Can I withhold service charges?

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On June 4 2022 , the communal roof of my 7th floor apartment which I rent out was breached by rain water causing damage.

The event was a major inconvenience to my tenant who had to vacate the premises for a time.

View Full Article: Can I withhold service charges?

Crisis facing landlords could top that of the pandemic

admin    Uncategorized     agents

The cost of living crisis brought on by the biggest military conflict in central Europe since WWII will hit landlords hard – they could end up losing thousand of pounds in rent as the crisis bites this winter.

According to the Centre for Economics & Business Research think tank as reported by Melissa Lawford writing for The Daily Telegraph, around 10 per cent of households in England will fall behind on rent this financial year. That, says the think tank, equates to over 400,000 households in England at risk of homelessness, and all at a time when local authorities are already under extreme pressure housing regular immigrants and Ukrainian refugees.

If this figure is realised it would be around one-third higher that the number falling into arrears during the first year of the pandemic, taking us back to the financial crisis year levels of 2011-12.

With rents at all time highs and inflation racing ahead of wages, tenants will be grappling this winter with one of the biggest falls in real disposable incomes ever recorded. High inflation is causing real earnings in people’s pockets to fall at the fastest pace on record.

Government debt maxing out

The Government is using its remaining fire-power subsidising energy costs. With little left in its now extended borrowing powers to fund the kind of the support tenants received during the pandemic though furlough and other loans and grants, people will suffer. Landlords also will not be granted the mortgage holidays they received then.

According to Hamptons International’s research, real pay has been falling at 3 per cent year-on-year to early summer this year, while at the same point, the average annual rate of rental growth topped 11 per cent, with a 16 per cent plus hike over the past two years.

Paul Shamplina, of Landlord Action, an eviction specialist, is quoted as saying:

“It is going to be worse than the pandemic because the Government support has gone away. There is no furlough scheme now. There are no bounce back loans.

“I set up this company 22 years ago, and we are the busiest we have ever been – and we will get busier. Day in, day out, it is relentless, the number of tenants who can’t pay their rent,” he says.

Adding to landlords and tenants’ woes, there’s already a tenant debt overhang. As real wages have declined over recent years, many tenants have slipped further into debt and rent arrears, and these debts have already started to climb higher, even before we experience the worst of the winter crisis.

Reports by The Joseph Rowntree Foundation, a housing focussed charity, say that over the past year or so the average debt level facing those tenants in arrears increased by over one-third and average arrears climbed from £450 to over £600.

The foundation has forecast that more than 353,000 private renting households were in arrears in rent arrears as of June 2022, and this figure is now likely to rise quite dramatically as the energy bills start to come in this winter.

Mr Shamplina thinks that many landlords will “not bother to chase unpaid rent because of how long the process takes in the backed-up courts, and prefer to cut their losses and just get their properties back.”

In the meantime, over the coming months some landlords will face mortgage payment hikes as much as 40 per cent above those of last year, when loan deals were at their cheapest. When mortgage rates are at between 3.5 to 4.0 per cent interest payments will very likely eat up a big proportion of a landlord’s rental income.

House price growth slowdown

The growth in house prices over recent years has been a big plus for those investors contemplating buy-to-let investments, which improves renters’ choice and keeps rents down. But according to forecasts by Hamptons, house price growth will fall to zero in 2023. As interest rates rise affordability suffers and this will likely bring an end to the housing market boom and put a damper on buy-to-let investing.

There will be 150,000 fewer home purchases made next year as transactions fall from 1.25 million to 1.1 million, a decline of 12pc, and fall back to levels seen in 2013, Hamptons warns.

Exacerbating the whole situation is the army of landlords selling-up faced with all this and the coming Government buy-to-let crackdown: the banning of Section 21 and fixed-term tenancies etc, leading inevitably to a greater shortage of rental housing and therefore even higher rent levels.

A Government spokesman told the Daily Telegraph:

“We are taking action through our £37bn support package.”

