VIS as having 5 bedrooms. The relatively high rent should also have given a good indication that the property was not let out in its usual 3 bedroom form, which should have alerted the Rent Officer to look more closely at the raw data. This could apply similarly to the number of living rooms if this is included in the raw data.

Properties which are let to include separate annexes should be recorded with the total number of bedrooms and living rooms, so even if they are marketed as a 3 bedroom 2 living room house with an annex, if the annex has 1 bedroom and 1 living room, and the tenancy includes it, the total number of rooms to be recorded on VIS is 4 bedrooms and 3 living rooms. An explanation of the fact that 1 bedroom and 1 living room is in a separate annex may be added in to remarks.

Another example of such an effect on local lettings markets could be in areas where there is a higher density of occupation, such as where there are significant numbers of larger family sizes or groups that are willing to share. Again living rooms may be used as bedrooms in these areas and Rent Officers need to be aware of these local market influences, which may be termed ‘market intelligence’.

It is important that Rent Officers have all the property details including how the letting was marketed before the lettings information is entered onto VIS as Rent Officers need to ensure that the information goes into the correct list of rents.

  • Rooms
  • Local reference rents
  • Local Housing Allowance
  • Quality of LI
  • Market intelligence

Dates

(V1.2 2016)

Dates to be used when recording the lettings information.

Accuracy and age range of data

Rent Officers use lettings information to ensure that their determinations reflect current rental market values. Local Housing Allowance (LHA) determinations take 12 months’ worth of data which gives a stabilised view of the market. Aggregated outputs from data extracts are also provided to the Office for National Statistics, and they are particularly interested to see how rents change for a given letting over time, so the accuracy and regularity of data recording is crucial.

It is important for Rent Officers to record information regularly because for property specific determinations, lettings information should be the most recent data as the determination must reflect the ‘relevant time’, which is the date the local authority made the referral, or the date the tenancy ended if earlier. For registered rent determinations the date of valuation is the same as the date of the decision. In many cases no more than 3 months’ worth of lettings information will provide sufficient data to make a decision, but in others where less LI is held, a longer time period may be used for data searches.

It is essential to ensure that short term fluctuations in rent levels are identified and trends in rental values are monitored over a period of time. Such analysis may identify gaps in the lettings data which may be used to help target LI collection, but clearly Rent Officers must reflect the market activity they find in recording their data and so must never be selective about inputting the confirmed data they have collected.

The use of lettings information to support a determination, and the decision as to whether the lettings information is relevant, or the rents were payable in the Broad Rental Market Area at the time the determination is made, are all a matter for the Rent Officer’s professional opinion. Rent Officers look at lettings information over a 12 month period when determining LHA levels. Normally 12 months’ data is appropriate and sufficient for Local Reference Rent reviews as well. This allows Rent Officers to monitor any trends in the information and ensure that general trends and the stability of the market are accurately reflected in their determinations, and only sustained and quantifiable trends either upwards or downwards are reflected.

LI dates

Data collected should be input as soon as possible after confirmation in order for the information to be as accurate and relevant as possible. Rent Officers should have entered data within 5 weeks of collection, and filed their hard copy data within 6 weeks, and anyone exceeding these deadlines must report it to their line manager.

Tenancy start date

When recording Lettings Information we need the fullest details possible - including the tenancy start date - labelled Date of Letting on the VIS entry screen. Given the variety of letting arrangements it is important to use the appropriate date.

A tenancy agreement may be made before the tenancy actually starts (the most common examples are student lettings). However the tenancy start date here would be the date the contractual period starts – not the date the agreement was signed. LI that has a future tenancy start date must not be entered in VIS until after the tenancy has commenced. The reason for this is very clear, the Order specifies that we record “rents which are payable”, and the rent is not payable until the tenancy has started

The tenancy start date is the date the current contractual agreement commenced, and it is usually the date the tenant moved in. If Rent Officers are not able to get complete dates of the start of the tenancy from their sources, they should try to get information about which month the letting started in and in these cases (because of the limitations of the VIS system) the tenancy start date should be input as the 1st of that month.

The tenancy start date for renewals is to be recorded as the date the new agreement or rent comes into effect.

Reconfirming existing lettings information after 12 months

Rent Officers try to reconfirm LI when the contractual period of the original tenancy start date is about to expire. For 12 month lettings this will be the anniversary date.

