UK House Prices show steady increase

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The latest available data for August shows an annual price increase of 8.4%, taking the average property value in the UK to £218,964. Monthly house prices increased by 1.3% since July 2016. In England, the August data shows an annual price increase of 9.2%, taking the average property value to £235,573. English monthly house prices […]

… LandlordZONE.

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Optimal Tax Planning Strategies

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With the correct planning it may well be possible for you to utilise legislation to restructure your property rental business without a requirement to refinance or to pay capital gains tax or stamp duty. There are a number of restructuring options you may wish to consider and some may be more appropriate than other. For… Read more

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Editorial – October 2016

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It’s that time of year again. The nights draw in and with the colder weather the dreaded condensation and mould create problems for landlords. Our lead article spells out the problem, its causes and how you should deal with it. It’s a good insight into this perennial problem based on many years’ experience of dealing with this.

The RLA are calling on the new Chancellor Philip Hammond to ditch the mortgage interest relief changes proposed by George Osborne in a “last big push” attempt to change the law ahead of next month’s Autumn Statement. The RLA is asking members to let MPs and Ministers know the devastating impact these changes will have on landlords – and their tenants.

The courageous legal bid to force a judicial review of the Government’s controversial mortgage interest relief – or Tenant Tax as the RLA have dubbed it – plans failed at the High Court. But while this was a huge disappointment all is not lost say the RLA. They are continuing with high level political lobbying to persuade the Chancellor to rethink his plans to stop buy-to-let finance costs being a legitimate business expense – see the full article in this issue.

Richard Bowser of Property Investor News has been talking to a landlord who has come up with an innovative way of avoiding tenant problems, after some bad experiences he had. Being a landlord is not a “bed of roses” as we all know, especially if you are dealing with social housing tenants, but it’s not all bad news according to this story.

Mr Bowser says that Shelter draws attention through the national media to the large cost burden that the annual Housing Benefit bill now causes UK taxpayers, pointing out that private landlords are the widespread recipients of state largesse etc. The reality, he says, is that all too often it is only most committed landlords these days who take on housing benefit tenants. Yet all around the country local councils are increasingly desperate, trying to reach out to private landlords – see this article and watch the video about one landlord’s positive experience with his social tenants.

Our book review this month is another Legal Action Group publication – the suppliers of the “Bibles” on property law. This book is on Repairs and tenants’ rights, an up-to-date practical guide on a very topical issue at the moment, following the “”revenge eviction” rules brought in last October in the Deregulation Act 2015.

Don’t forget the up-coming property shows advertised below, and also the Landlords Repairing Obligations Workshop run by Easy Law Training (Tessa Shepperson) – 23 November 2016 with lawyer, Peter Marcus in Ely.  All landlords are subject to the statutory repairing obligations under the Landlord & Tenant Act 1985.  But do you know what they are?

If you really want to know all about the law on Repairs relating to property, I suggest you read the book and attend the workshop.

Read these and several more rental property articles below.

Tom Entwistle, Editor

… LandlordZONE.

View Full Article: Editorial – October 2016

NEW online quote and buy comparison website for landlords and buy-to-let investors

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There’s a new online quote and buy comparison website now available from the award-winning* team at Deacon.

DEACONlink Landlord allows landlords and buy-to-let investors to compare up to 5 quotes in an instant from some of the country’s most well-known insurers, including Zurich, LV=, NIG, Covea and ARO.  Cover is available immediately for buildings, contents, and legal with rent guarantee.

It’s been developed as an alternative to the big price comparison sites, featuring a selection of well-known insurers to help you find the cover you need at a competitive price.  All types of rental properties are covered, from houses and cottages to bungalows and chalets.  For small blocks of flats and Houses in Multiple Occupation (HMOs) you’ll need to call Deacon on 0808 159 4096.

“We believe our products and service speak for themselves, and are the reason why 9 out of 10** customers renew their insurance with Deacon every year,” says Mark Savage, Client Service Manager at Deacon.