The spokes person added that vulnerable households can apply for help through the £1.5bn Household Support Fund and argued that the forthcoming Renters Reform Bill would “help renters challenge unjustified rent increases.”

The Government has just launched a new consultation on improvements to the Decent Homes Standard for the private rental sector

A key proposal in this is giving tenants the ability to claw back rent if homes do not offer safe and warm accommodation.

View Full Article: Crisis facing landlords could top that of the pandemic

BLOG: ‘Our tech can help landlords understand the cost of EPC upgrades’

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The UK’s private rented sector is dominated by ageing and very energy inefficient housing stock – at 6.3% it has the largest proportion of ‘F’ and ‘G’ rated properties.

To help the UK’s governments meet their net-zero ambitions, private landlords can mitigate carbon emissions through ‘smart retrofitting’.

It’s also an excellent way for landlords to support current tenants facing cost-of-living challenges. As well as softening the impact of rising utility bills, improving the energy efficiency of private rented homes will improve tenants’ standard of living by boosting comfort and reducing the risk of ill health during winter.

Then, as people are more environmentally conscious and mindful of rising energy costs than ever before, landlords can make their properties more appealing to potential tenants by making energy-saving upgrades.

Despite the many advantages of retrofitting – and the advice, grants, and financial solutions available – many landlords have yet to install renewable technologies and other energy-saving measures in their buy-to-let properties.

There are several reasons for this: some landlords argue that proposed measures to meet governments’ targets are inconsistent and unclear, many have a limited understanding of the financial support available to them, and others believe retrofitting will wipe out their profits, making letting unviable.

Impossibly expensive

As measures won’t have the same impact across all properties and as some retrofits can seem impossibly expensive, it is vital to ensure that the right improvements take place in the right properties. This is where technology plays an invaluable part.

One solution available to private landlords is a software application designed to guide them through the entire energy retrofit journey. Developed by my company, Heero Technologies, it provides landlords with personalised energy insights and recommendations with up to 95% accuracy.

The software delivers agnostic, bespoke property information that is both personalised and specifically targeted at home energy improvements.

For example, it not only highlights specific measures based on their ability to improve the energy efficiency of a particular property, but also shows the cost of installation and energy bills savings associated with each suggested measure. It even recommends vetted installers based on customer feedback, estimated cost of work, and proximity to the landlord’s properties.

Read more: A guide to the current MEES regulations.

Additionally, the software offers advice on financing and can ensure that any funding tenants are entitled to is secured, therefore reducing the upfront capital costs associated with retrofits.

Retrofitting buy-to-let properties doesn’t have to be daunting. By turning to technology, private landlords can improve conditions for tenants whilst future-proofing their assets.

For more information, visit https://www.heerotechnologies.com/

Nicola Kennedy (main pic) is the company’s CEO.

Read more: EPC upgrade regulations will cause chaos warns expert. 

View Full Article: BLOG: ‘Our tech can help landlords understand the cost of EPC upgrades’

WARNING: 21% of landlords still unaware of looming tax and income reporting rules

admin    Uncategorized     agents

More than a fifth of landlords still aren’t aware of HMRC’s looming Making Tax Digital (MTD) for Income Tax Self-Assessment deadline, according to surprising new research.

Despite the changes due to take place on 6^th April 2024, property finance platform Hammock found that 21% are in the dark over when they need to start using compatible software to manage their tax affairs with HMRC.

Just under half of landlords still use spreadsheets (33%) or physical files (12%) to manage their property finances. However, instead of filing an annual self-assessment tax return, landlords will soon need to use MTD-compatible software to keep digital records and file quarterly updates for business income and expenses, an end of period statement and a final declaration.

It should make the process much quicker for many, as it currently takes 20% of landlords six to seven days to complete an annual tax return, and for 10% it’s a lengthy eight to 13 days. By using its software, that time is reduced to about 30 minutes a year, says Hammock, which should be welcome news to the 44% of landlords who reckon quarterly tax returns will be more time-consuming.

