Editorial, June 2017

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What a lot has changed since I last wrote an editorial for what is likely to be our last LandlordZONE® Newsletter in its current format.

From July 2017 we will be sending this Update out on a weekly basis, bringing you the latest landlord news and information along with some in-depth articles and reports on what’s important in the UK private rented sector (PRS).

We have a new Government, still a Conservative Government, but with a reduced majority. Despite Theresa May’s appeal for a “strong and stable government”, as we enter the crucial Brexit negotiations, it seems with have anything but.

Other bad news has come think and fast, leaving us with a slightly depressed feeling; the Manchester bomb, the London vehicle and knife attacks, and the Grenfell Tower fire; surely it’s time we had some good news for Great Britain.

Who knows what the future holds for the UK as we begin the process to extract ourselves from Europe; hard or soft, short or long drawn out? One thing is certain, we are told, we will be out, and what’s more, that’s what the vast majority want.

The Queens speech held few surprises with most of the promised legislation in the Conservative Manifesto stripped out, but one thing that did survive from the previous government, and with greater emphasis, is the banning of tenant lettings fees, not just by agents but by landlords as well.

Restricting holding deposits to one week’s rent makes sense and is appropriate in my view: you should be able to check out a tenant within a week, and if the tenant backs out you can retain the deposit, up to your own justified losses. If you reject the tenant, even when they fail your checks, you cannot retain the deposit.

On the other hand, restricting the security deposit to one months’ rent is more problematic for some. Landlords started to take six-week’s rent money to prevent tenants using their deposits to pay the last month’s rent, and also when landlords accept pets they usually ask for a higher deposit. These are problems that need to be ironed out before this becomes law.

The sixth edition of Kent Reliance’s half-yearly (state of the market) Buy-to-Let (BTL) Britain report indicates that landlords’ confidence has fallen back in the first quarter of 2017, with only 41% now optimistic (nearly 70% in the last study) about their buy-to-let portfolios.

However, although the rate of growth in private rented sector (PRS) has slowed, it has still expanded to reach 5.5 million households in Q1 2017, or over 20% of households, and is predicted to reach 25% of households in 5 years’ time.

The report says that around 25% of investor landlords are considering incorporating their business or transferring property assets to spouses, and limited company loans have accounted for 44% of mortgage applications during Q1 2017.

Landlords should think very carefully and take good tax planning advice before incorporating a buy-to-let business. Although incorporation works very well for a property development business, it does not suit every investment business, size comes into this as well as personal circumstances.

With the cost of incorporation, plus the extra accounting and company reporting cost, higher mortgage, transfer duties, and different tax rules on dividends and earnings, as well as regulatory risk – the possibility the government will change the rules – incorporation does not work well for everyone.

Some of you may have seen the new BBC documentary series entitled “The Week the Landlords Moved In” which has landlords swapping places with their tenants to experience life on the flipside.

The first airing this week showed one landlord’s son break down in tears after he swaps accommodation with his tenant and experiences for himself, not only the grimy conditions that his pensioner tenant lives in every day, but also living on a low income for a week, around £54, the cost of a round of drinks for him he says.

Another landlord featured, millionaire landlord Paul Preston, 40, admitting that he has “expensive tastes” living in a luxury apartment as he does with his personal trainer girlfriend Prea, who he refers to in the show as “Queen P” because of her “craving for luxury.” Paul has made a fortune dividing homes up into separate bedsits, and renting them out by the room, and just to emphasise the point he calls his business “Success HQ”.

Neither of these scenarios leave the public with a good image of landlords, rather they reinforce a stereotype which is basically a money grabbing soul, taking advantage of ordinary working people by providing shoddy and unhealthy accommodation at high prices.

Yes, damp and mould result because the tenants cannot afford decent levels of heating, but there is lots more landlords can do to make their accommodation safe, and to keep on top of maintenance, repairs and cleaning.

This is exactly the reason why Government (national and local) hates the fact that there are so many landlords like this, and why they want to encourage the build-to-rent programme to offer more accommodation which brings rents down overall, ads professional management and offers safe, clean accommodation. If private buy-to-let landlords want to compete with this in the future, they will need to up their game.

Tom Entwistle, Editor

… LandlordZONE.

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Section 8 and Section 21 with an improvement order outstanding?

