2022: The year of cutting losses and tighter portfolios

admin    Uncategorized     agents

It’s been a tough year for portfolio landlords, and it’s fair to say that 2022 was up there with one of the most stressful and tumultuous years since the financial crisis for many landlords.

But for me personally, and many other landlords, it was also exactly the jolt I needed to act on my portfolio, especially regarding rents.

I also admit that I took a year or two longer to incorporate my portfolio in response to the Section 24 tax.  I should have acted sooner – I was caught napping at the wheel! Hey, nobody’s perfect.

For those of you who may not know me yet, I’m David Coughlin, founder, and director of National Residential and more recently, the Landlord Sales Agency.

Like many of you, I’m a private landlord having built a personal portfolio of 150 properties over the past 20 years and then going on to help other landlords buy and sell over 4000 properties.

During the past 20 years, I’ve also built a strong reputation as an industry expert and amassed a formidable network of peers and business owners in the property sector.

It was the last two years of economic change which caused me to set up The Landlord Sales Agency having been contacted by fellow portfolio landlords and peers in my network asking for my help and advice to sell their own tenanted properties.

Having experienced many of the challenges dealing with tenanted properties myself such as: trying to increase rents to offset interest rates; evicting problem tenants; selling tenanted properties for best prices; paying for repairs with tightening budgets; I put necessary measures in place and built a fantastic team and network to overcome these challenges for my own personal portfolio.

I was in the right niche at the right time with the right power-team so that I could help other landlords successfully overcome these issues quickly.

But this last year wasn’t without challenges, and as many of us were to find out, it was going to get a lot worse, and fast, before we discovered solutions.

Tough one

On the one hand, when I look back it’s easy to see why this year might have been a tough one: interest rates and taxes went up in an almost exponential way, inflation and the cost of living rose higher than ever before, and for landlords on tracker mortgages especially, concerns rose over deteriorating rental profits, with worries of future stagnation or worse deflating sales prices.

Then we had Section 24 and landlords not knowing whether they could incorporate, or even if they had the financial or technical resources to do so. Landlords feared paying more tax than they were making in profits. Added onto that was the volatile mix of rising regulatory costs: EICR (electrical) certificates required for us to continue to rent legally, expensive refurbs and even more regulations and costs with EPC ratings (which for some of us meant spending up to £10,000 per property).

Rocky times?

The future looked bleak, and when faced with the hard truth that we needed to sell our portfolios, this seemed like rocky times ahead.

I took a long, hard look at my own portfolio and came to the same conclusion: right, it’s time to downsize, so which properties are going to go?

That’s when I realised what I should have done years ago. They say that every cloud has a silver lining, and perhaps going into 2023, that’s exactly what the last year did for me.

What was clear was that with my focus on other business ventures, and fantastic relationships with my tenants, I’d avoided raising rents.

In fact, I’d not put my rents up in over 10 years while interest rates bobbled around at crazy lows of 0.1-0.5%.

It was an eye-opening hit of reality. Immediately I got to work and over these past 12 months to quickly match the local area rents, whilst ensuring we kept tenants happy by offering an explanation and support during the rent increases.

We were still proposing to charge tenants slightly less than the market rate and committed to resolve any nagging repairs.

For those who could not afford the increase we offered alternatives such as paying them a financial incentive to leave along with a full refund of their deposit.

Supportive

Most tenants were understanding and supportive and were more than happy to pay the rent increases because historically they’d been paying far less, and we were providing win-win solutions.

It seems simple, but I guarantee, if you’re a landlord reading this, a fine-toothed reassessment of your buy-to-let rents could make a huge difference. Straight away this tightened up my entire portfolio, and with that I was able to make the decisions I needed to make: sell the “dead weight” to counteract the financial consequences of the year; and keep only the very best properties going into 2023.

