Waiting for the ‘right’ moment to invest?

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Fact: In the last 50 years, property prices have only fallen during four of those years.

So, if you were waiting to time your run to perfection to invest in property with the exact moment prices hit rock bottom

View Full Article: Waiting for the ‘right’ moment to invest?

Landlords LEFT OUT of new ‘forbearance’ guidance for mortgage holders

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Landlords have been left out of measures announced today designed to support mortgage holders during the cost of living crisis.

The guidance, which has been issued by the Financial Conduct Authority (FCA) updating borrowers’ responsibilities to their existing mortgage holders, will only cover ‘regulated’ products.

This means that buy-to-let mortgages, which are deemed to be ‘unregulated products in the UK’ will not be covered.

The FCA says it recognises that many mortgage borrowers face higher mortgage payments alongside the rising cost of living.

In summary, the FCA is calling on borrowers to show ‘forbearance’ towards home owners who may be in trouble financially in the coming months.

“Borrowers may approach lenders needing or wanting to reduce, or smooth increases in, their monthly payments,” it’s advice says.

The omission of landlord mortgages from this guidance is in stark contrast to the depths of Covid during May 2020 when the FCA launched a ’mortgage holiday’ scheme that included both landlords and home owners.

Back then LandlordZONE had to confirm with the FCA and the Government that the scheme covered landlords, but this time it has been very clear on its stance on buy-to-let mortgages.

It statement today reveals that a trade organisation, believed to be the NRLA, and a property firm quizzed the FCA on this.

They were told that: “Our rules…only apply to regulated mortgages. “Where an authorised person carries on activity in relation to an unregulated agreement to provide credit which is secured on land, its conduct in relation to compliance with our Principles, including the fair treatment of customers, could be relevant to our assessment of whether it is satisfying the Threshold Conditions.”

Read the guidance in full.

View Full Article: Landlords LEFT OUT of new ‘forbearance’ guidance for mortgage holders

Eviction moratorium ‘sham’ as eviction cases soar in Scotland

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Scotland’s moratorium on evictions has been branded as a ‘sham’ by critics after revelations that the number of tenants facing eviction is more than double the usual number.

This week, the Scottish Government announced that a rent cap and a ban on evictions would remain until September.

View Full Article: Eviction moratorium ‘sham’ as eviction cases soar in Scotland

Landlords criticised for not completing Selective Licensing forms

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A council has criticised landlords in its area for not completing its selective licensing forms properly and says that out of 700 applications they have received, three quarters are missing vital information.

That then leads to a delay for the council in granting the licence because the landlord has to be chased to supply the missing details.

View Full Article: Landlords criticised for not completing Selective Licensing forms

Renters Reform Bill – Free webinar March 21st

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The Renters Reform bill is gathering pace and could enter parliament as early as May.

There are 12 proposals being put forward that could significantly effect the way Landlords currently run their property businesses. Are you up to speed?

View Full Article: Renters Reform Bill – Free webinar March 21st

Self-managing landlords looking to switch to agents

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Fears about the future of the private rented sector (PRS) are leaving many landlords considering whether they should sell up or switch to using an agent, research reveals.

The findings from Uswitch highlight that 63% of private landlords would consider using a property manager or a letting agency.

View Full Article: Self-managing landlords looking to switch to agents

Politician warns big landlord fines by councils ‘can be seen as hypocritical’

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A Suffolk councillor has spoken out against targeting private landlords with tougher regulations when authorities face similar problems with their own housing stock.

Both Babergh and Mid Suffolk councils have agreed that civil penalties of up to £30,000 should be used to deter rogue landlords instead of prosecution for illegal but less serious cases of housing offences because they take less time and fewer resources.

However, councillor David Busby, Babergh’s cabinet member for finance, assets and investments, told colleagues that the move could seem “hypocritical” against the backdrop of problems with the council’s own social housing stock, according to Suffolk News.

Unsafe

Last month, it was found some council house tenants across the authorities had been left in potentially unsafe conditions as just under 470 inspections and safety reports were missed.

The councils referred themselves to the regulator once they realised and began work to rectify the problems.

Busby (pictured) says the council needs to be careful about criticising private landlords too much if it hasn’t got its own house in order.

“But that shouldn’t stop us putting pressure on those private landlords who break the law,” he tells LandlordZONE.

Tough time

“Landlords have had a tough time of it recently and the majority are trying to do a good job although there are always some that abuse their position – 90% of our effort should be put into dealing with the 10% who cause the most problems.”

Earlier this week, Haringey Council was criticised for not completing fire and electrical checks at thousands of its properties, despite handing a private landlord £2,500 for the same failing.

