The importance of timing & planning for dilapidations

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Commercial Property:

Dilapidations – a question of timing, and seeking the right advice at the right time can reap rewards for both landlords and tenants and maximise the ability of the parties involved to seek or defend against damages for alleged breaches.

A lease is used in most instances to formalise the agreement between landlord and tenant, the content of which will have implications for both parties throughout the term of the lease and at lease end. It is therefore of critical importance that the context of the lease is clear and concise and represents the requirements of the parties.

A prospective tenant should therefore seek advice from an experienced building surveyor to assess condition prior to entering into any lease agreement to minimise risk and avert potential claims. This is particularly relevant in the current commercial climate, where the majority of leases are for shorter terms.

The condition of the premises at commencement of the lease can have significant bearing on dilapidations claims. It is a common misconception among tenants that they are not obliged to repair, maintain or replace building components or landlord’s fixtures that were in poor condition at the outset of their tenancy.

Equally, the context of a Full Repair and Insuring lease does not imply a new for old policy and a tenant is not obliged to go beyond the standard of repair identified in the lease.

The wording of lease clauses and their inherent meaning can be complex.  An experienced surveyor will be able recognise the merits and deficiencies of a lease and put this in context for their respective clients.

Most commercial leases will prescriptively identify the standard of repair within the repairing covenant of the lease. In most instances, this will place a burden on the tenant to “put the premises into repair or keep in repair”.

Broadly speaking, even if the demised premises are in poor repair at commencement this is not the standard to be maintained. Rather, the tenant is further obliged to maintain to a prescribed standard – often “good and substantial or good and tenantable condition, irrespective of the cause of damage”. The latter removes the landlord’s obligations to repair.

The standard of repair can be varied within the lease by a Schedule of Condition, most often in favour of the tenant, often requiring the tenant to return the premises in “no better or no worse condition” than evidenced in the schedule of condition.

It is therefore equally important where a schedule of condition is annexed that it is accurately reflective of the condition on the date of the inspection and identifies the whole of the demised premises.

Tenants should be aware that where alterations or additions are made to the demised premises these will be subject to the same repairing obligations as that of the existing premises. Alterations are subject in most instances to specific direction at the end of the term to either retain or remove.  Tenant fixtures and landlord fixtures are, in most cases, treated differently at the end of a lease and can have a bearing on the claim.

The expertise of a chartered building surveyor can be invaluable to both landlords and tenants where claims arise, particularly at the end of the lease term.

A landlord’s surveyor should endeavour to identify breaches and take cognisance of alterations to the property and prescribe the remedy required to resolve each breach. An estimate of cost should also be provided in order to establish the value of the claim.

An experienced building surveyor will have the ability to strategically assess the most viable options for the landlord to minimise future risk once the premises reverts, while ensuring the landlord receives “best value” from the outgoing tenant.

By equal measure, a tenant-appointed surveyor will be able to consider the merits of the landlord’s claim and minimise exposure for the client. In some instances, this may go beyond simply negotiating the claim line by line and an element of commercial awareness can go a long way to reaching a favourable settlement.

The best time to appoint a building surveyor? As soon as possible. Once appointed the surveyor will be able to make an assessment of the type of service required and provide strategic advice to the client.

This advice can be invaluable in minimising risk prior to the commencement of a lease for landlord and tenant alike. At lease end, the appointment of a chartered building surveyor can be the difference between a good and bad outcome for the client.

By Kenny McDonald

Kenny McDonald is an associate in Building Surveying Consultancy in the Glasgow North office of DM Hall Chartered Surveyors.

https://www.dmhall.co.uk

Facebook: https://www.facebook.com/DM-Hall-Chartered-Surveyors-LLP-168316039915372/

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – The importance of timing & planning for dilapidations | LandlordZONE.

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Landlord Show Addresses Key Landlord Issues

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National Landlord Investment Show:

The next National Landlord Investment Show addresses key issues plaguing landlords in 2018 coming up at Olympia on 15 March.

The National Landlord Show arrives at Olympia on Thursday 15 March to give advice via complimentary seminars, leading suppliers and two landlord debates where you can get advice from accountants, estate planners, mortgage brokers, councils and financial advisors.

Why are landlords easy targets?

As landlords have become easy targets to fill the Government’s coffers by using taxation hikes, it’s essential for any investor or potential investor in property to understand the market fully. With Corbyn describing himself as a socialist and with landlords in his sights, the instability of the Sterling currency and Brexit, the potential threats are both numerous and serious.

Also, the show will discuss opportunities such as licensing and how standards, demand, rents, and profits can all rise. Now that the tax changes and other regulation are likely to affect unprofitable landlords, and many leaving the market, it’s essential for all in the BTL market to see their investments as a business, not a side-line or hobby. Knowing how to react to the change afoot is a priority for all involved buy-to-let.