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If you haven’t issued a tenant with a EPC cert when commencing a tenancy agreement can you still evict for non payment of rent? Also if you have a improvement notice order can you still evict for non payment of rent? Regards Tony

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Fire prevention in social and rented housing

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Fire safety measures are an important consideration for those in charge of social or rented housing. There are strict guidelines that should be adhered to, dependent on the type of accommodation, and tenants and landlords should be equally aware of these, although the provision of them is the responsibility of the landlord.

There are over 50,000 fires in dwellings across the UK every year, many of which could be prevented if the proper precautions were taken. For people living in rented accommodation, the likelihood of a fire occurring is over seven times higher than those who own their own property. Here are the basics that you need to know.

Gas appliances

All gas equipment provided in a rented property or social housing should be safely installed and checked every year. The tenants of the property should be provided with a gas safety check record before they move in and if you have not received this you are within your rights to request it.

The annual check should be kept by the landlord for 2 years and provided to tenants within 28 days of this being carried out. Any unchecked equipment, such as flues and pipework, could be a potential fire hazard in addition to the risk of carbon monoxide poisoning.

Electrical appliances

Landlords should ensure that any electrical equipment provided with the property, including plug sockets and light fittings, are safe and working properly. Any appliances should carry the CE marking where relevant, which indicates that it complies with the requirements of European law. As a tenant, if you think something is wrong with any of the electrics in the property you should notify the landlord immediately.

In a larger property, also referred to as a house of multiple occupation (HMO), the landlord should an electrical safety check carried out every 5 years by a registered electrician.

Fire safety equipment

All properties, whether rented or social housing, should come with a working smoke alarm on each storey – so if you are renting a house you should have one on all levels. If the property has any sort of coal or wood burning appliance then a carbon monoxide detector should also be fitted.

These must regularly be checked to ensure they are working. If a tenant is unhappy with the smoke alarms present and believes they are insufficient for the property they can report the landlord to the local housing authority. In an HMO fire extinguishers may also need to be provided. At least one extinguisher should be on every floor and if there is a shared kitchen then a fire blanket should be provided. It important to note that fire extinguishers will need to be assessed and checked annually to make sure they are still in fully working order.

There should also be a clear escape fire escape from the property, whether this is external or an internal stairwell that has been specially treated, and any doors leading to this should be fire doors. This will slow or stop the spread of the fire and allow the building to be evacuated quickly and safely, minimizing the danger to human lives. Purpose built flats are usually fitted with 60 minutes of fire resistance between the residences and the route of escape, but it should be at least 30.

Signs

Where rented property or social housing is in the form of flats, certain areas should be well signposted for the tenants. Any emergency fire exits or assembly points should be clearly marked and understandable. In certain buildings, such as HMO’s, it may also be a good idea to include fire action signs in certain places so all residents are aware of the correct procedure to follow should a fire occur, and how to keep it to tackle it if needed.

Furniture

If any furniture is provided with a property it must be fire safe and comply with the Furniture & Furnishing (Fire Safety) Regulations 1988. All soft furnishings should carry a label stating their compliance with these regulations and it is the responsibility of the landlord to make sure all furniture is provided with this.

Tenant precautions

Tenants can also help to minimize the risk of a fire and should take proper precautions in the property where necessary. Electrical sockets should always be used sensibly and not overloaded, and any electrics that are thought to be faulty should be immediately reported to the landlord.

In addition to this, if non-UK appliances are being used then the correct adaptor should be used at all times with it. If there are electric heaters in the property these should never be used to dry clothes and should be kept unobstructed at all times.

Mobile heaters should be kept a safe distance away from soft furnishings such as curtains and sofas and if there are candles in the property these should be handled carefully and also kept a sensible distance from any soft furnishings. If smoking is permitted in the residence, then tenants should ensure cigarettes are extinguished properly and the contents of ashtrays are checked before they are thrown out.

This article was written my Paul North, head of operations at Fire and Water Supplies. Visit the Fire and Water Supplies website to find out more.

… LandlordZONE.

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Mortgage lending up 12 % in May 2017, but BTL down…

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Gross Home lending up 12% in May but a new Council of Mortgage Lenders (CML) buy-to-let forecast shows a downturn in landlord lending. The CML has estimated that gross mortgage lending reached £20.1 billion in May, a 12% increase, but the CML’s buy-to-let forecast for 2017 and 2018 has been revised down from previous expectations […]

… LandlordZONE.

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Can anyone provide me with a link to a downloadable Section 21 form?