The Regulator of Social Housing found the authority had breached parts of the Home Standard, resulting in the potential for “serious detriment” to tenants.

View Full Article: Politician warns big landlord fines by councils ‘can be seen as hypocritical’

NRLA chief rebuts claims that he ‘misled’ MPs about PRS shortages

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A Commons committee has confirmed that NRLA chief Ben Beadle did not mislead MPs when giving evidence about the diminishing supply of private rented housing.

An article in The Guardian had accused Beadle of making up stories about the state of the sector in a bid to persuade the government to scrap restrictions on mortgage tax relief. It said the landlord body was warning of landlords selling up due to punitive taxation and that Beadle had told the select committee into the PRS last September, “We are already seeing landlords and, critically, homes leave the sector…The exodus is well under way.”

It reported that he told an industry webinar last week: “Actually the truth is that while some landlords are leaving the sector, this sector is actually still increasing. That’s not terribly helpful to our argument to be honest with you. But in the context of cost of living and rising costs we have to tell that story and link the two.”

Red handed

Conservative MP Natalie Elphicke claimed the clip showed Beadle and the NRLA being “caught red-handed making up stories about a ‘shortage’ of rental stock so landlords can jack up rents and to scare politicians who should know better”.

According to the English Housing Survey, the number of private rented households rose in England by 177,000 from 2021 to 2022 – figures published since Beadle’s committee appearance, he insists. “It was to this that I was referring on the webinar. However, my comments did not provide the full context. The latest English Housing Survey data remains an outlier when compared to all empirical evidence and other key industry data.”

Following a meeting yesterday, the committee agreed that he had not misled them.

Beadle (main picture) adds: “Everything I told MPs was completely accurate based on the published data available at the time. The NRLA will continue campaigning for a sector that is fair to both responsible landlords and tenants.”

View Full Article: NRLA chief rebuts claims that he ‘misled’ MPs about PRS shortages

A year in review for agents: The PRS annual report 2022

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The Property Redress Scheme annual report 2022 has just been released and reflects on the past year in the property rental sector and we look at some of the major things on the horizon that property agents need to be prepared for in 2023.

The report covers a summary of what happened in the private rented sector in 2022 and how this has impacted the complaints raised, resolutions and memberships of the Property Redress Scheme. The PRS annual report 2022 also includes the results of the largest sentiment survey of the year, carried out across sector. Read the report here.

Key highlights from the report

• Membership numbers rose by six per cent
• Early resolutions awarded increased by 48% in 2022 to £353,053
• Over 2,000 complaints raised in 2022, an increase of 6.8 per cent
• Complaints were completed in less than 40 days in 2022, compared to 50 days in 2021

 “The Property Redress Scheme has grown for the eighth year in a row, increasing our membership by six per cent from 2021. As of 2022, we are now the largest redress scheme in the UK. This is a reflection on the recognition and reputation of the scheme and shows we are established and respected in the sector. Read the full report to find out more.”

Sean Hooker, Head of Redress at the Property Redress Scheme

Key highlights from the survey of over 3,000 agents and landlords

• 76% of agents feel the private rented sector is fit for purpose and 72% of landlords feel the same. Their main reasons for this are it provides a regular income, and the current regulation protects landlords
•  Both agents and landlords feel the biggest challenges facing the private rented sector are legislation (agents 25%, landlords 39%), rent payments (agents 24%, landlords 21%) and property maintenance (agents 17%, landlords 14%)
• Despite legislation being a big challenge, 83% of landlords are confident their compliant with current regulations
• 50% of agents feel very or quite supported by the Government and 24% feel neither supported or unsupported whereas 43% of landlords feel not very or not supported at all and 16% feel neither supported or unsupported
• Almost half (48%) of all landlords feel the current legislation hinders them due to too many complex regulations
• Almost an equal number of landlords are against (31%) as they are for (30%) tenants with pets in their property
• 80% of landlords envisage themselves still being a landlord in three years’ time

About the Property Redress Scheme

The Property Redress Scheme is now the largest letting agent redress scheme in the UK with over 17,200 members.

Our role is to provide an impartial service that considers consumer complaints about a variety of property related issues. The PRS have an expert team that:

• investigate fairly and listen to both sides, once the member has had the opportunity to resolve the complaint directly
• explain things clearly and let people know where they stand, initially trying to negotiate an early resolution
• give people our decision as quickly as possible, where early resolution was unsuccessful
• always meet people’s communication and accessibility needs

Join the PRS today

All agents can join the Property Redress Scheme, it is a simple and straightforward process. Simply complete the application form here and pay the appropriate annual subscription fee.