The National Landlord Investment Shows at Olympia brings together the diverse landlord community of up to 4,000 active investors to solve these problems as a community.

The Council Landlord Debate

The UK’s largest council debate will allow landlords to ask questions to five London councils. Visitors will be able to join a complimentary panel hosted by some of London’s councils to find out about the checks, fees, standards and procedures in each London Borough. Attendance at the panel is complimentary and on a first come, first served basis.

The Expert Property Panel, launched in 2017, is also returning to the March show and is expected to host 450 + landlords and investors at what is the UK’s largest series of landlord debates.

This open panel debate focuses on tax and how landlords can manage their taxes and finances effectively; the afternoon session covers local councils – understanding their processes, legislation and differences in each borough.

Speakers this time include: Tony Gimple, Founding Director at Less Tax 4 Landlords, Emma Cox, Sales Director for the Commercial Property Finance Division of Shawbrook Bank and Russell Conway, Senior Partner at Oliver Fisher Solicitors, who is regularly featured on LBC Property Hour. The most recent speaker to be announced is Jim Haliburton, MD of HMO Daddy. Marie Parris, CEO of George Ellis Property Services, will once again present.

Shawbrook Bank attests to the importance of the education at the event, “Shawbrook is proud to support the Landlord Investment Show for 2018. We have worked together for a number of years and it has always been important to Shawbrook to partner with organisations that support an educational approach designed to shed light across a variety of important topics including the economic environment and the regulatory landscape”

Visitors can register for the show at landlordinvestmentshow.co.uk

For exhibitor enquiries, please call 020 8656 5075 or visit

landlordinvestmentshow.co.uk/exhibit

About Landlord Investment Show

National Landlord Investment Show is the UK’s leading property investment exhibition, providing solutions, networking and advice for new seasoned and investors in the buy-to-let market. Established in 2013 and operating in property hotspots throughout the country, it has now run 54 shows successfully, and has provided property investment solutions for over 20,000 landlords in the last 12 months alone, a growth of 31% since 2015.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Landlord Show Addresses Key Landlord Issues | LandlordZONE.

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Why did the IFS issue the report “The decline of homeownership among young adults”?

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The Institute for Fiscal Studies issued the Briefing Note “The decline of homeownership among young adults” on 16 February.

It contained findings, but did not make any recommendations. The key findings were:

• Today’s young adults are significantly less likely to own a home at a given age than those born only five or ten years earlier.

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New Energy Regulations could scupper mortgage renewals

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MEES & Mortgage Renewals:

Private landlords hoping to fix their mortgage rate ahead of any further increases in bank base rates, and those who rushed-in to buy using soon to expire two-year fixed rates to avoid the new 3% surcharge back in April 2016, could find their plans scuppered by the new Minimum Energy Efficiency Standards (MEES).

The regulations, which are due to take affect from April 1, 2018, and according to Property Master, the digital start up that uses algorithms to match the requirements of individual private landlords against the entire buy-to-let mortgage market, they could prevent landlords getting mortgage renewals.

The new MEES rules, set to come into effect in less than six weeks’ time, will force landlords to ensure their entire rental properties are in line with the new standards.  This will require their properties having an energy rating of at least an E.  Failure to comply with these new rules will mean that the property will be illegal to rent out on a new tenancy, and this could affect property and property portfolio valuations for mortgage renewal purposes.

“Lenders granting new finance deals will typically require properties to be revalued and we should prepare for value to be affected by fears some landlords will encounter void or empty periods as they rush to upgrade their properties or that some properties will no longer be able to generate a rental income because the landlord has not made or put in place plans to raise a property’s energy rating,” said Angus Stewart, Property Master’s Chief Executive.

Mr Stewart continues:

“This could be a particular problem for portfolio landlords as they will need to ensure all their rental properties comply with the MEES rules even if they are not seeking to remortgage every property they have.  Having just one property with a below standard MEES rating could prove to be a problem for some landlords looking for a new finance deal.  Landlords who have a fixed rate which is soon to expire or who just want to get a good deal ahead of any forecast bank base rate cannot risk ignoring the April MEES deadline.”

Landlords failing to comply with the new MEES rules could potentially also face substantial financial penalties in addition to potential void or empty periods.  The penalty for renting out a property on a new or renewal tenancy for any period of fewer than three months will be in breach of the MEES Regulations will be equivalent to 10% of the property’s rateable value.

The fine is subject to a minimum penalty of £5,000 and a maximum of £50,000. After three months, the penalty rises to 20% of the rateable value, with a minimum penalty of £10,000 and a maximum of £150,000.