Once I’d reached the sweet spot of taking stock of my own portfolio and selling the properties I’d decided to let go of in the fastest way, for the highest possible prices with a brilliant team I’d created, I was able to do the exact same thing for landlords around me, with incredible results, and that’s how The Landlord Sales Agency was born.

So, as I look back on 2022 now with a smaller, but more efficient and profitable, portfolio I feel relieved to be going into the next year without all the stress and hassle of the year before.

Shake-up

Yes, in an ideal world perhaps we’d all like to have kept our bigger, diverse portfolios, but on the other hand maybe this is exactly the shake-up we needed.

A fresh portfolio with smaller, better, more manageable properties that require far less work, as many of us hit an age where sooner, rather than later, we’ll be looking to kick back, enjoy and retire after a wild ride in this ever-changing industry we call Property.

For more reading on the economic and political landscape of the past year and what it has meant for landlords, you can see Total Landlord’s full month-by-month round up of 2022 here.

And for a detailed look at what’s happened to the economy and the UK housing market over the last couple of years, and what the forecasters are suggesting will happen in 2023 and beyond, read Total Landlord’s Economic and property market update for 2023.

Author bio:

David Coughlin is an entrepreneur, co-founder of the National Association of Property Buyers and founder and director of both National Residential and the Landlord Sales Agency. He’s one of the UKs most recognised private landlords, and best known for being a leading expert within the UK property industry, with over 20 years of experience.

 [CF1]Photo also attached

View Full Article: 2022: The year of cutting losses and tighter portfolios

Holding Fee Refund?

admin    Uncategorized     agents

Hello, I’m a student looking for rental properties next year!

We paid a holding fee of £400 and haven’t yet signed any lease or paid further deposits, however, we found the letting agent seemed a little dodgy and pushing for payments as quick as possible.

View Full Article: Holding Fee Refund?

Early Repayment Charge?

admin    Uncategorized     agents

Hello, I currently have a 5 year fixed BTL mortgage with Leeds building society at 2.14%. I am looking to sell the property although I am being asked for an early repayment charge of £3k.

Given the base rate is now 3%

View Full Article: Early Repayment Charge?

New platform to help tenants buy rented homes from landlords

admin    Uncategorized     agents

A new tech platform aims to help renters buy their own home by letting them build up credits based on their everyday spending and rental data.

Homely’s MortgageReady system rewards good behaviour through tracking rent payments, utilities and other key regular payments, which enhances renters’ credit rating.

Linking to open banking, its software can work out affordability risk based on their spending habits. It records how much someone is spending and bringing in each month, and suggests ways of improving saving with spending tips and by using partner brands and their offers.

The platform also helps people build up their deposits through a smart recommendation engine which educates them about mortgages and lets lenders make better lending decisions based on the information gleaned about each tenant.

Good deals

The platform can then notify potential homeowners as soon as they are ready to take on a mortgage and points them towards good deals.

For those still happy to rent, Homely for Renters lets would-be-tenants search for properties using access to data histories on a property’s condition and maintenance and the experience of previous tenants.

It can also help landlords perform ongoing servicing and maintenance, while its LandlordReady and LandordQuality system filters data back to tenants, to hold landlords more accountable.

Co-founder and CEO, Lewis Scott (pictured), believes it’s the first digital platform to bring the whole market together by reducing inefficiency and improving communication. “We feel our connection between renters and landlords will create a better quality rental environmental and offer tenants an unrivalled platform in efficiency and standards,” he adds.

Homely launches officially early next year.

View Full Article: New platform to help tenants buy rented homes from landlords

Home sellers slash prices to find a buyer

admin    Uncategorized     agents

Since September, 10% of homes for sale have had a price reduction of 5%, as buyer demand slumps by 44%, Zoopla reveals.

The property platform also highlights that nearly a third of homes in the South East and East of England –

View Full Article: Home sellers slash prices to find a buyer

Greens demand rent freeze and eviction ban

admin    Uncategorized     agents

An immediate cap on rent increases and a ban on no-fault evictions until at least the end of March 2023 are being demanded by the Green Party.

