How landlords can get up to date with changes in the law (and avoid problems and prosecutions)

admin    Uncategorized     agents

There have been so many changes going on over the past two years that most landlords’ heads are spinning trying to keep up with it all.  We have had:

• Changes to the deposit regulations
• Changes to the section 21 rules
• Changes to both the section 21 and section 8 forms
• New rules regarding smoke and CO alarms
• New Right to Rent checks which need to be done on all residential occupiers
• Supreme Court decisions on the legal obligations of leaseholder landlords for repair and whether proportionality under the Human Rights Act should be considered for private sector eviction cases
• Changes in the rules relating to  High Court enforcement of possession orders
• And so on.

Some of the penalties for failing to comply with these new rules are pretty serious. For example:

• Failure to comply with the deposit regulations means that you cannot use s21 to evict your tenant and may be ordered to pay up to 3x the deposit to your tenant
• Likewise, you will not be able to use s21 if you have not complied with the new rules (if they apply to you)
• Allowing a tenant into occupation where they do not have the right to rent can result in a fine of £1,000 for a first offence or £3,000

It is imperative that landlords and letting agents are fully up to date with all of this.

In order to help, my Easy Law Training company is running a one day legal update workshop with housing barrister Sam Madge Wyld on 20 October 2016.

This will be held at the prestigious Homerton College in Cambridge – one of the few colleges to offer on site parking!  The college is a short taxi ride away if you want to come by train (and you can travel to Cambridge from Kings Cross or Liverpool St London).

The event carries 4 hours CPD and the price includes all refreshments, wi-fi and detailed course notes.

The workshop will cost £198 (£165+VAT) and you can book your place via the Easy Law Training website here.

We hope to see you at this very special event.

Article Courtesy of: Tessa Shepperson – Easy Law Training – www.EasyLawTraining.com

… LandlordZONE.

View Full Article: How landlords can get up to date with changes in the law (and avoid problems and prosecutions)

Interesting Commercial Property

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Now that the Bank of England Base Rate is at 0.25%, any prospect in the foreseeable future of a rise in interest rates for savers is remote. It therefore pays to look at other interest-producing investments in case the rate on offer is attractive. At current prices, presupposing you want to at least be certain of getting your money back, I wouldn’t recommend buying commercial property simply for the yield. The prices don’t allow much if any room for falls in capital value. That’s not to say that all commercial property investment should be avoided: what matters is that you have your wits about you and are adept at judicious choice.

If you already own commercial property investment then when you bought the property determines the yield you are getting. Arguably, the property should be revalued periodically so that the yield is not calculated upon historic purchase price, but on how much the property would cost you to buy at the revaluation date. If you borrow on the asset then the lender would require current value and in future no breach of the loan-to-value covenant. If you’ve no borrowings then whether there is any point revaluing every so often is a matter of opinion. Regardless of whether there is any need, I reckon it does pay to get a rough idea of capital value every so often to ensure your investments are stable. For investors stuck with empty shops in unwanted ‘high streets’ to have not realised what would befall those locations is a good example of investment shortsightedness.

Expressed as a percentage on the capital value of investment, yield based on prevailing and reversionary rent is overt. A source of covert yield comes from interest payable by the tenant. All leases are different but there are generally two contractual occasions when interest might be or is payable.

One occasion is on late payment of the rent(s) reserved, including any other money payable under the lease. The other is on the back rent following any increase at rent review.

A typical definition of ‘Interest Rate’ is the base rate from time to time of ‘x’ bank, or if that base rate stops being used or published then a comparable commercial rate reasonably determined by the landlord.  Having defined the source of the base rate, the next definition is the ‘Default Interest’: for example 4% per annum above the Interest Rate.

Preambles defining the terminology in the lease make it easy to spot where the best returns could be had. For example, for late payment of rent(s):“if any Annual Rent or any other money payable under this lease has not been paid within 21 days of the date it is due, whether it has been formally demanded or not, the Tenant shall pay the Landlord interest on that amount at the Default Interest Rate  (both before and after any judgment). Such interest shall accrue on a daily basis for the period beginning on the due date and ending on the date of payment.  If the Landlord does not demand or accept any Annual Rent or other money due or tendered under this lease because the Landlord reasonably believes that the Tenant is in breach of any of the tenant covenants of this lease, then the Tenant shall, when that amount is accepted by the Landlord, also pay interest at the Interest Rate on that amount for the period beginning on the date the amount (or each part of it) became due and ending on the date it is accepted by the Landlord.”

Even if the lease does not says rent is payable whether formally demanded or not, the payment of rent is a contractual obligation.  As a courtesy, most landlords issue rent demands, but it is not compulsory. Also, where the rent can be calculated by the tenant without input from the landlord, for example a rising rent of pre-fixed increments, the tenant cannot excuse delay in paying by reason that the tenant did not know how much was due. The same principle applies to rent reviews that are based on some arithmetical formula, such as inflation-linked. To avail of the higher interest rate, the landlord should not issue rent demand or send a reminder, but wait until the grace period has elapsed, then demand the rent(s) plus the interest.

At rent review, it is common for the revised rent (assuming some increase) not to be agreed or ascertained until some time after the review date. Normally, the shortfall (back rent) is back-dated to the review date, unless otherwise stated in the lease. When back rent is payable depends upon the particular lease. It might be payable immediately on agreement or ascertainment of the rent, or within 7-14 days thereafter. Or it might not be payable until the next quarter or rent day following the agreement or ascertainment. Over ascertainment date, the landlord has no control, but the agreement (date on the Memorandum) can be delayed to take advantage. Also, whether the interest in calculated on the whole of the back rent or on each periodic instalment depends upon the lease. Generally, nowadays, interest on the back rent is at Base Rate so might not amount to much, but in older leases the interest rate might be higher or subject to a minimum rate, for example 5-10% is not uncommon. Whether the landlord should issue a demand for back rent depends: the tenant is capable of calculating the interest payable without the landlord’s input.

