NEW: App to let landlords sell equity in their properties for income

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A new app will soon launch that lets landlords release equity in their properties and then sells shares in it to investors who get a percentage of the monthly rent.

Proptee, the brainchild of Benedek Toth (pictured), is an investment platform where property investors can buy and sell shares in rental properties from as little as £1, generating a monthly rental income depending on how many shares they own – without the hassle of getting a mortgage or paying agent management fees.

The business model is a stock exchange for properties, Toth tells LandlordZONE, letting investors check photos, rent projections and tenant details to make informed investment decisions.

The 24-year-old says the idea was borne of frustration at not being able to get a mortgage despite having the capital because he didn’t have a credit history – although he was still able to invest in stocks.

10% equity for 10% of rent

After a landlord sells a house or releases equity, Proptee releases shares to investors, so for example, owning 10% of the property means they’ll get 10% of the rent.

It can also manage properties for them, he says. “The concept should appeal to many landlords as it releases equity without them getting into debt, and it’s much quicker than the traditional sales model as there are more potential buyers.”

Just about to kick off its first round of fundraising ahead of the platform’s launch early next year, Proptee already has 1,300 potential investors signed up, with five properties on the books so far, and plans to get 50 on board.

Says Toth: “They can be anywhere in the UK but we’re looking for people who take care of their properties.”

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Review Hearings are adding a further delay to evictions!

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In addition to the temporary ban on evictions implemented to help sustain tenancies and prevent homelessness during the COVID-19 pandemic, since re-opening, the courts have now introduced Review Hearings. The reason given for this is to enable them to prioritise the most urgent eviction cases.

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Give landlords more time to upgrade properties to new energy efficiency standards, says industry council

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A leading industry lobbying organisation says the government’s proposed draconian minimum energy efficiency standards or MEES are unfair to landlords.

The comments have been made by The Lettings Industry Council (TLIC) in response to the government’s consultation on its proposed changes to the MEES rules, which ends on 30^th December.

Its most controversial proposal is to raise the minimum EPC band to a C for all new and renewing tenancies from 2025 onwards, and all existing tenancies by 2028.

It also says the landlord spending cap should be raised from £5000 to £10,000, after estimating that it will cost £4,700 on average to upgrade rental properties to a band C rating.

Footing the bill

“I understand and support the need to improve our carbon footprint but it seems that landlords will once again be footing the bill and we run the risk of more leaving the market, leading to a further reduction of stock,” says TLIC chair Theresa Wallace (pictured, above, outside No.10 Downing Street).

“I feel landlords need to be given time to recover from any financial hardship caused by Covid-19 before they are asked to make any further investment into their rental properties.”

TLIC is therefore proposing that landlords should be given until 2030 to upgrade their properties to a band C rating, and in the meantime be required to upgrade their properties in stages, focussing their efforts on getting to at least a band D rating first.

The government’s other proposals include a compliance and exemptions database for England and Wales, increasing the maximum fine for non-compliance to £30,000 and forcing letting agents and property portals to ensure properties have the relevant EPC before being advertised.

Read the consultation in full.
Read more about the BEIS proposals.

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Spaced out? Fifth of homeworkers can’t wait to get back to the office

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Having the space to think, free from interruptions with kids, and having adequate technical equipment, are luxuries that many home workers just don’t have.

The result is that at lease 15% of those currently being asked to work from home are feeling stressed and many can’t wait to get back to the office.

Research carried out by GoCompare Home Insurance found that:

• 19% say they are now fed-up with working from home
• 14% are working from the sofa and 6% are working from their bed
• 1 in 10 have experienced an embarrassing video call due to their home set-up
• Half of homeworkers have had to spend money improving their working space
• Most people working from home are unhappy with their workspace set-up, according to new.

The current necessity for home working means that 63% of home workers have experienced issues due to their inadequate set-up. Sometimes that leads to embarrassing Zoom calls because of what’s going on around them, and even home office shaming by colleagues. As a result, 19% now say they are fed-up with home working and 15% say they are suffering from stress.

In an attempt to restrict the spread of the coronavirus over the winter, the Government has asked those who can, to once again return to homeworking.

The new research commissioned by GoCompare (note 1) reveals some of the difficulties people are grappling with. Some are having to work from their sofa, while others have not choice but to use a bed. With kids interrupting work, calls, using an inadequate tech set-up, and with occasional background noises, it all makes for unprofessional exchanges.

The research commissioned by GoCompare Home Insurance highlight the fact that finding space to work in the average home is one of the biggest challenges for employees. Only 27% said they have a dedicated workspace in their home, 9% admitted to having to keep moving around to find a space to work and only a quarter working remotely said they are happy with their set-up.