View Full Article: A year in review for agents: The PRS annual report 2022

TOM’s Ultimate Guide for landlords whose tenants can’t pay the rent

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More than half of landlords reported having lost rental income due to the pandemic and, as the cost of living crisis continues to bite, many more are worried about their tenant falling behind with the rent.

It’s vital that landlords know how to deal with rent arrears before they escalate. In this article, Tom Entwistle, a residential and commercial landlord since the 1970s and founder of LandlordZONE draws on his experience to offer tips for landlords whose tenants can’t pay the rent.

For more advice, read Total Landlord’s article, what to do if your tenant can’t pay the rent and falls into arrears, including videos from Mike Morgan of the Property Redress Scheme’s Tenancy Mediation Service, and evictions expert Paul Shamplina, founder of Landlord Action.

Tenants in arrears

A key skill for any successful landlord is having the ability to manage rent payments effectively. Maintaining your cash-flow – especially if you have a mortgage or mortgages to pay – is a vital part of your property management skill set, much needed to avoid you perhaps losing a property that you’ve worked hard to acquire.

Having missed or constantly receiving late rent payments from a tenant is an alarming prospect and very frustrating for any landlord. Rent arrears lead to a good deal of stress and sometimes sleepless nights for landlords.

But it’s something you need to learn to deal with in a professional and detached way if you are to maintain a good relationship with your paying customers – your tenants.

Getting angry solves nothing and can lead to more trouble. You need to work through a logical process to deal with the situation, one which treats your tenants with respect and is as helpful as possible in what is often a very difficult situation for your tenants.

Planning ahead

Everything you do in a landlord-tenant relationship should be planned and precise, planning for the worst case but hoping for the best. In my experience dealing with the average residential tenant means that 95 percent of them (19 out of 20) will pay their rent on time and look after your property as any good home should be looked after.

It’s the small percentage of tenants that cause you all the trouble, so better to do your best to avoid them in the first place. Do thorough vetting and selection, carry out a robust referencing process, take precautions like asking for a guarantor and taking out rent guarantee insurance.

These precautions, I would suggest, will be even more important when Section 21 is abolished under pending new legislation changes.

Standing orders – best thing since sliced bread!

I always insist on rent payments by standing order. I’ve found it is the best system ever to manage rent payments for residential as well as commercial tenants, for the small-scale landlord.

You know instantly when a rent payment has failed to arrive because standing orders are only cancelled for two reasons: there is not enough money in the tenant’s account or the tenant instructed the bank to stop it.

I’ve never accepted payments by cheque because it’s so hit and miss and stressful: the cheque’s late, is it the post? Has the tenant not sent one? How long should I wait to ask? When you do ask, invariably “it’s in the post” or “I’ve changed banks and I’m waiting for a new cheque book”, in fact every excuse under the sun. This game can go on for a long time.

So, with standing orders all you need to do is keep an eye on your bank balance online. You know exactly when the rent is due each month and if it does not appear you need to take immediate action.

Don’t be tempted to delay taking action or your tenant will think you are too relaxed about it. Start with a friendly phone call, email or just call round to ask your tenant why the non-payment?

Whatever the reason or excuse, always follow this up in writing and state the circumstances as a contemporaneous note in your tenancy’ diary. It might seem harsh but this could be the first step in the eviction process so documentary evidence is so important. Most evictions are due to rent arrears.

I have a “rent arrears letter” that I send out with a statement of rent payments already received and when the arrears started. I will re-send this on a regular basis until the arrears are cleared.

The letter contains information about how the tenant can seek financial help and advice, how we can talk about their problems and try to resolve them in the short term, and finally the severe consequences of falling behind with their rent.

If there’s a guarantor or rent guarantee insurance involved make sure you keep these parties in the loop, always send them copies of your letters and statements so they know in good time what they may be liable for, and they may then put some pressure on your tenants to comply.

Always communicate directly with your tenant if you can

Having had many instances of rent arrears or missed payments over the years I find that there’s often a genuine reason and one that can be sorted out with a quick discussion.

Perhaps there was a change of bank, a late wage payment or just a heavy spending month, and a cheque will make-up for the missed payment, but invariably a missed standing order is a sign of trouble, a struggle on the tenant’s part to pay.

I find that some tenants will cooperate to try and overcome their difficulties, but some – and I’m afraid to say a good number, will do their utmost to avoid you when they are struggling. They will fail to answer their phone, or respond to emails or answer the door.  They are either too embarrassed to face you or they want to mentally bury their money issues and hope they will go away.