Whether you’d want to charge interest, let alone deliberately manage your investments accordingly is your prerogative: in my opinion, there doesn’t seem to be much point in having a lease and not sticking to it, but many investors are benign. I’m not trying to encourage anyone to take advantage of tenant-preconceptions, but simply to draw the possibility of opportunity to your attention.

Michael Lever
The Rent Review Specialist
Established 1975

… LandlordZONE.

View Full Article: Interesting Commercial Property

Too quick to evict? Landlords, don’t be too hasty

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James Davis – Portfolio Landlord & Property Expert

When you start out as a landlord from the age of 22 you learn a thing or two about managing property. This week James shares some top tips on handling tenant evictions.

When tenants fall into rent arrears, landlords can be far too quick in issuing eviction notices. More often than not, they trigger long-winded, expensive and unnecessary legal procedures that are only getting longer and more costly.

Here are some pain-free owner-tenant resolutions which have proven significantly more effective in my experience.

All pain no gain

Dealing with rent arrears is a common cause of irritation for property owners. Listening to Shelter, landlords lose £9.9bn to rent arrears and property damage each year – that’s £6,600 for every landlord in the UK.

For landlords suffering these shortfalls, an assured shorthold tenancy can be terminated by reliance on section 21 or section 8 of the Housing Act 1988- although they must give a minimum of two months’ written notice. Once you’ve got to court for a possession order, which can take months, a judge granting the order doesn’t necessarily mean it’s over. If the tenant doesn’t leave, you’ll have to go back to court to get a bailiff order to legally evict them from the property. With wait times for court dates getting ever longer, you could be several months in rent arrears by the time the tenant is out.

Find a creative resolution

Where possible, it can be more cost-effective to take a deep breath and resolve your tenant issues amicably. Access Legal found that 46% of tenants in rent arrears fail to pay up even after court proceedings. In these cases, simply offering informal payment extensions can yield better results.

From experience, the trick is to approach your tenant with an open mind.

For example, I have a tenant of 5 years who lost his job six months after moving in. By communicating regularly, we managed the situation and I kept an excellent resident. To safeguard this approach and maintain trust, let your tenant know you are contacting their guarantor to gain reassurance on the situation. Getting a % of the rent is better than none at all; especially if the tenant acts out of spite for perceived insensitivity towards a situation they didn’t expect themselves to be in.

Make your life easier

The succession of events stemming from an eviction notice can quickly take their toll on landlords, when it becomes very clear that the processes behind issuing s.21 or s.8 notices can be more hassle than they are worth. Therefore, it’s always wise to try and find an amicable solution first, even if it means compromise on your part.

Article Courtesy of Upad

… LandlordZONE.

View Full Article: Too quick to evict? Landlords, don’t be too hasty

Call of the week – the criminal agent

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A new member called up in tears over their current situation with their agent. This landlord had signed up to an agency on the strength of a professional looking website with addresses in a very nice area of central London. All of which indicated the agent was a professional they could trust.

The post Call of the week – the criminal agent appeared first on RLA Landlord News Hub.

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Stay vigilant over knotweed threat

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With the nightmare tale of a family unable to sell their home due to Japanese Knotweed hitting the newsstands this week, the RLA is reminding members to be vigilant.
According to reports a family in the Midlands are unable to sell their property due to an extensive outbreak, with potential buyers warned by surveyors and shunned by mortgage lenders over fears the roots of the giant weed could interfere with the foundations of the home.
View Full Article: Stay vigilant over knotweed threat

Rental market holding-up post Brexit

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Buy to Let has faced one blow after another over the last 12 months or so: an onslaught of new regulations making the task of letting considerably more onerous, a 3% increase in stamp duty on investment properties, a hike in income tax after the removal of tax allowances, a punitive capital gains tax regime […]

… LandlordZONE.

View Full Article: Rental market holding-up post Brexit

Is Airbnb compounding the housing crisis?

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London listings on Airbnb have rocketed by more than a quarter in just four months – sparking fears the popularity of the holiday letting site is depriving the city of vital homes to rent.
View Full Article: Is Airbnb compounding the housing crisis?

ARLA warn of inadequate official documents

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The Association of Residential Letting Agents (ARLA), a leading UK professional association for letting agents, is advising its member agents to not to rely on online government documents, which are required to fulfil their legal requirements. ARLA cites a number of incidences where civil servants responsible for drafting official documents are making serious mistakes, mistakes […]

… LandlordZONE.

View Full Article: ARLA warn of inadequate official documents

Rents rise in most UK regions, says ONS

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Data just released from the Office for National Statistics (ONS) show that private rents continued to rise, by an average of 2.4% across the UK 12 months to July 2016. This figure is unchanged compared with the year to June 2015. These figures are considerably above the inflation rate for the period in question, with […]

… LandlordZONE.

View Full Article: Rents rise in most UK regions, says ONS

RLA calls for clarification on CGT Amendments

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We are calling on the Government to clarify the amendments recently tabled to the Finance Bill 2016. These amendments appear to blur the distinction between trading profits from the purchase and resale of property, and investment in property to let.
View Full Article: RLA calls for clarification on CGT Amendments