Council using providers to supply them with private properties?

I use this kind of services from 6 years now.
You deal with all sort of issues with tenants. My last tenant even had a stolen motorcycle behind the shed at the back of the garden.
With those tenants your kitchen and toilets and your flooring will deteriorate a lot faster.
They even managed to set my house on fire and i was really, more than lucky.

I've let a property to a corporate business under a licence to occupy and that was fine. The contract looked a bit intimidating but I had no problems at all.

But I'm not clear who is responsible for what here. You are the landlord, the council is the tenant, the council sublets and takes responsibility for repairs, what is the "Supplier" responsible for?

This appears to be a Rent2Rent set up. (Councils may call this a "private sector leasing scheme").

From your description is sounds like you lease your property to the "tenant" company and grant them permission to sublet. Alternatively, you enter into a tenant management agreement, whereby the "tenant" company becomes your agent and lets the properties on your behalf. (In effect, simply a letting agent for you, albeit with a specific (sub)tenant group, e.g. homeless families).

The "tenant" company then sublets your property to the "Service Users", but if this is done directly then these would by legal default be on ASTs, not occupancy licences.

Alternatively, the "tenant" company may rent out the properties to the council who then place their homeless families into the accommodation, and pay the "tenant" company for that use.

As emergency homelessness placements, paid for directly by the council (not via the occupier claiming Housing Benefit) then the council retain a right to evict the families, (unless they are using the properties to discharge their longer term homelessness accommodation duties, which is what many councils are trying to achieve, in which case it's back to the "tenant" company issuing ASTs to the residents).

If you have a mortgage then this type of set up is unlikely to be allowed. You may need to transfer to a specialist commercial mortgage, at a much higher % interest rate.

If there is no mortgage, then you could enter into such an arrangement, BUT you would need to change your buildings insurance to cover this situation, and your insurance premiums are likely to increase significantly. Check this with your insurers prior to entering into any agreement.

If the "scheme" is genuinely for the council to use as emergency accommodation for their homeless families, then why isn't the council willing to lease the properties from you direct???? (This would be far easier and cheaper for them, and clearer legal responsibilities, than having a 3rd party "middleman" management company).

I did this more than 20 years ago with South London Family Housing Association, 2 x 2 bed properties each on a 3 year term.

These properties were not inspected regularly by the HA; were used for transient families and asylum seekers.

One family did not even use the cooker but used some sort of stove in the middle of the lounge carpet to cook their food.

Both properties were trashed and I ended up having to gut both back to the brickwork - horrendous mould issues; replace chipboard flooring plus new carpets/vinyl, new kitchens and new bathrooms; and most of the double glazing had to be replaced.

The HA thought they could just slosh emulsion over the mould but their contractor forgot to paint behind the radiators!

Properties then out of rental for 6 months.

The contracts were, and likely still are, drafted to give me no recourse against the HA.

Never again.

Reply to the comment left by Robert M at 20/04/2023 - 10:39
woah - a lot of info to get my head around. but I think I have worked out what it is now.

Yes the property is let to the "tenant" company and I grant them permission to sublet. The "tenant" company then sublets the property to the "Service Users" (the actual family who will be housed, determined by the council.)

I have confirmation form the council that the tenants that are placed there are done via licence with themselves. They have said that if a tenant breaches the licence conditions they would work with the provider (tenant company) to resolve the problem and they would take responsibility for any evictions ( being on' licence' court would not be required as they have less 'rights' and they have the homelessness duty as a direct result anyway so would have to rehouse/deal with it themselves)

The council have also said that if I do agree to use my property and I come to an agreement with one of the above providers this does not mean I have a direct relationship with council thereafter. All communications, payments etc will come via the provider to me.

The 'tenant' company have said that the council attend when the property is handed over to them to make sure it is up to standard and all is ok. The tenant company then regularly check all is ok at the property. The tenant company takes over the responsibility for all gas checks, EICR and EPC certs as needed when they expire, l though I must have these in place at the time I initially hand the property over to them.
The contract with the tenant company is for 6 years. The tenant company also carry out any works needed before the house is handed to them to make sure they pass the standard required. They have identified I need a fire door on the kitchen, some guttering needing replacing and more plug sockets in some of the rooms (apparently each room in a house must have at least 2 double sockets as a minimum??).
The tenant company furnish the property, do a full inventory at the start and at the end of the term and ensure that (aside from general wear and tear) the property is in similar condition as it was at the start.