The survey also looked at the spaces people were using in their home as a workspace. Only 24% had an existing home office which they could utilise for work. Most workers have had to get creative with improvised workplaces: 21% use their kitchen or dining room table, 15% have had to construct a homeworking space in a spare room. Other makeshift workspaces include the sofa (14%) and the bed (6%), while 4% have had to move a child out of a bedroom to create a home office.

Half of those restricted to homeworking said that they have had to spend money improving their working space, including buying office furniture (21%), painting and decorating (13%) and building work (10%).

For many, the novelty of remote working has worn off. Nearly a fifth (19%) surveyed said they were fed-up with working from home. Most (63%) have experienced issues with their home office set-up. Regular interruptions were a key gripe (19%), kids interrupting work call was an issue for 11% of people. Technology was a headache for some, with 13% saying their home’s WiFi is not up to scratch, while 12% have problems with the strength of their phone signal.

Inadequate facilities have caused some people real problems in carrying out their work, adversely affected their performance and left 15% of home workers feeling stressed. 9% people said they have experienced an embarrassing video call due to their home set-up, while 6% have been in trouble with their boss and 5% confessed to missing a deadline. A minority (4%) had been shamed by work colleagues for their home working arrangements.

Lee Griffin, CEO and founder of GoCompare Home Insurance says:

“Since the outbreak of the coronavirus homeworking has become the norm for millions of people, to help stop the spread of the virus. Across the country an army of workers have set-up workstations on kitchen tables, in spare rooms and even their sofas and beds. With the rise in infection rates and new lockdown restrictions in place, millions of office workers will have to continue remote working.

“Employers have the same responsibilities for home workers as they would if they were working in an office. This means ensuring employees have the right equipment and technology, internet connection and office furniture. This includes support and training and appropriate risk assessments.”

Mr Griffin added,

“If you’re an office-based worker working from home as a result of the pandemic, you don’t need to contact your insurer to update your documents or extend your cover. However, if you continue to work from home after restrictions are lifted, you may well need to check with your insurer, especially if, as part of your job you receive visitors to your home or hold company stock or assets at home as it is unlikely that you would be covered.

“Your employer would be responsible for having appropriate insurance for visitors or of company assets, such as computers and equipment, in employees’ homes. Those who are deemed self-employed, so freelancers or those on some zero hours contracts, would need to consider specific business insurance and public liability cover for home working.”

Note 1 – On the dates 21-22 October an online survey of 2,044 randomly selected Great British adults was executed by Maru/Blue. For comparison purposes, a probability sample of this size has an estimated margin of error (which measures sampling variability) of +/- 2.1%. The results have been weighted by age, gender, region and social grade to match the population, according to Census data. This is to ensure the sample is representative of the entire adult population of Great Britain. Discrepancies in or between totals are due to rounding.

GoCompare is a comparison website that enables people to compare the costs and features of a wide variety of insurance policies, financial products and energy tariffs.

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PRA may look for Banks to increase Stress testing to 167% for Higher rate Landlords

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The PRA has highlighted to lenders that section 24 rental income tax changes have made BTL investments more expensive for high rate taxpayers and lenders are not fully accounting for this when assessing affordability.

Banks routinely look for a minimum stress testing or Interest Cover Rate (ICR) of 125% calculated against monthly interest at a notional rate.

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Belvoir predicts rent rises in 2021 and calls for Government intervention to protect the PRS

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Belvoir’s Q3 post lockdown rental index reveals significant regional diversity, with evidence of increased tenant demand, property shortages and arrears in some areas. Average rental values have remained fairly flat for the past three years, but the UK’s largest High Street property management franchise, which has 300 offices nationwide, is predicting that continued high tenant demand, plus a shortage of properties is likely to result in increased rents in 2021. Belvoir continues to call for Government intervention to protect tenants who are becoming increasingly vulnerable to rent arrears.

Belvoir CEO Dorian Gonsalves says: “The Belvoir rental index, which has been tracking advertised rents since 2007, and is prepared for us by property expert Kate Faulkner, reveals an interesting emerging picture in the UK’s post lockdown market. In many ways the Q3 index confirms the resilience of the rental market, and a continued cultural shift towards renting as a lifestyle choice.

“In addition to the Q3 rental index, a cross section network survey confirms that house rents continue to outperform apartments, with offices citing high demand after lockdown, plus a shortage of properties as contributory factors. Our survey revealed that 82.5% of participating offices reported increased rents for houses in Q3 versus 2019. Although many of these offices are predicting that rents will continue to rise in Q4 and beyond, this is dependent on regional factors, making the Belvoir rental index an incredibly valuable resource for landlords who can see at a glance what is happening in England, Scotland, Wales and Northern Ireland, but can also zone in on how the rental market is performing in any particular region.