If you find your tenant is willing to cooperate with you, and is willing to accept help when they are perhaps going through a temporary money problem, then you should try your best to accommodate them.

They may well otherwise be a good tenant, but in an energy crisis with high inflation and job insecurities they may need temporary help, like a rent holiday or a temporary reduction in rent, to be repaid over time.

Alternatively your tenant may be able to pay but has no intention of doing so. Or is continually paying late in dribs and drabs, which makes your life difficult keeping track of it all.

Not being able to communicate means that you are not able to offer help and therefore the situation will inevitably lead to you going for an eviction – no landlord can be expected to house tenants for free indefinitely.

Follow the correct procedure

For serious arrears the tenant needs to have missed at least two monthly rent payments. When a payment is missed I send (by post and email as well if you can) a rent arrears statement regularly showing the arrears as they build-up. This does three things: it keeps the tenant reminded of the arrears situation, it stops both parties losing track of the arrears position and it forms good evidence if you need to go to court.

How can mediation help with rent arrears?

Taking the legal route should be a last resort. If you can get some cooperation, mediation should be your first port of call if you’re having trouble reaching an agreement with your tenant yourself.

But at the same time, buy-to-let is a business and you can’t afford to allow someone to keep living in your property rent free.

When your tenant is in two to three months’ rent arrears, and it appears they either can’t afford or simply won’t make their rent payments, then you may have to make the difficult decision to serve an eviction notice.

Eviction should be a last resort but if you need to go down this route make sure your property is in good order and you have responded to any repairs requests.

You also need to be sure you have complied with the necessary prescribed actions such as having a current gas and electrical check certificate, carried out right-to-rent checks and all the appropriate notices have been served, especially when using Section 21.

The Section 21 notice is a two months’ notice normally served when rent arrears start, whereas a Section 8 notice is a two  weeks’ notice for rent arrears and the arrears should be for more than two months.

Section 21 is only available if the tenancy is a periodic one, where the fixed term has ended. If you are lucky the tenant may realise they  can’t afford to stay and leave voluntarily.

Arrears in commercial (business) tenancies

In my opinion rent arrears in a business tenancy are similar to a residential tenancy in that the first priority is to help your tenant through any short-term difficulty, but the handling of this calls for a more nuanced approach.

Again, as soon as the arrears start you should establish contact to find out what the difficulty is. A short-term cash flow issue can be accommodated perhaps with a temporary rent re-scheduling, a rent holiday or reduction, to be made up over time, and again you need to send regular statements to clock the position at the start and as the arrears build.

It may be possible to help a commercial tenant out of their difficulties by suggesting a sub-letting of part of the premises or an assignment of the lease to another tenant. The RICS Code for Leasing Business Premises offers guidance here.

Whereas a tenant in persistent arrears in a residential tenancy is better out of the property, from the landlord’s point of view, this is not necessarily the case with a commercial tenant.

When a commercial tenant is evicted a lot of the tenant’s costs fall back onto the landlord: full business rates in most situations become payable after three months, insurance premiums (which often double for a vacant unit) can no longer be charged to the tenant, security issues arise with vacant units, and the landlord has to take care of standing charges for all services: gas, electricity, telephone, internet. They all fall on the landlord, along with a good deal of administration time.

The lease term and non-payment

The tenant is tied into a lease for its duration, and is responsible for all the costs regardless of paying the rent. There are often advantages, given that commercial units can take some time to re-let, especially in difficult economic times, to try to help the tenant through the difficulties and it is better to have the tenant in the premises even if they don’t pay rent.

With a commercial tenant who won’t cooperate and won’t pay there are two possible courses of action before resorting to forfeiture – the procedure for evicting a commercial tenant.

One is to take the tenant to the county court (small claims) for the debt of rent arrears, and two is to appoint bailiffs who will visit distress for rent (Distress for Rent Act 1737) on goods if the rent is not forthcoming.

Bailiffs must also follow more recent legislation known as Commercial rent arrears recovery (CRAR). Often one or other of these two courses of action are enough to shock the tenant into keeping up the rent payments in future. 

A key point about dealing with rent arrears is that you need to let your tenant know that you take the matter extremely seriously. You do this by taking action as soon as a payment is missed.

Don’t ignore it and hope the problem will go away, or you will allow arrears to build up into enormous losses, as some landlords do.

 [CF3]https://www.youtube.com/watch?v=7DN4kxlnHic

View Full Article: TOM’s Ultimate Guide for landlords whose tenants can’t pay the rent