“And should the worst happen, our award-winning in-house claims team based here in the UK, will guide you step-by-step through the claims process.  As part of Arthur J. Gallagher, one of the biggest and longest established insurance brokers in the world, you can be confident we’ll be here when you need us,” he added.

To find out more about Deacon and their insurance products for landlords, and how much you might save on your insurance cover, click here

* Broker Claims Team of the Year, Insurance Times Magazine, May 2016

** 1 September 2015 – 1 September 2016

… LandlordZONE.

View Full Article: NEW online quote and buy comparison website for landlords and buy-to-let investors

IFS report counters George Osborne’s justification of Section 24

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The Institute for Fiscal Studies (IFS) report written in February 2016 titled “The Effects of Taxes and Charges on Saving Incentives in the UK” countered the arguments used by the then Chancellor George Osborne to justify the introduction of Section 24 of the finance act 2015. Paul Johnson of The Institute of Fiscal Studies said… Read more

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Get £40 for taking part in user research

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Calling Landlords! We want to speak to you about managing multiple properties for an exciting idea we’re developing. The interviews will last 45 minutes and we’ll give you a £45 Amazon voucher in return.

You’ll need to attend a short interview at our offices in central Manchester or elsewhere in the North West (we’re flexible!)

Interviews slots are on Thursday Nov 3rd. If you’re interested, please complete this questionnaire and let us know a time that suits you.

… LandlordZONE.

View Full Article: Get £40 for taking part in user research

Partial gift of property to tenant who is also my son?

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One of my tenanted properties is occupied by my son and his wife. The property is conservatively valued at £250,000. He would like to buy it from my wife and me, but can get a mortgage for only £100,000. We are thinking of gifting the remaining £150,000 to them. How should we structure the ‘sale’… Read more

The post Partial gift of property to tenant who is also my son? appeared first on Property118.com.

View Full Article: Partial gift of property to tenant who is also my son?

Condensation, the Landlord’s Curse…

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VIEWPOINT:

It’s that time of year again, a time when tenants are most likely to complain about the mould appearing in those corners of the property where the walls and ceilings are really cold, and hot air with moisture always rises to the top. If it’s black mould at the top of walls, you can bet your bottom dollar its condensation and not just damp.

As winter approaches outside temperatures drop and this perennial landlord’s problem of winter condensation and black mould rear their ugly heads yet again. I say yet again, because once the mould spores are there, they will keep re-occurring when the conditions are right.

The big question is, how do you know if this is caused by the building itself or the tenant’s lifestyle, or is it a combination of these two? At the risk of repeating myself I’m re-stating a lot of what I’ve said before, but as a long-term landlord I think I’ve seen enough of this to become something of an expert and it’s become a pet subject of mine.

Dampness or condensation symptoms are very similar but the cures are very different, and to the uninitiated applying the wrong methods can be both expensive and ineffective.

When tenants start to complain about “damp” to their letting agents and landlords, you need to have some answers.

• What causes condensation?

• Is it the same as dampness?

• Why is it that some tenants have condensation problems, while others don’t, even in the same property?

• Why is it that the condensation problem is more prevalent in rented properties?

• Why are older properties affected more than modern ones?

• What effective measures can be taken to solve this problem?

• What can landlords do if they are taken to court over this or when rent arrears tenants claim in court they don’t pay because of dampness?

• How can landlords deal effectively with repair requests?

I’ve had many years dealing with these problems in residential as well as commercial properties and in that time I’ve begun to develop a really good understanding of this tricky problem and how to deal with it – in this article I will attempt to answer these questions and provide some solutions.

I can say from the outset, despite the many articles I’ve seen written on the subject, it’s not generally very well understood. There’s a lot of misunderstanding around it, and even some so called “experts” get it wrong.

Mention damp and black mould, and we’ve all seen those nasty pictures in print and in the television documentaries, the look horrific and immediately the landlord is denounced; he or she becomes the pariah figure who is condemning tenants to live in appalling health-threatening conditions.