“Unsurprisingly during a pandemic, the average length of tenancies remains high nationwide, although this has been a trend for some time, with 41% of tenants opting to remain in their home for 19-24 months, and almost a quarter renting for over two years.

“The Q3 2020 survey revealed a 7% increase in the number of offices who experienced landlords selling up to three properties when compared to Q2. The number of offices seeing landlords selling 6-10 properties compared to Q2 also increased from 5% to 9%, but on the flip side, there was a decrease in the number of landlords purchasing properties to rent. Our survey revealed that no offices reported landlords buying six properties or more – a trend that has remained static since Q4 2019.

“Looking ahead to 2021, 90% of Belvoir offices surveyed are predicting that house rents will increase or remain static, while 82% predict that rents on flats will increase or remain static. Predictions regarding the likelihood of rising or decreasing rents vary from region to region, and even for offices within a specific region, so I recommend that landlords contact a reputable professional agent in their area to discuss how the market is likely to perform in their area before making any decisions about taking advantage of opportunities to expand their portfolios, or selling properties.

“Belvoir’s Q3 results confirm that despite the pandemic and ensuing recession, the market has in fact remained remarkably robust. However, there is undoubtedly an urgent need for further Government intervention and improved strategies to ensure that tenants are able to access and benefit from the same levels of assistance as homeowners. Without further Government support, such as the introduction of a tenant loan scheme similar to that already operational in Wales, there will be increased risk of further rises in arrears and more likelihood of landlords selling up. This will result in further shortage of good quality rental properties and will leave tenants vulnerable to rogue landlords offering substandard accommodation.”

To view the Belvoir Q3 rental index in full visit: https://www.belvoir.co.uk/pages/rental-index

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David Coughlin: how I escaped recession era Liverpool to build a 100-property portfolio

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David Coughlin’s journey from the son of an unemployed Bootle docker to a 100-property portfolio landlord is one of the private rental market’s more extraordinary journeys.

Now pushing fifty years old, it was in his mid-20s that he began investing in property.

Coughlin was born into a family where few if any of them had a job and was the first to get a degree (from Leicester University) going on to gain two post-graduate degrees at Cambridge University.

His first purchase didn’t go that well – a property in Manchester that, although it delivered healthy rental profits to help fund his 20-something lifestyle, failed to rise in value during the four years he spent working at McVities in the city.

In 1998 he then bagged a job as a senior operations manager at Mars food in Slough which included a seven days on and five days off shift pattern and £90,000 salary; the vital ingredients to start buying property – time and money.

“I bought a property for £165,000 in Windsor and two years later it was worth £250,000 so I listed it on one of the then newly-arrived online property sales websites and two guys came around to value it,” he says.

“They offered me £210,000 for a speedy cash sale but when I questioned the low valuation, they said there were lots of people in the area prepared to take a hit for a quick sale.”

This got Coughline thinking and, after buying a guide to property investment he had bought off the internet for £99 that plugged the importance of ‘motivated sellers’, decided to jack in his job and start a property portfolio.

Quick sale

He took three franchises out at property buying website QuickSale  in Berkshire, Lincolnshire and Chester and also joined several offline and online forums including the infamous Singing Pig to further educate himself about property.

“I initially used estate agents to source deals but they soon got wise to what I was doing so I switched to a more sophisticated marketing strategy using local paper advertorials to generate leads,” he says.

He bought two properties in Loughborough including a student HMO and a property in Burton-on-Trent and then a familiar pattern emerged – wait a few months after buying an under-priced property, remortgage it to extract the original deposit, and repeat.

Heyday

“It was the heyday of property then during the early noughties because lenders were still flexible and keen to lend to landlords, and house prices were rising,” he says.

Within three years Coughlin had amassed over 100 properties using this method, making him one of the first and certainly the most successful using this method.

“The key is understanding who the motivated sellers are – e.g. people who need and want to sell at a discount including landlords fed up with running HMOs, people moving abroad and those who can’t sell their property on the open market but can’t wait any longer,” he says.

“But it was also about helping the deals get across the line – hand holding tenants and where necessary offering purchase and rent-back deals which you could still do back in those days, which helped him bag half his portfolio.

Deal packaging

After realising that having 100 properties was the limit for a portfolio landlord, in 2007 he set up National Residential to apply his skills to the buy-to-let market, using the same techniques he’d learned building his portfolio to offer other landlords a deal packaging service.

This business model is not without its critics – and other ‘quick sale’ companies have been slammed for offering desperate sellers very low offers.

Coughlin has two answers to this – one is that his family’s humble beginnings installed in him a moral compass that compels him to treat his clients fairly, and that during the credit crunch he switched to an auctions-based business model.
“We do a valuation and then set a reserve price for the auction so the vendor knows what they are going to get. If it sells at or above the reserve price they’re happy, if it doesn’t they don’t sell,” he says.