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This may be the first time we’ve had to do this …. so I need a Section 21 form to issue to my tenant, but doing a Google Search seems to offer only agencies requiring me to complete details – who will then no doubt (despite stating they are FREE) expect me to pay a… Read more

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The landlord law changes you need to be aware of in 2017

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If you are involved in the property business, you’ll be aware of the new buy-to-let measures that have plagued the market over the past year. But are you acquainted with the imminent landlord law changes that will affect buy to let investors this year?  

Tax Relief reductions:

In 2016 the Government announced that it was reducing the tax relief landlords can claim. In fact from 6^th of April 2017, the amount of tax relief that landlords can claim on their finance costs (such as mortgage interest) will be gradually replaced with a basic 20 per cent tax credit.

These reductions may result into profit losses for a number of landlords, prompting many to suggest that they will look to recuperate their losses by charging higher rents.

Not every landlord will necessarily be affected: some landlords are setting up limited companies, which are exempt from the changes.

While many landlords will benefit from this change, some may ingenuously believe that it is the right option for them, without considering that there are fewer mortgages available to this type of investor with much higher rates of interest, and various tax implications to ponder when moving to a limited company structure.

New penalties for property mismanagement:

In April 2017 the Government also introduced penalties of up to £30,000 for a variety of housing regulation infringements committed by landlords, such as a failure to provide authorities with an HMO licence and for overcrowding a property.

Local authorities can also make rent reimbursement orders against landlords who have mistreated tenants or let properties in a poor condition.

The benefit of the new legislation for local authorities is that it allows them to fine landlords without having to go through complicated, time-consuming and expensive legal proceedings.

Letting agent fee ban

While no specific date has been set for the introduction of the Government’s letting agent fee ban for tenants, the Housing Minister did confirm that ministers would begin discussing details for the plan in April 2017.

It is believed that letting agent costs will be passed onto landlords, which could greatly increase the charges they incur.

All landlords that use letting agents to manage their properties should be aware of all the options available to them in order to cut costs where possible. For example, they may choose to go for a cheaper option on offer from the same agent, which could balance out the increased costs, or they might decide to start self-managing their portfolio.

Blacklist of rogue landlords:

The Government’s blacklist of rogue landlords and letting agents has been in operation since October 2017. This database will be available to local and central government, which will ensure that those landlords and agents that have been served banning orders or have breached the law are included on the blacklist.

If a landlord is placed on the list, they will be banned from letting property for a minimum of 12 months, meaning it could greatly affect their businesses.

Effective management practices are vital especially in times where landlords’ conduct is being carefully scrutinised by the public, and Arthur will enable you to achieve this. Arthur’s property management software enables you to have complete control over all aspects of your portfolio and it’s accessible from your computer, tablet or mobile phone. Arthur brings your landlords, tenants, contractors, agents and owners all under the same interface, making problem solving a breeze. With our system, you can manage your portfolio from anywhere in the world, which is guaranteed to give you a peace of mind as the buy-to-let market undergoes so many radical changes. Arthur provides you with complete flexibility and is excellent for multi-unit properties (no matter what size) such as: student accommodation, blocks of flats and HMOs.

Come and try our 30-day free trial today!

Article Courtesy of: Arthur Online

… LandlordZONE.

View Full Article: The landlord law changes you need to be aware of in 2017

Property plans!

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The experts at Belvoir reveal five essential plans you need to be a successful landlord and how to prepare them…

WHAT: Plan 1. Marketing

WHY: A clear and concise marketing plan allows you to position your property correctly in order to amplify your exposure to the market, maximise the achievable rental return and minimise periods of void.

HOW: “First of all think about the content of your marketing material,” says owner of Belvoir Bournemouth Luke Marchbanks.

“A well-written description with a catchy summary is advisable to really ‘sell’ the lifestyle of your property. Good quality, professional photographs are a must too – in fact, many potential tenants make the decision whether to view a property based on its visual impact.

“Always be honest with your words and pictures and deliver a true reflection of the property and what it offers in order to avoid disappointment during viewings.

“Next, research the major property portals so you can create a good online presence,” he continues. “And look at other advertising solutions, such as local newspapers or community message boards.

“Planning ahead is also essential so it’s vital to know when you are likely to need to remarket. Be proactive and talk to your tenant to find out their future thoughts and how long they are likely to stay at the property.

“Importantly, too, it’s advisable to regularly review your marketing material and plans in order to keep your exposure appealing and fresh.”