It is important that re-confirmed LI, where there are no changes to the rent or the tenancy start date, is not recorded on VIS until the original LI item is over 12 months old and has expired, otherwise it may appear as a duplicate entry. (This type of tenancy is sometimes referred to as ‘holding over’ on the original terms of the tenancy, after the initial 12 month term has ended. See below.) For example, data entered in month 1 (January), and re-confirmed in month 12 (December) will appear twice on a 12 month extract of the dataset. The re-confirmed LI should be entered in month 13 (January) so there is a clear 12 month gap between the dates of entry.

However if the tenancy has been renewed with a new contractual period and tenancy start date, or the rent has been changed, it can be entered within the same 12 month period. Any difference in any field on the database will indicate that the entry is not a duplicate. In such cases the rent or the tenancy start date or both will be different to the original entry, so it will be clear that it is not a duplicate entry. (One possible difference in a VIS field which could still be a duplicate is where only the landlord agent has changed.)

Renewals and holding over

When a tenancy is renewed and there is a new contract or agreement, the tenancy start date is the date that the new contractual period started. This includes where the original terms of tenancy remain but a new rent is paid after a notice of rent increase is served. Data can be entered on VIS within a 12 month period but only if one or more of the following applies –

  • The tenancy has been renewed with a new contract being signed
  • An entirely new letting (to a new tenant) has been created
  • There has been a change in rent, either under the original tenancy or under a new tenancy.

If the tenant stays in the dwelling beyond the contractual period at the same rent with no new contract, this is known as “holding over” and the tenancy start date is the date the contract first started. Where an RO has confirmed that the tenant is holding over this can be confirmed on VIS but only once the original item is over 12 months old.

If the tenant stays in the dwelling beyond the contractual period, paying a new rent, the tenancy start date is to be recorded as the date the new rent became payable. This may then be entered on VIS at any time because there has been a change in rent.

Where one or more new agreements are entered within the same 12 month period the new agreement date must be clearly annotated in the tenancy start date field to denote that they are not duplicate tenancy entries, for example where there are two six month Assured Shorthold Tenancies.

Pre 1989 tenancy start dates

Lettings information where the tenancy started before 15th January 1989 must not be recorded on VIS. Instead it should be provided to the Central Support Team (CST). This is because the database comprises lists of lettings which are assured tenancies, or their equivalent.

Contractual rent increases

If a contract specifies an increase of rent after a given period of time, the tenancy start date remains the date the contract started. No new tenancy has been created. Such cases should only be recorded on VIS when the new rent has come into effect, with a comment noting the rent increase provision. This is only where the rent increase provision is contained within the original agreement. This is not where a new agreement is signed at a new rent.

If Rent Officers are in any doubt about the issues covered by this guidance, or on any other Rent Officer matter, they should consult the guidance team.

  • Local Reference Rents
  • Significantly high rent
  • Local Housing Allowance
  • Single room rent
  • Quality assurance – minimum data standards

Ineligible services

(V1 2016)

Dealing with services under the tenancy which may not be included in any claim for Housing Benefit.

Definition

Ineligible service charges are charges for services set out in the Housing Benefit Regulations as being ineligible for benefit, together with the tenant’s share of the water rates, if paid by the landlord. When Rent Officers receive a referral they must first determine the value of any ineligible charges (other than meals) and deduct this amount from the referred rent to produce the rent payable under the tenancy.

The approach to Lettings Information must be similar, recording net rents in order to ensure that we are comparing like with like when we seek evidence upon which to base our determinations.

Most commonly, the ineligible charges are service charges covering elements of fuel for heating, lighting, hot water, power and cooking used exclusively by the tenant. Any amount covering meals should not be deducted from the rent payable. However the Housing Benefit Regulations also includes the provision that leisure, sport facilities and gardening services are ineligible for Housing Benefit purposes.

It is a requirement for LHA to be derived exclusively from net rent figures. Therefore ineligible services must be deducted from the Lettings Information when it is entered on VIS. This will ensure that the List of Rents produced from VIS will be on the correct basis. Teams should determine appropriate deductions for all identified contractual ineligible service charges included in any rent, irrespective of the type of accommodation.

Clearly each case should be looked at on an individual basis, and a team consensus view reached on the basis of open market rental value based evidence to ensure a consistent approach. The questions to consider to arrive at a reasonable deduction to make are, how much is the rent on similar lettings with this service, and in comparison how much is the rent on similar lettings without this service? The difference would be likely to be a reasonable deduction to make to those lettings with this service. Rent Officers should support their valuation of ineligible services by conducting research into the costs of common services e.g. fuel costs.

