The spurious business model known as Rent 2 Rent, or R2R, is not without its supporters.
Surfing the internet you will find various services and workshops on offer by “Property investment experts” extolling its virtues as the latest get rich quick ploy and in it’s basic form it is a valid business transaction.
Owner lets to one person at an agreed price, who is then free to rent it out at a higher price, pocketing the difference. Local authorities do this all the time, in their search for properties to discharge homelessness duties and when you see letting agents advertising “Guaranteed Rent”, that’s usually what they mean and in a recent conversation with an acquaintance he wondered why anyone might think there was anything wrong with making a bit of profit on the side.
He was probably right but for the most part, in London at least, that isn’t how R2R works in practice. The usual model being to turn a family home into an overcrowded, unlicensed HMO operating below the radar, something else my acquaintance couldn’t see a problem with, so I thought I would explain, as one of the people spending all day, every day sorting out the mess created.
R2R is not just the free market in operation, it’s a scam with numerous victims and long term effects.
When you have large groups of people crammed into one house, the risk of fire is heightened. Rules are in place, enforced by the Fire Brigade and local authority precisely to reduce this risk, which is why fire resistant doors, smoke detectors and means of escape are heavily prescribed.
Reports of renters being killed or injured in HMO fires are frequent.
Government introduced licensing requirements for very good reasons, related to safety and the improvement of property conditions but R2R scamming only works if nobody in officialdom knows anything about it.
It isn’t so much that the scammer is trying to avoid paying the licensing fee of a few hundred pounds for 5 years, its the cost of the works they would have to do to bring the place into licensing compliance, which could easily run to £20,000, which in turn eats into profit and makes the business model not worth bothering with.
There are many good methods available for local authorities to track down such properties, including the Marks out of Tenancy Service and Metastreet buts its still possible to stay off the grid.
When you look at a property from the outside, how do you know it isn’t carved up with stud walling and housing 15 people, 3 to a room?
Enough properties still manage to evade detection, simply because there are so many of them and so few people to track them down and enforce.
In his 2017 report, Dr Stephen Battersby, found that in London there are 2.4 EHOs for every 10,000 properties and these findings were based on the 2012 Census figures, when the PRS was nowhere near as big as it is now.
Harassment and illegal eviction:
Given how essential it is that such properties dont come to the attention of the authorities, it is perhaps unsurprising that when the knock comes to the door and the letters start arriving, often the first response is harassment.
Common to this model is for the person running the scam, to install a “Lead tenant”, to keep an eye on the rest of the housemates, usually for a reduction in rent and to call them as soon as anyone official turns up.
Either the scammer or the lead tenant then start making the occupiers lives a misery, with threats and intimidation and when that doesn’t work, or the council get more insistent, the illegal evictions start, with the aim of getting the figures below mandatory HMO size.
If any scammers, EHOs or licensing officers are reading this be aware that illegally evicting someone does not end the tenancy, in fact even death doesn’t end a tenancy. A tenancy can only be ended by termination, surrender, mutual agreement or a court order, so whilst there may only be 3 occupants left, the other 8 tenants are technically still in the property.
Loss and chaos:
Getting rid of people who might be witnesses for the prosecuting authorities inevitably means also getting rid of their possessions for the same reason.
So renters occupying R2R properties that have been discovered, will commonly lose:-
· Their deposit, which was never protected anyway.
· Their documents, passports, driving licences, Home Office letters, benefit letters etc.
· Their laptops.
· Personal possessions, including family photographs, jewellery, college paperwork.
In one recent case the poor tenant lost his work uniform for his zero hours job, when the R2R scammer squirrelled away his belongings so the room would look empty when inspected. The employer wouldn’t let him work without the uniform and refused to provide a replacement. So not only could he not work, he couldn’t claim benefits because all his documents had gone as well.
In another recent case that came to the attention of one of Safer Renting’s partner boroughs, the scammer employed thugs to kick in doors and intimidate everyone and then removed the roof, to make the property look uninhabited and actually be uninhabitable, although one of the renters could not source a replacement, having lost all his documents and has been living back in the property without a roof, as an alternative to the street.
Even something seemingly as trivial as the loss of your phone charger can create massive headaches when you have no money to buy a replacement and you’re on the street.
So when someone like my acquaintance, says to you that R2R is just some quick-witted loveable rogues turning a bit of profit or that they are providing affordable accommodation for people who otherwise cant meet the rent on a flat of their own and if it wasn’t for those “Clipboard jobsworths” at the council sticking their oar in everyone would be happy, bear the above in mind.
Lives get wrecked and the poor renters get pushed further down into a hole that it gets even more difficult to climb out of. With few choices, all they can do to recover is take something cheap, with no questions asked, which is usually, just another R2R scammer.
By Ben Reeve-Lewis