Yes, it’s true that some properties have such serious defects that they are prone to damp and condensation and their owners need to put them right.

But far more common is a situation where the root-cause of the problem is the way the tenants are living, or sometimes it’s a combination of that and inadequacies with the property.

The problem landlords have is that tenants, the general public, environmental health officers (EHO), solicitors and judges in court, very often just don’t understand the difference between damp and condensation, their root causes, and who is really to blame.

What causes condensation?

Tenants often report dampness in a property when in fact the black mould on the walls and musty smells on clothes are caused by condensation.

Condensation occurs when warm moisture laden air meets a cold surface. Typical is when steamy air from cooking, washing and drying clothes rises up to the top of the house and meets a cold surface; easily visible as water droplets on window pains and tiles, but less so when the moisture meets cold wall paper, plastered walls, carpets and clothes in wardrobes in unheated rooms. Then it is invisible, quickly absorbed into these materials and results in that cold musty smell and mould spores.

The result is a dank, cold house with musty smells and the tell-tale black mould, which can become toxic and injurious to health.

So, there are two main causes of condensation:

1 – Too much steam and moisture laden air that rises through the house rather than being vented outside at source; usually from the kitchen or bathroom, or typically when clothes are left to dry on radiators.

2 – A house with rooms that are far too cold.

Ventilation

When steam is produced it should be vented out of the house in the room where it is produced, by opening windows, using permanent vents or extractor fans, and closing doors to prevent it circulating round the house.

The problem is that opening windows in winter is not something people want to do as it cools the room, and providing permanent air vents does the same thing. I’ve seen many vents purposely blocked with rags by occupants.

It does not help that the modern house, with all our draft proofing measures, unlike the old days with chimney ventilation, becomes a hermetically sealed box, so even new houses suffer some condensation. But condensation does not discriminate between new and old properties – if the conditions are right it will occur in both.

Rooms too Cold

It’s always the coldest rooms where condensation happens and black mould appears, usually tops of walls in bedrooms and bathrooms which receive the least heating.

Very often it’s simply a matter of not providing enough heat in the house, either to save money, because the occupants can’t afford to heat, or because the heating system is not adequate for the task.

Fluctuating temperatures don’t help: tenants tend to leave the heating off all day and blast with heat and steam when they return – ideal conditions for condensation.

When the house is poorly insulated, as in many older properties without cavity walls, heating is expensive because a lot of it is being wasted. Then, lack of heat leads to colder and colder moisture absorbing walls and more and more condensation. It’s a self-perpetuating circle.

A really well insulated and heated house will rarely suffer much condensation because everything including carpets, wall paper and clothes in wardrobes are all nice and warm and will not absorb moisture, even when some steam is generated. No rooms should drop below 18 degrees C day or night.

Interstitial Condensation

A technical term used to describe what happens when condensation remains a problem for a long time. The cold walls absorb more and more moisture which penetrates deep into the walls; the wall paper, plaster and masonry, and even timber, which will eventually lead to dry rot. The moisture is so deep it will take months to dry the building out, even when more than adequate heating is applied.

Likewise mould spores will develop on surfaces which eventually become toxic (causing a real health hazard) and are then extremely hard to eradicate.

So, once these conditions have been allowed to develop they can be very difficult to reverse; they do a lot of damage to the fabric of the building. After a while plaster just disintegrates and crumbles away. These conditions are also a serious health issue for anyone attempting to clean up – special precautions are required.

Dampness

Dampness is different to condensation and has different causes which are invariably defects in the building and most definitely a landlord issue. These are not difficult to spot and eliminate: a leaking roof, rising damp in the lower parts of ground floor walls and floors in basements, or a leaking water pipe. All these will create a localised problem and will appear different to condensation and mould.

Older properties and insulation

Many rental properties fall into the older category and are without cavity walls and modern insulation standards. In fact it has been estimated that around 16% of UK rental property stock does not meet modern Decent Home standards. The Energy Performance Certificate (EPC) gives an indication of this when a tenant enters into a tenancy.