However if the RO has specific information relating to the services for that particular letting, that information may be used instead of their own valuation of the services.

Leisure

Rent Officers are reminded that where we input Lettings Information, we must also be deducting amounts from the agreed rent where there is use of leisure or sport facilities such as a swimming pool, tennis court, etc. Properties where there is exclusive use of these facilities tend to be in the more expensive part of the rental market. It should be stressed that a deduction should still be made where there are communal facilities however the adjustments will be significantly less than when there is exclusive use of the facility.

Recording on VIS

This amount should be recorded in the “Value/estimate of ineligible services” box in “Record lettings” information. When inputting this LI one should also select services “yes” on the second tab and select the “yes” radio button for leisure facilities on the services tab. It would also be helpful to record details of what was provided in the remarks box.

  • Lettings information – recording – all other pages
  • Housing Benefit – ineligible services
  • fair rent – services – all pages

Subsides and premiums

(V1 2016)

Dealing with lettings where the rent may be subsidised for the tenant, or where a premium may be payable by the tenant.

Open market rents

Under the Rent Officers (Housing Benefit Functions) Order 1997 as amended, Rent Officers are required to collect lettings information which reflects the rent which a landlord could reasonably expect to obtain under a tenancy or letting. Under Rent Officers’ role within the Rent Act 1977 rent determinations are based on an open market rent starting point under a methodology confirmed in case law in the judgments of the Spatholme and Curtis cases. The basis of Rent Officers’ determinations of rent is the rent obtainable in the open lettings market.

Definition

An open market rent is a rent freely negotiated between a willing landlord and a willing tenant, without recourse to subsidies or premiums which may influence the open negotiations on one side or other of the bargain to be struck. This means the rent is negotiated, so that the landlord does not obtain more than the market would support, and the tenant does not pay less than the landlord could reasonably expect.

Subsidy

A subsidy is a sum of money received by one of the parties to the tenancy, and this sum may have an influence on the amount of rent which the party is willing to agree to.

An example of a subsidy which would affect the rent negotiated would be the receipt of housing benefit. This is why Rent Officers do not record lettings as lettings information if the tenant is in receipt of benefit at the tenancy commencement. If however the claim was made after three months have elapsed from the tenancy start date, then we can assume that the receipt of benefit was not a factor at the negotiation of the rent amount, so the letting may be recorded as LI.

Another example may be where the tenant’s employer pays for the accommodation for their employee, so the rent is funded by a third party. Effectively this removes an incentive for the tenant to negotiate a lower rent, so the rent may not be said to be a truly open market rent.

Premium

A premium is a sum of money paid by one of the parties to the tenancy, and this sum may have an influence on the amount of rent which the party is willing to agree to.

An example of a premium may be a lawful premium paid for an old tenancy at a low rent. This would be where a tenant is willing to pay a sum of money at the start of a tenancy in return for the granting of a tenancy for longer term and/or at a lower rent. Again Rent Officers will avoid recording such tenancies as open market rents because they do not reflect the generality of Assured tenancies in the current market.

Collection and recording activities

In order to ensure that the body of the lettings information that Rent Officers collect forms an accurate reflection of the local lettings market, the right questions need to be asked and confirmations need to be sought. LI is routinely checked against the database of Housing Benefit referrals prior to entry on the LI database, in order to check that we have no record of a claim for benefit under the tenancy, or that if there is a claim, to ensure that the tenancy was in place for a minimum of 3 months prior to a claim being made. As well as such separate checks, Rent Officers need to establish from data sources that the tenancy entered into was not subject to any premiums or subsidies at the start of the tenancy, when the rent and other terms were agreed.

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 perhaps more unusually, converted to an appropriate figure. In the majority of cases the evidence will be excluded but if the item is for a category where evidence is minimal there may be further discussion with a line manager before deciding to exclude that evidence.

In the rare instance where the evidence is to be included, the premium or subsidy should be annualised over the period, so it will be divided over the length of the tenancy.

  • Lettings Information – all other pages

VIS

(v1.1 2016)

The way Rent Officers record lettings information on the Valuation Information System (VIS).

All lettings information collected by Rent Officers should be stored on VICTER using the VIS functionality (Valuation Information System). There is a comprehensive guide to entering lettings information in the VICTER How To’s, specifically ‘How to… Record Lettings Information on VIS (VIS Entry Guide)’.

The sole exception is moorings data which is recorded on a separate spreadsheet, and for which there is separate guidance.