The party says the government must urgently bring forward its promised Renters Reform Bill in time to stave off ‘a winter of evictions and homelessness’.

View Full Article: Greens demand rent freeze and eviction ban

Joseph Rowntree Foundation Report Of The Private Rental Sector

admin    Uncategorized     agents

Further to my last piece about the Rise of the Private Rental Sector, I have unearthed this Reform the private rented sector and open up access to home ownership and social housing, says JRF | JRF

One of the things it says is:

“………Setting a strategy for reducing the size of the PRS by rebalancing the position of first-time buyers and landlords in the mortgage market and discouraging property speculation.

View Full Article: Joseph Rowntree Foundation Report Of The Private Rental Sector

£15,00 Insulation grants for middle class earners

admin    Uncategorized     agents

Middle-income households are to be eligible for grants worth up to £15,000 to make their homes more energy efficient says Grant Shapps, the business secretary.

Shapps is to announce the plans next week to help households fund loft insulation, cavity wall insulation and smart heating controls.

The new scheme will be called “eco plus”, and is to be targeted at those families in the middle income band who are unable to pay for measure that would cut their energy consumption and heating bills.

Energy saving campaigning

Meanwhile the Government is to launch a £25m publicity campaign originally killed off by Liz Truss, to encourage households to save energy this winter.

Prime minister Rishi Sunak has now given the go-ahead to fund a UK-wide public information campaign to encourage people to save energy using simple measures including turning down their central heating boilers and switching off all electrical devices when not needed and during the day time.

The campaign is likely to come before Christmas. The exact format is yet to be decided, but it will be designed to encourage people to use less energy. This comes at this time when prices are escalated by the Ukraine war and the government is subsidising costs to the tune of tens of billions of pounds to cap energy prices.

The Government is worried that the energy situation could get far worse depending on what Putin does next.

There is currently a cap of £2,500 a per until the end of March 2023, after which the cap will move to £3,000, thereby limiting the price of energy for households and businesses for another period.

The insulation scheme

The government has allocated £1 billion in funding from its existing budgets over the next three years to provide house insulation grants for those unable to afford insulation upgrades. The money will be made available for households falling into Council Tax bands A to D.

The grants will meet 75 per cent of the cost of upgrades. And are estimated to be available for over 70,000 homes and to save hundreds of pounds a year. This follows on the heals of a green homes grant which was pulled last year after a disastrous start, consequently this time it will be administered by the energy suppliers.

It has been estimated that the upgrades provided by this scheme have the potential to save significant amounts of energy and save householders considerable amounts on their energy bills.

For example, installing loft insulation can costs in the region of £1,000 plus but can save up to £600 per year. Cavity wall insulation costs more at around £2,500 but can potentially £500 per year. Thermostat valves on radiators and other advanced heating system controls costing around £800 can also save in the region of £500 per year.

The Government’s aim is to reduced the average household energy consumption by 15 per cent this winter as the country grapples with the Russian led energy crisis which could escalate further. Jeremy Hunt the Chancellor has said that people will be joining a “national mission” to reduce “energy dependency on what Putin chooses to do”.

Anything for landlords?

So far there is no indication of whether or not this scheme will apply to rental properties, though various scheme have been made available for tenants by county councils across the country.

Insulation Grants are available to the occupiers of privately rented properties as it is they who pay the fuel bills.

For tenants aged 70 or over, or for those on a state pension, or if they receive a qualifying tax credit or benefit, tenants are not likely to have to pay towards the cost of insulation.

If tenants qualify for a partial grant, it is they who should contribute the remainder. However, landlords may feel that the improvement to their property and the resale value will justify them paying the difference, whilst taking advantage of the fact that their current tenants qualify their property for the grant.

As a private landlord or property management company, your requirement is to give written permission prior to works being carried out.