Coming up soon is an important repair issue for landlords, which although EU inspired, it is thought unlikely that Brexit will have any effect on the introduction of the Minimum Energy Efficiency Standards (MEES ) regulations. These will make it unlawful from April 2018 to let buildings (both commercial and domestic) in England and Wales which do not achieve a minimum Energy Performance Certificate (EPC) rating of ‘E’.

As poor energy performance is not limited to old or obsolete buildings, MEES will have significant impacts for a number of landlords, tenants, and property agents. Landlords should really be thinking about this, planning for and taking action now to avoid higher costs and protecting their revenues from their properties.

The MEES regulations apply in England and Wales. There are different but complimentary regulations applying in Scotland, which have been developed under Section 63 of the Climate Change (Scotland) Act, known as ‘Action on Carbon and Energy Performance’ (ACEP).

This means that one in ten buy-to-let homes could be unlettable in less than two years’ time unless their landlords take steps to improve their property’s energy efficiency.

Tenants are also able to demand improvements to insulation from April 2016, when landlords will not be able to refuse tenants’ “reasonable” requests for energy efficiency measures, but it this case the tenant would be obliged to pay for the improvement.

The legislation states that landlords must not let out properties with the two lowest energy efficiency ratings, F and G, after April 2018 at the latest. According to a recent English Housing Survey, 11.4pc of homes in the private rented sector were rated F or G in 2011.

Damp specialists

Beware the damp specialists who come into a condensation riddled property with their two pronged meter, showing you just how much dampness the wall contains. Of course it does, because the condensation has well and truly soaked in over time, but their suggested remedies will often be very expensive and ineffective.

Advice for your tenants:

The incidence of condensation can be reduced by:

1. Leaving background heating on all day in all rooms and generally making sure the house is adequately heated in cold weather. Insufficient heating is the main cause of condensation in rental properties.

2. Opening a window or using cooker and wall extractor fans when cooking and keeping lids on saucepans.

3. Leaving bathroom doors closed and the windows open after a bath or shower to clear steam.

4. Keeping the bathroom door closed when washing, bathing and having a bath or shower.

5. Never blocking air vents or airbricks.

6. Opening windows in all your rooms for a short period each day to allow some fresh air circulate.

8. Never drying clothes on radiators or storage heaters with damp clothing.

9. Never introducing portable LPG heaters – they produce 1.6 litres of water for every kg of gas burned.

See the LandlordZONE® Condensation Letter for tenants

Advice for landlords

• Make sure the property is free from issues that can cause dampness – leaking roofs, gutters, downpipes, rising damp, bridged damp courses, leaking pipes, blocked drains etc.

• Make sure the property meets modern insulation standards – you will need to bring your property up to standard before 2018, so you may as well do it sooner rather than later and avoid problems with condensation.

• Make sure the heating system is adequate for the property and is well maintained.

• Consider fitting extractor fans in kitchens and bathrooms and trickle vents in window frames. These extractors can be of the automatic types which operate when humidity levels rise, but remember, people will often block these up if they feel the cold.

• In extreme cases think about supplying a dehumidifier which will remove moisture and dry out rooms.

• Beware when cleaning black mould as the pours can be toxic and a major health hazard – seek professional advice from cleaning specialist with the right equipment.

• The ultimate cure is a full house loft mounted air recirculation system with heat exchangers which provides a continuous flow of fresh, warm dry air throughout the building. There are some well established companies supplying this equipment, Envirovent being one.

Advice for Disputes

Landlord-tenant disputes are unfortunate but an occupational hazard for all landlords. It’s also unfortunate that many tenancies start off really well and over time deteriorate into poor relationships for no particular reason apart resentment coming into it, for one reason or another.  As Robin Williams said in the film Dead Poets Society, “…T’was always thus, and always thus shall be!”