Bit nervous about signing up as no experience before of this, but to be honest the idea of renting directly to a tenant is equally as terrifying bearing in mind the S21 plans ahead and what if they stop paying the rent. At least this way it is guaranteed.

The tenant company seems to know what its doing and is on the council list as a preferred supplier.

I already asked the question fromthe council about why they dont lease direct to private landlords for emergency accommodation. They said too much admin. Easier for them to get companies to tender to do this, then the council leave it to them to deal with. In other words the cost is irrelevant - they just dont want to do it themselves!

You seem to have a lot of experience in this area. any other advice please of what I need to be aware of?
Oh yes they fix the rental amount paid to me but increase at 1% each year for the 6 years. I have said already this is a bit of a joke but they have stated they deal with everything once handed over (except big issues like roof leaks etc) so maybe this is viable once everything else factored in?

Reply to the comment left by Beaver at 20/04/2023 - 10:38
I let the property to the company, then in turn have a contract with the council to supply properties to them for housing families in temp accommodation.
The family has a licence agreement with the council directly and I guess the tenant pays the council the rent. The company gets paid by the council for the use of the property for 6 years, then I get paid by the company directly.
I have no dealings with the tenant at all nor the council directly. The tenant deals with the company directly in the first instance for any issues/problems and they sort this out directly unless it is a big issue like a roof leak etc then they contact me about it and I am then obligated to sort that out. Day to day issues the company deals with.
Apparently the contract between the company and the council states that the company has certain time limited obligations to fulfil in terms of getting things done and carried out and they face fines if they don't carry out stuff on time.

I read the bit where the subletting company were responsible for things like EUCR, EPC and GSC.
Selective licence!

No no no the buck stops with you as the Landlord and owner ( you have your name on the deeds, mortgage and equity in the property
If you need a Selective licence or any other kind of licence and don't have one when the tenants move in " Justice for Tenants will be only too happy to help the poor tenants get a Rent Repayment Order and force you to repay 12 + months rent.
No gsc, EICR or EPC then you can't serve a s21 and evict your none paying tenants.
Barge pole comes to mind.
Read the contract very carefully with a solicitor who knows about housing law

Reply to the comment left by DAMIEN RAFFERTY at 20/04/2023 - 11:56
I will check but there is no selective licencing in place here. From what I understand sel licencing is for private rentals. This may be exempt if it did come in? I would not be renting privately to a tenant. Councils want sel licencing to get rid of bad landlords who dont provide good houses.
The council themselves visit and have to sign off the use of my property as fit as up to standard before they give the go ahead for the company to take it onto their books before a tenant even moves in, so having a possible sel licence on top of this is pointless?

Anyone else provide houses to a company in a sel licence area that has experience of this?

Mark/LL Minion

I note that you are new on this forum unless you have been visiting under another name?

There have been several threads along similar lines as yours. The offering may seem attractive with lots of promises made; however (and I'm generalising), the contracts are usually horrendous and not in favour of the property owner, and the company being let to often does not perform under the contract, the tenants don't look after the property and it turns out to be an unhappy and expensive experience. This is not a one-off but a recurrent theme here on 118.

Before making a decision whether or not to proceed, I urge you to wait a few more days to receive more feedback from the members here, and also to check the Members' Article Archive. One thread I can think of is regarding a SERCO contract (there are others I'm sure). The conclusion reached by the majority of the LLs in these arrangements is to avoid.

Reply to the comment left by Freda Blogs at 20/04/2023 - 14:44
newbie. i have looked into the serco option but not for me, but this looked a better option. I will wait to see what else is posted. The issue is I dont want to let direct to a tenant. The only options will be those on benefits and I dont want to go there. Last one took over a year and half to evict.
Thanks