Where flats are concerned it is unlikely they will be able to have cavity wall insulation installed unless all flats in the block, above and below and either side, also agree to have it fitted.

View Full Article: £15,00 Insulation grants for middle class earners

Gove promises rent protections for tenants in 2023

admin    Uncategorized     agents

The long awaited renting reforms first muted in 2019 will be implemented next year, promises Housing Secretary, Michael Gove MP.

Admitting that the Government should have “moved more quickly” on these reforms to protect tenants following the Grenfell Tower tragedy, Mr Gove’s latest comments come in the wake of the death of two-year-old Awaab Ishak and a visit to his estate.

Over five years on from the Grenfell Tower fire and an Independent Review of Building Regulations and Fire Safety (The Hackitt Review) among three others, the Government has introduced a whole host of new regulations either enacted or in progress:

The Social Housing (Regulation) Bill, The Fire Safety Act 2021, the Building Safety Act 2022, a Fire Reform White Paper and The Buildings Safety Act 2022, all of which represent a real opportunity to provide fairness for tenants and accountability for those responsible for managing social and private rental housing.

Despite all of this, the family tragedy in a social housing flat highlights issues which still pose risks to life. Earlier this month a coroner in Rochdale, Lancashire found that the toddler, two-years old Awaab Ishak, had died from complications following exposure to mould spores in his social housing home.

The black curse

Black mould in homes is caused by cold, damp and condensation which in turn are usually accompanied by the lack of heating and ventilation, moisture. This is produced by washing, cooking and indoor drying of clothes, the usual cause of black mould.

Moulds produce allergens (substances that cause allergic reactions), irritants and, sometimes even toxic substances. Inhaling or touching these spores can cause serious allergic reactions, sneezing, a runny nose, red eyes and skin rashes, and for those with pre-existing conditions these substances can cause asthma attacks and other serious reactions.

Renting reforms

The English Government’s comprehensive renting reforms first proposed back in 2019 will be in place next year Michael Gove has promised. He’s admitted the Government should have “moved more quickly” to protect tenants after the 2017 Grenfell Tower fire.

Pressure piled on the Housing Secretary this month with the coroner’s verdict on Awaab Ishak’s death and he is now facing urgent calls to strengthen tenants’ rights following that inquest. Awaab was found to have died from a severe respiratory condition caused by exposure to mould in his home.

It came out at the hearing that Ishak’s parents had contacted their social housing landlord, Rochdale Boroughwide Housing, multiple times raising their concerns about the black mould in their flat but were ignored.

Gareth Swarbrick chief executive of Rochdale Boroughwide Housing has since been removed from his post as. His sacking came just four days after the inquest verdict came out into the death of two-year-old Awaab.

On Saturday 19 November, Mr Gove wrote a letter to all English council chief executives and council leaders asking them to provide an assessment of damp and mould issues affecting social and privately rented properties in their area, including the prevalence of category 1 and 2 (HHSRS Rating System) damp and mould hazards, as well as an assessment of action that might need to be taken.

Under the instruction, Local Authorities must provide to The Department for Levelling Up, Housing and Communities, their last three 12 monthly reporting periods, detailing how many damp and mould hazards they have sorted out compared to assessments made, how many times enforcement action was taken, how many civil penalty notices were issued, and the number of prosecutions successfully pursued.

A landmark tragedy

Housing charities and campaigning groups have highlighted the Ishak case as being as significant as the Grenfell Tower tragedy in the history of English housing. 72 residents lost their lives in the London tower block after which the inquest and subsequent enquiries have highlighted a long list of deficiencies, a host of safety issues concerning fire protection and building standards.

While the Rochdale incident concerns only one death, the implications are equally far reaching: black mould is a very common issue particularly in rental property both for social and private housing.

While deaths by this cause are extremely rare, nevertheless the effect on people’s health is a serious concern. The NHS has spoken out about the underlying and long-term health issues caused by living in cold and damp conditions, the heath effects of black mould, and the log-term cost to the health service.