Relations can get very strained and when a certain point is reached, persistent rent arrears and late payments, damage to the property, or anti-social behaviour, for example, it is not unreasonable for a private landlord to start eviction proceedings. Social landlords can afford to be and usually are much more tolerant of this; private landlords usually can’t afford it.

However, tenants will sometimes bring up issues in defence against eviction. The defence can range from finding technical errors in the way the landlord has served notices, or completed court papers, to defects with the property, whether real or imagined, notified or not.

Under the present system the landlord can be faced with a defence immediately before or during a court hearing when it’s too late to do anything about it. Claims of disrepair will usually mean a deferred trail date, sometimes 6 months hence, with a request for expert reports on the conditions. The up-shot is a long and expensive legal process is in train where the loser pays all costs.

1 – When problems arise, such as rent arrears, damage to the property, introducing pets without permission etc., always contact the tenant quickly and discuss the problem.
2 – Always document these discussions and all contacts with a follow up letter outlining the details of the problem, how it is to be resolved and an agreed timescale for this.

3 – In the case of rent arrears send off a rent arrears letter (see the LandlordZONE® Documents section), a rent schedule and serve notices s21 and s8. Try to assist the tenant in overcoming the problem short-term by helping with Housing Benefit claims and re-scheduling rent payments.

4 – Try to get a reason for non-payment in writing from the tenant – this goes some way towards preventing late on “invented” reasons as a defence against eviction if it comes to that at a later date.

5 – In the case of repair issues, request access to the property for inspection and if possible have an independent expert (a builder for example) present and help you compile a report which can be compared to your ingoing inventory. Include photos if possible.

6 – In the case of condensation, evidence from previous tenants can be crucial. If they had a good experience, try to get documentary evidence from them. Think about a leaving questionnaire for all tenants.

7 – Inexpensive Temperature, Relative Humidity and Dew Points meters are now available which means landlords can quickly check room conditions and provide evidence of this.

8 – Taking meter readings can be useful to determine the amount of energy the tenant has consumed since they entered. A quick calculation can provide evidence of the average weekly consumption and therefore the heating applied.

8 – Request access to carry out necessary repairs and get them completed as soon as possible.

Documentary evidence is the key to winning any court action – judges will not take a landlord’s word against that of the tenant, so you must back-up your assertions with good solid evidence. This will be even more important in future if challenged by a tenant in view of the revenge eviction legislation included in the Deregulation Act 2015.

Revenge Evictions

The use of section 21 will be barred if a tenant reports repairs and an environmental health officer (EHO) deems the property to have serious defects – health and safety hazards, damp, condensation and mould being one of these which fall into category 1 & 2 hazards.

Really bad conditions are largely confined to a small proportion of “rogue” landlords who for the want of a better term, let slums.

But all good landlords ought to be concerned about the new rules because damp, condensation and mould is so difficult to pin down to a cause – it can just as easily be the tenant as much as the building and landlord.

Currently five restrictions or pre-conditions are imposed on the section 21 process: licencing, deposit rules, EPC, Gas Safety Certificate and serving the How to Rent Guide. For all of these the landlord is still in control – follow the rules and you retain control, that’s fair enough.

However, the retaliatory eviction rules have the potential to cause serious issues for ALL landlords if not handled correctly because:

(1) EHO judgements are can be suspect,

(2) Convincing a judge on repair issues is often challenging to say the least,

(3) Both these services are seriously under resourced and currently cause long delays – add this extra workload, which could to be substantial, and chaos will ensue,

(4) Gaining access to rented property to remedy defects is often very difficult for landlords,

(5) The process is wide-open to abuse by those tenants who wish to avoid eviction by “creating” defects of their own.

By way of example: a case cited in the Letting Update Journal (Oct 2014) was of a tenant who refused to ventilate even though the radiators were covered in wet drying clothes. The property was covered in black mould even though it had been free of condensation problems with previous tenants. The tenant violently refused to follow advice and brought in the local authority Environment Health Officer.