WHAT: Plan 2. Inspections

WHY: Without regular inspections it’s impossible for landlords to know what’s going on behind the closed doors of what is probably one of their biggest assets… so start planning ahead now!

HOW: “If you or an agent don’t visit your property on a regular basis it can deteriorate without your knowledge, plus there’s no way of knowing if the tenant is living within the terms of their Tenancy Agreement,” says owner of Belvoir Hendon Josh Sacofsky. “Quarterly visits are advisable and having a clear plan for the year to come will help reinforce the commitment to inspect.

“Planning ahead will also allow you to arrange suitable dates and times which are convenient for both you and the tenant (with at least 24 hours written notice). If possible, the tenant should be at present when you visit as this will allow you to ask questions, plus receive feedback, about the property.

“Before inspecting create a checklist of areas you need to look at, or issues you need to look out for. Particularly pertinent are signs of general wear and tear, structural damage, damp or condensation, plus brown staining to the ceiling or walls which could indicate a leak. It can be useful to take along the original inventory as a point of reference.”

WHAT: Plan 3. Maintenance

WHY: Planning ahead for your property’s maintenance needs will help protect your investment and reduce the likelihood of future major repairs, plus allow you to budget for expenses. Additionally, a proactively-maintained property will also help attract good quality tenants who are likely to stay in the property longer and look after the property for you.

HOW: “Firstly, it’s important to create a good communication channel with your tenant so you are made aware of any deterioration or necessary repairs between inspections,” advises Luke.

“As part of your maintenance plan it is also useful to create a list of reliable, trustworthy contractors for all major areas, such as a plumber, electrician, general handyman etc, so the information is accessible at speed when needed.

“Your legal responsibilities, such as gas safety inspection dates, should be laid out carefully in your plan too so you can schedule ahead.

“Creating a timeline and diarizing your property’s potential maintenance needs in advance will allow you to categorise what will need to be done when and ensure the execution of routine maintenance is carried out efficiently.”

WHAT: Plan 4. Portfolio growth

WHY: Being an investment landlord with multiple rental properties is just like running any other business… and all businesses need a long-term business plan.

HOW: “Set yourself realistic and achievable targets so you can grow your property portfolio effectively,” advises Josh. “Think about timeframes too. When are you going to make your next investment? How long will the process take?

“Budgets and expenditure should also feature strongly in your planning. Make sure you’ve got your finances in place and, if you need funding from a bank, try and get that tied up – as a purchaser, having pre-agreed finances can make you desirable and can often act as a bargaining tool.”

Think ahead, too, to when you’ve purchased the property.

“Once you are in possession of the property you want to get it to market as quickly as you can in order to secure a speedy rental return,” says Josh.

“Compile a list of contractors who are going to make the property rental ready, plus short-list the potential agents who are going to manage the property for you.”

WHAT: Plan 5. Exit

WHY: Having a long-term plan in place regarding how you’re going to leave the market is vitally important so you can exit your investment in the most timely and cost effective way.

HOW: “Many investors focus a huge amount of work and due diligence into the start of their investment journey but don’t necessarily consider the end,” says Luke. “However, it’s essential that you plan ahead so you can structure your exit to maximise your property’s potential and profit.

“Knowing why you’re investing and what you want the property to achieve is vital here. The way your exit plan is structured will be dependent on, and dictated by, these long-term aims.

“Whatever your motivation for investing, financial planning is key,” he continues. “Before committing to a property purchase it is recommended to meet with someone from the financial sector to ensure that the investment will fulfil any long-term aspirations.

“It’s also important to remember that the market does change and prices and demand do fluctuate so your plan should be flexible, allowing you to regularly revisit and revise it as necessary.”

Article Courtesy of: Belvoir</a>

… LandlordZONE.

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The Great British Housing Disaster

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https://www.youtube.com/watch?v=Ch5VorymiL4    

… LandlordZONE.

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‘No deposit’ insurance product debate

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With tenancy deposits coming under fire recently, Eddie Hooker, CEO of Hamilton Fraser, parent company to mydeposits, looks at whether alternative insurance products, offering a deposit free solution, protect both landlords and tenants, and if they improve the Private Rented Sector (PRS). To address these questions and many more potential issues, mydeposits has today released… Read more

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Accused of HMO by Newham – Help

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I have a buy to let in Newham and I have a Selective Licence. I rented out my property to a family of 2 and their family friend so that’s 3 tenants in total in May 2017. I included all the names of the tenants in the Tenancy Agreement. Newham Council Enforcement Team have told… Read more

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