These new rules will apply to new tenancies and to tenancy renewals and landlords will be required to ensure compliance before the lease is granted or renewed.

An estimated 20 per cent of non-domestic properties are thought to be in the soon to be illegal ‘F’ and ‘G’ energy efficiency rating brackets.  Works that may improve the rating include upgrading the boiler and improving insulation but in some cases improvements to the fabric of the building may be necessary, which could be costly.  There are a limited number of exemptions to the MEES rules, for example, if consent to upgrade the property is refused by a third party such as a local authority.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – New Energy Regulations could scupper mortgage renewals | LandlordZONE.

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What is the ‘remaining term’ of a periodic tenancy?

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I wish to remove some of my properties from Haart Lettings in Fleet due to several reasons. These include be over-charged by tradesmen they have employed, lack of property management and generally very poor value for money.

When raising the question of how much notice was required to take back management myself

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A Definitive Guide to Laminate Flooring

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Wood Flooring:

There are many options on flooring you can choose from but the most popular and frequently bought is undoubtedly laminate.

There are a lot of products and informative guides available online about laminate flooring and how it compares to its peers but we struggled to find a definitive piece that explained what it is, what to look out for, how to choose the right one for the purpose and after care all on one page.

In this article we tackle these topics, so you can make a more confident informed decision if you’re looking to buy laminate flooring for your purpose.

What is Laminate Flooring

Laminate is a type of synthetic flooring that is constructed from layers fused together through a lamination process, giving it its name. It usually has a wood-like appearance with a top “photographic” layer designed to look like wood grain underneath a clear protective wear layer but it’s not limited to wood as you know CGI can visually mimic anything.

It is often easily confused with vinyl flooring, but these are constructed out of different materials – vinyl tiles are 100% plastic whereas laminate flooring is 99% wood.

Types of laminate

There are differentiating types of laminate flooring available to suit your requirements including the ways in which it can be installed, different styles, effects and finishes, its durability properties, thicknesses and features like scratch resistance and water resistance.

Laminate Styles & Effects

The huge advantage of laminate flooring is that it’s easily available in so many different styles that can fit your existing home décor, whether that’s modern and sleek or rustic and traditional. For a home that needs sophisticated and minimalism in its flooring, you can purchase laminate in a smooth or satin finish.

Natural wood is the most popular effect laminate is known for and it can be used in most home décor styles, but it best complements country and farmhouse style interiors thanks to the fact that it can be designed to almost exactly mimic real wood but with all the advantages of synthetic flooring.

Laminate Features

Most laminate floors claim to be water-resistant which is not to be confused with water-proof. To achieve the latter, you need take extra measures like sealing the edges to walls and around water bearing appliances likes sinks, bath tubs, shower cubicles and toilet basins.

Another popular feature is scratch-resistance which doesn’t guarantee it can’t be scratched from the most common chips of stones being caught on the grip of your show sole, but it usually refers to light scratches when children are dragging or scraping their toys against the floor.

A recently and not yet common feature that is slowly coming available is the stain resistance from ink which is an advanced feature on the general drink or food stain resistance you would expect on laminate if you don’t leave it to dry for days.

Durability AC Ratings

Most people don’t realise that laminate flooring is available to purchase in different levels of durability depending on what it’s needed for. To differentiate between these, the laminate is rated on a scale called the AC rating which is a combination of the materials used, layers and its thickness.

You will generally find the thicker you go the higher the AC ratings will become but that’s not the case for all so please look out for the AC ratings to conclude whether its fit for propose.

For most homes and domestic properties, an AC rating between AC1 and AC3 should be sufficient.

AC1 is ideal for areas that have very little foot traffic, and AC2 for lightly used areas such as bedrooms and guest rooms.

For higher traffic areas that may have more wear and tear like entry halls, bathrooms and kitchens, a laminate flooring with an AC3 rating is best.

The higher levels on the scale, AC4 and AC5 are best suited for commercial properties. AC4 flooring can work well in offices where people may be moving around while wearing shoes.

AC5 is the highest level and thus is the most durable. This is perfect for areas with very heavy traffic such as department stores.

Costs

The cost of your new laminate flooring can vary hugely depending on all the above factors. The more durable types of laminate flooring tend to be more expensive, but it can depend on the amount of work that’s gone into the style.

For example, you may think that choosing a higher AC rating may work better as it will last longer in the long run, but those designed for commercial properties will most likely not fit the style you need. It’s important to balance up the different factors to see which kind of laminate flooring will best suit your needs – the most expensive one isn’t always going to be the best decision for your home, but neither is the cheapest.

Installation types

One thing for sure is that Laminate flooring does not need a subfloor to be installed, but there are two different ways in which it can be put down in your home: an easy to install click system and a glued laminate.