After the inspection the EHO came up with a long list of modifications and “improvements” that the property needed, even though it had been fully refurbished before this tenancy. The required modifications included moving radiators, building a new internal wall and replacing a large bay window.

On appeal it seems the report was modified with more emphasis placed on the tenant’s responsibility in the issue, but nevertheless it illustrates the difficulties landlords face with inexperienced EHOs, as this lady clearly was, with retaliatory eviction rules.

In my experience a large percentage of the time condensation is caused by the tenant: (1) saving on heating costs and living in a cold house, (2) not ventilating when washing and cooking, (3) drying clothes on radiators etc.

Try to convince tenants, some EHOs, some judges and the general public that this is not the landlord’s fault and you are met with pure cynicism and you really are up against a serious lack of knowledge and understanding on the issue.

I’ve seen this problem develop with tenants from all socio-economic groups, so it’s not confined to the bottom end of the letting market. But often you will never convince the tenant or the authorities of the real cause unless they are experienced or you can show that previous tenants in the property never had an issue with condensation.

My concern with the revenge eviction rules is that there is a danger of introducing a process where good landlords just cannot get fair treatment; cannot easily resolve these situations quickly when it’s costing them money in repairs / rent payment disputes, and where, given time, landlords will simply realise that letting is just not worth the hassle.

Author: Tom Entwistle, Editor

LandlordZONE® Documents

www.landlordzone.co.uk/documents

Private Rented Sector Energy Efficiency Regulations

https://www.gov.uk/government/consultations/private-rented-sector-energy-efficiency-regulations-domestic

Energy Efficiency and the PRS

www.bpf.org.uk/en/files/event_related_documents/Energy_Efficiency_and_the_Private_Rented_Sector.pdf

Property Reports

www.landlordzone.co.uk/property-reports

Repair Reporting Issues and Section 21

www.landlordzone.co.uk/content/repair-reporting-issues-and-section-21

Damp, Condensation and Mould in Rental Property

www.landlordzone.co.uk/pdf/Mould.pdf

… LandlordZONE.

View Full Article: Condensation, the Landlord’s Curse…

National Landlord Investment Show: London Olympia, Tuesday 8th November 2016

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Date: Tuesday 8th November 2016

Doors Open: 9am – Close – 5pm

Location: London Olympia Conference Centre, Hammersmith Road, London, W14 8UX

Register and attend the show to receive a maximum of 5 CPD points towards your landlord accreditation

BOOK YOUR FREE TICKETS

Due to the massive success The National Landlord Investment Show we are delighted to announce the show is heading to back to Olympia for 2nd time in 2016.

This will be our 6th show at Olympia since 2014.

The show will attract Landlords, Investors, Developers & Property Professionals.

If you are Interested in Investment Opportunities, Landlord TAX, Buying at Auction, Finance/Mortgages, Landlord Insurance plus much more…..then this is the show for you.

25 plus seminars delivered by industry experts.

Come and meet over 80 exhibitors within buy-to-let.

Industries exhibiting include:

• Legal Services

• Buy-to-let mortgages

• Landlord Insurance

• Referencing

• Letting Agents

• Online Agents

• Property Management

• Local Council

• Tenancy Deposit Scheme

• Landlord Tax Advice

• Landlord Associations

• Buy to let opportunities

• Local Tradesman

Register and attend the show to receive a maximum of 5 CPD points towards your landlord accreditation.

This is a MUST attend event!

… LandlordZONE.

View Full Article: National Landlord Investment Show: London Olympia, Tuesday 8th November 2016

Lending Into Retirement – Don’t assume age is a barrier

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I think it’s fair to say that the general consensus amongst mortgage professionals is that lenders still aren’t doing enough for older borrowers. At first glance you might look at most lenders looking to lend until age 80 as being quite accommodating, but as we start to work longer, live longer and need to borrow… Read more

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View Full Article: Lending Into Retirement – Don’t assume age is a barrier