Are downturns an opportunity?

But what about the looming economic downturn caused by Covid? Does his business thrive during recessions?

“A lot of people think that tight markets mean more people will want to sell quickly but the flipside of that is when lenders and surveyors are being cautious on valuations, this means the buyers’ demand wanes, our market wanes,” he says.
“So we do best when the market is booming – it’s easier to sell properties.

“During Covid we’ve decided to go all-out to help landlords who are hit by section 24 taxes, by the pandemic, and by the evictions ban – as we have investors who want to get into the buy-to-let market, so we’re acting as a consultancy/sales machine in the middle. 

“We do a far better job at getting deals over the line than traditional estate agents would, as we hand-hold tenants whose landlords are selling up and we also have national reach unlike most local agents.

“We’re targeting investors who want to sell between now and next march when furlough ends and the stamp duty holiday ends, and when CGT rises.”

Repeat success

But could someone repeat his success now? He says it would be possible but that it would take longer.

“You’ve got to buy property at a low price to make this work – and then refinance after a few months to get your deposit back to buy another property.

“Fifteen years ago, that was easy because mortgage lenders gave you 50 or 100 mortgages but now, they limit the risk at three and then says ‘prove yourself and you can have some more’. It’s more difficult now and if I was starting out now it would be more like 30 properties or 40 properties maximum in three years.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – David Coughlin: how I escaped recession era Liverpool to build a 100-property portfolio | LandlordZONE.

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The Property Investors Awards is delighted to announce the winners for 2020

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The celebrations usually involve holding a glittering evening of fine dining and entertainment to announce the winners. Although a very different way of celebrating this year, it is even more important to ensure we continue to celebrate the very best of the property investment sector.

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Rees-Mogg: ‘Dear landlords.. sorry about all the pain, but there’s no more help on the way’

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The Government has expressed sympathy for landlords’ Covid-related struggles and has praised their patience but still hasn’t announced any new practical measures to help them.

Speaking in the Commons, Conservative MP Robert Syms called for a debate on residential landlords as he said the sector was “very unhappy”.

He told MPs: “It provides valuable property for people, yet throughout this crisis landlords have been prevented from managing their properties and evicting people, even those with arrears from well before the crisis.

“I know of landlords who have not been able to evict people exhibiting anti-social behaviour and causing distress to other tenants because of restrictions the Government have imposed.

“Some people who could pay rent are not paying rent, but some of the residential landlords are still having to pay mortgages. This is a troubled sector and we should explore all the issues.”#

‘Wasn’t unsympathetic’

Responding to the question, Leader of the House of Commons, Jacob Rees-Mogg (pictured), said he “wasn’t unsympathetic” to landlords’ plight.

However, while he offered no new initiatives, Rees-Mogg pointed to the lifting of the stay on possession proceedings, and added: “Although we have laid regulations to require bailiffs not to enforce evictions until 11th January, there are exemptions – this is important – for the most serious cases, such as anti-social behaviour and illegal occupation.”

Rees-Mogg added: “We are grateful to landlords for their forbearance during this unprecedented time.

“Some may have been able to benefit from postponements of mortgage payments, which have been made available, but we strongly encourage tenants in all relevant Government guidance to pay their rent or to have an early conversation with their landlord if they have any difficulty doing so.”

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As built-to-rent developers embrace pets, how much longer can landlords refuse them?

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A large new apartment development about to open its doors in London is the most recent to offer those buying or renting at the site the opportunity to live with their pets.

Network Homes’ Evolution development in Southall will offer residents the opportunity to bring their pets with them across the whole site, although its developer says that any four-legged friends will have to be vetted before they move in.

But sites like Evolution, and others in London including be:here Hayes, Black Horse Mills in Walthamstow and Duet at Salford Quays, are challenging perceptions that landlords and home builders are anti-pets.

They’re encouraging change in the private rented sector which is slowly becoming more pet-friendly, helped by the Government’s new model tenancy contract which has been changed to encourage landlords to take on more tenants with pets.

Pets bill

Also, the Dogs and Domestic Animals (Accommodation and Protection) Bill currently going through Parliament aims to give tenants the right to live with their pet.

Lisa Ley, Network Homes’ head of sales and marketing (pictured), says that due to strict regulations, lack of space, or access to the outdoors, many apartment providers aren’t able to accommodate a four-legged friend.

She says that the opportunity to live in an apartment in London that permits domestic animals is “a rare luxury”.

Prices at Evolution start from £65,000 for a 25% share of a one-bedroom apartment priced at £260,000, the rest is owned by Network Homes and owners pay a subsidised rent along with their mortgage.

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