Before you jump to your decision there are advantages to each type of laminate floor installation:

Click system simply needs to be slotted into place and can be done without the help of a professional in most cases; in contrast,

Glued laminate is more time-consuming and messy to install but it’s far stronger and if you are looking to buy a long life laminate floor which you don’t intend to change for at least a decade.

Whichever one you choose if you’re thinking of doing it yourself and it’s your first time installing laminate flooring on your own, this installation guide will be useful.

Maintenance & Care

To get the most out of your laminate flooring, it’s important to care for it as best you can. While it can be very durable, it is still prone to damage. It’s important to remember too that laminate flooring, unlike vinyl, is not entirely waterproof – it can be susceptible to warping and dampness if it’s flooded due to the layers it’s made up of. It’s recommended to use a soft broom or vacuum cleaner to remove any particle left on the surface, and any dirt can be cleaned off with a damp mop or cloth. A wet mop will likely saturate the flooring and could cause damage.

Make sure to read up on how to care for laminate to make sure that your laminate flooring will last to its potential.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – A Definitive Guide to Laminate Flooring | LandlordZONE.

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Equality laws could affect “no benefit tenants” policies

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Lettings agent Nicholas George recently admitted indirect discrimination on the grounds of sex, settling out of court with single mother Rosie Keogh. She was paid £2,000 compensation, because her application was refused on the grounds of being in receipt of benefits.

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The Licensing of HMOs (Prescribed Description) (England) Order 2018

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Hi All, Just had this piece of new legislation pointed out to me by a client. Although I heard Sajid Javid’s sabre rattling around Christmas, I hadn’t heard much more on it since. The new piece of legislation, made 20/02/2018 and laid before parliament 23/02/2018 appears to be coming in to force 01/10/2018 and would also appear to have been rushed through (was anyone aware of a consultation on this?)

http://www.legislation.gov.uk/uksi/2018/221/made

It appears to be removing the 3 floor limit from the original HMO regulations.

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Rental income and stamp duty or limited company

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I have one property rented out since I down graded to a small flat in August 2016 only. I am thinking of opening limited company as people say that is more tax sufficient, and asset is owned by the company rather than myself which can paid for my care in old age.

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Benefit Tenanted Properties could be eligible for energy grants

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Energy Efficiency:

Properties occupied by tenants on Housing Benefit could be eligible for energy efficiency grants to bring properties up to current standards ahead of the MEES (minimum energy efficiency standards) directive, effective from April this year.

The government is allocating a limited amount of funding for housing associations and private landlords with benefit tenants, where the current EPC rating of the property is E or below.

The grant is allocated to the tenant not the landlord, so successfully obtaining funding in this way would entail a certain amount of cooperation between the landlord and the tenant.

The scheme applies to houses only, not flats. UK energy suppliers will be contracted to carry out improvements, depending on the location and type of property, but the tenant will not need to be an existing customer of the supplier.

The scheme is a part of the Home Heating Cost Reduction Obligation (HHCRO) and the “Affordable Warmth Grant” aimed at dealing with fuel poverty in across the UK.

For example, installing a new A-Rated Boiler can reduce carbon emissions and can save tenants up to £300 per year on fuel bills for heating and hot water, and with good insulation the whole package can save the tenant considerably more.

Potential improvements covered by these grants include:

• Loft insulation
• Cavity-wall insulation
• Hot-water-tank insulation
• Draught proofing
• Gas, electric or oil central heating and hot water

Tenants can apply for the grant if they are receiving any of the following benefits:

• Working Tax Credit – with an income of less than £16,040 and which must include a disability element
• Child Tax Credit – with an income of less than £16,040
• Attendance Allowance
• Disability Living Allowance
• Income Support – which must include a disability premium
• Housing Benefit – which must include a disability premium
• Council Tax Benefit – which must include a disability premium
• War Disablement Pension – which must include mobility supplement or Constant Attendance Allowance
• Industrial Injuries Disablement Benefit – which must include Constant Attendance Allowance

Improving efficiency of a property will benefit both the tenant and landlord, so it’s in both their interests to work together to see if they can obtain the funding for this.

If you think your tenant is entitled to receive this grant, you can find out more information on the Warn Front Website – https://www.gov.uk/browse/housing-local-services/landlords

There is limited funding for this and the “Warm Front Scheme” is funded year by year on a set Government budget. The budget is usually taken up quickly because of the high demand, so the money may not always be available. However, it worth a try to get it and if successful landlords and tenants will benefit substantially by reducing the cost of meeting the compulsory MEES standards.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Benefit Tenanted Properties could be eligible for energy grants | LandlordZONE.

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