There’s a danger that some could get caught off-guard and won’t have the processes in place to manage the changeover, Hammock co-founder Manoj Varsani (pictured) tells LandlordZONE.

“Many scramble for their bank statements and receipts once a year, but by using software, people will be able to plan for their tax bill and shouldn’t have any surprises, particularly as it can give you a breakdown of the profit and loss by property.”

Read more about MTD

View Full Article: WARNING: 21% of landlords still unaware of looming tax and income reporting rules

Tenant find service only

admin    Uncategorized     agents

Hi, Is it possible for an agent to only find you a tenant and reference them on your behalf – or do you have to be tied into using their AST too?

I have used an agent in the past but she insisted on using her AST and not mine (which seemed far more comprehensive and detailed for both me and tenant).

View Full Article: Tenant find service only

Tenants increasingly getting first refusal to buy their home

admin    Uncategorized     agents

Mortgage brokers are reporting ‘an enormous uptick in enquires’ from tenants who are being given first refusal to buy their rented home.

The brokers point to increasing numbers of amateur landlords who are now exiting the private rental sector with rising interest rates squeezing margins –

View Full Article: Tenants increasingly getting first refusal to buy their home

In need of a lift

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We purchased a flat just over a year ago, we did so as the flat was in a nice area, near to our family and importantly due to our advancing years and my wife’s disability, she is in need of a hip replacement.

View Full Article: In need of a lift

DIY conveyancing for transferring own house to ltd company

admin    Uncategorized     agents

Hi, I finally decided to transfer my personally owned & lived in property to a ltd company for renting out.

I have always lived in this property and will be moving out soon.

I understand that transferring to ltd company and rent later will save me from CGT for past dates.

View Full Article: DIY conveyancing for transferring own house to ltd company

Fire break wall- Capital Expenditure or Revenue Expenditure?

admin    Uncategorized     agents

Hi all.

Hopefully, somebody on this superb property resource can help me with a tax query.

At the request of my landlord buildings insurance, I have recently had a fire break wall installed in the loft space

View Full Article: Fire break wall- Capital Expenditure or Revenue Expenditure?

EXCLUSIVE: Big landlord to sell ‘low-yield’ properties as interest rates rise

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Higher interest rates have forced one of the UK’s leading guaranteed property cash buying firms to rethink its investment strategy.

The Open Property Group plans to start offloading properties, says MD Jason Harris Cohen (main pic). He tells LandlordZONE: “We aim for a 7% yield but with borrowing costs of 6%, the only way to make it viable is to look for high yield properties.

“We’ll be selling off some of our lower-yield properties when they become vacant, especially those that wouldn’t meet the proposed EPC targets, but when there are opportunities to buy from landlords, we are still actively investing – albeit cautiously.”

Harris Cohen says rising inflation is pushing up the cost of contractors, building materials and sending round a plumber – all of which the landlord has to absorb – potentially making the HMO with all-inclusive bills model unviable, particularly due to higher energy costs.

Rent increases?

Landlords are also having to then weigh up whether to increase the rent or keep good tenants. With a void period, they might have four weeks without rent which is the equivalent of any rent increase, says Harris Cohen.

“It makes sense to keep the existing tenant in place, so we’re having to negotiate rents but at the same time making tenants aware of the support available.”

The company has just sent out a cost-of-living letter to all its tenants as it expects to see an increase in rent arrears this winter, possibly even worse than that experienced during the height of the pandemic when there was more government support.

“We appreciate that some of our tenants – the majority of whom are on housing benefit – will have to choose between heating, eating and paying rent,” he adds.

“We’ve reminded them how important it is to pay rent and explained the support available and that we will help them where we can. However, we have our own financial liabilities with 150 properties.”

Visit the Open Property Group.

View Full Article: EXCLUSIVE: Big landlord to sell ‘low-yield’ properties as interest rates rise