Speaking on BBC Radio 4’s Today programme on Thursday, Mr Gove said:

“I freely admit and acknowledge that in the aftermath of Grenfell we should have moved more quickly to take a particular set of actions to help people in social housing. We’re doing so now.”

“Awaab’s Law”

On a visit to the housing association estate in Rochdale, where the boy died, Mr Gove was said to be clearly shocked at the conditions facing some tenants. Apologising for the conditions people were living in he said, “They haven’t dealt with the fundamental problems.”

After a meeting with the boy’s family they said he had agreed to an amendment to the Social Housing regulation Bill, to adopt “Awaab’s Law”, which would set mandatory deadlines for inspections of damp and mould.

Mr Gove has already cut £1 million from the budget of the Rochdale Boroughwide Housing Association in the wake of the boy’s death, but the family are demanding the resignation of the entire board as well as the already fired chief executive, Gareth Swarbrick.

Mr Gove could not confirm exactly when legislation aimed at strengthening tenants’ formal protections would be introduced to parliament, saying only that the Renters Reform Bill “should come in 2023”.

Ending Section 21

The main thrust of this Bill is to end the so-called “no-fault” evictions, Section 21 of the Housing Act 1988, a mandatory measure that allows landlords to force evictions without giving a reason for requiring it.

Polly Neate, chief executive of housing charity Shelter, told the BBC Today programme that these no-fault evictions make tenants “fearful of complaining” in case they were given notice. Ms Neate added that tenants living in the private rented sector (PRS), as well as those tenants in social housing, such as Awaab Ishak’s family, urgently need stronger protections.

Mr Gove is now to give the social housing regulator new powers, and on Thursday he announced that he would cut funding for RBH and other landlords that failed to protect tenants.

“My message to [RBH] is clear: Awaab’s death was a tragedy which should never have occurred. It occurred because the housing association knowingly failed to maintain their properties in a decent standard, failed to heed complaints.”

View Full Article: Gove promises rent protections for tenants in 2023

‘No protection’: outraged landlord reveals battle to evict nightmare tenants

admin    Uncategorized     agents

A landlord battling to evict his nightmare tenants using a Section 8 order is exasperated that county court bailiffs encouraged them to stay put.

The Cumbrian-based landlord had been granted a possession order, but his tenants – on bail for alleged drug offences and owing £3,000 in rent arrears – were then advised by bailiffs to ask for the application to be delayed.

“When bailiffs arrived at the house, the woman was under the influence of drugs, but her behaviour was such that the bailiffs considered her vulnerable and she said she wasn’t moving,” he tells LandlordZONE.

“Their response was to contact the court and advise her to submit a N244 form asking for further time to stay.” He adds: “I saw the application and it would have been thrown out.” 

The tenant’s housing benefit now only pays for one room in her four/five-bedroom property as her children have been removed. Although the landlord is sympathetic, he’s angry that her response to the notice was to put up Christmas lights, demonstrating she had no intention of leaving.

Wrong form

Unfortunately, following the latest hearing, the landlord has now been told he’d filled in the wrong form for a Section 8 (which the previous judge did not pick up on) which means he’ll have to reapply and probably won’t get the tenant out until the new year, racking up nearly £1,000 in court fees.

However, he remains outraged that tenants are able to stall in this way. “Is it any wonder landlords are unhappy with the way the system treats them and why perhaps so many are selling up? I’ve been a landlord for 32 years and I’m thinking of doing the same.”

A few years ago, former Housing Minister Brandon Lewis issued a notice to councils advising them to stop routinely advising tenants to stay put after a Section 21 notice had been served and the bailiff arrived before they could be accepted as homeless.

Read more about Section 8 evictions.

View Full Article: ‘No protection’: outraged landlord reveals battle to evict nightmare tenants