Recording LI

For all records recorded on VIS, the user must record:

  • Address of the property including postcode
  • Dwelling type
  • Property type
  • Number of living rooms
  • Number of bedrooms
  • Advertised rent
  • Achieved rent
  • Source name and source type
  • Condition of the property

Confirmed lettings information should have a full postal address and postcode. This address should be a PAF valid postal address (Postal Address File, as recognised by the Royal Mail), and include a house or flat number. Although incomplete addresses may provide useful lettings information, such full postal details are essential for verification, anti-duplication and mapping purposes. Addresses with no door number or name, for example, should be recorded as supporting information rather than confirmed.

VIS good practice

When creating a new record on VIS always use the PAF validation facility. This will ensure the address is as accurate as possible.

When creating a record, always view the possible duplicate records. The duplicates check cross-references against possible duplicate records already on VIS. This will also cross check against the Housing Benefit records, which is part of the verification and quality checks. This process is essential to avoid duplicate LI entries which would affect the calculation of LRRs and LHAs.

Renewing an existing record (Via record lettings information)

Where an existing confirmed record is found on VIS which the Rent Officer wants to renew because the letting is continuing under the same terms, the renewal should be recorded by double clicking on the record, adding any new information where applicable, and saving in VIS. This will create a new separate entry with its own new information where applicable.

The previously recorded information is also retained. In order to prevent duplicate entries within a 12 month period renewal data where there is no change (to the rent or tenancy start date or anything else) should only be entered onto VIS once the original entry has expired. In practice this means the renewal data where there are no changes should be entered after a clear 12 months has expired. This is where the tenant is holding over at the same rent under the existing agreement (a statutory periodic tenancy) so it is appropriate to use the existing tenancy start date from VIS and annotate the renewal entry with “holding over”.

New or renewal data should never be entered using the Search VIS workflow. If you do, the entry will not count towards any statistics to be attributed to you and will affect the integrity of Rent Officer data. Rent Officers should use the Record Lettings Information workflow instead.

Correcting a record (using search VIS)

Records should only be corrected on VIS where an error has been found. For example the rent has been entered as £500 per week instead of £500 per month. Where a record is corrected, the erroneous data is not retained. Where a record is renewed, previous entries are retained.

If you have made a mistake inputting an LI entry, or it has been identified as part of the QA process, it should be corrected using the Search VIS workflow. New entries do not appear until the following day, so you cannot make corrections until a day after the entry has been made.

Renewals can be corrected immediately. Search VIS will show the previous version of the record before the renewal was recorded. It will be disabled and have an End Date. Click on the forward arrows at the bottom of the screen to access your renewed version. Then make the correction and click Save.

Never correct an error using the Record Lettings Information workflow.

Sometimes an error may arise without a mistake having been made, for example where a landlord’s agent changes but no other changes have taken place. This may be where an agent is taken over or bought out by another agent. In such instances, this should be treated as an error in the record, to be corrected.

There is a “VICTER How To…” document on these processes, called “How to Differentiate between Updating and Amending Lettings Information”. We no longer use the terms ‘update’ or ‘amend’ due to confusion between the two processes, so these are now termed ‘renewing’ and ‘correcting’ data, respectively.

Source type and source name

The source type (such as agent, small portfolio landlord, educational establishment, etc) and source name (such as Smith and Co.) are mandatory fields in VIS. This is because the information is used for statistical purposes. The source name is populated from the “Contacts” database. If the required source name does not appear in the database, a new source name must be created. Care must be taken not to create a new source name if the correct name already appears on the contacts list. Do not over type the new source name in the source name field because this does not add the source name to the contacts database, and the record will not be retained for statistical purposes.

Recording other LI and market information

Moorings data

A separate system has been established for recording moorings lettings information. This involves recording the evidence on a national spreadsheet which must be used by all RO teams to record all moorings LI. The moorings spreadsheet is stored on the shared drive and instructions on how to use the spreadsheet are located in the same folder.

Market intelligence

As well as collecting lettings information Rent Officers should also have knowledge of the local private rented sector. It is essential that any market intelligence information is recorded so that it may be shared with colleagues. Rent Officers should use the RO monthly report to record such information by local authority area. The monthly report provides the background and context to the lettings information itself. Market intelligence can also be included in meeting minutes such as RO team meetings or meetings where local reference are discussed and determined.

  • Quality of LI
  • Housing Benefit data
  • Dates
  • Market intelligence