View on flooring clauses in a tenancy?

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Hi, I have just been having a discussion with my wife regarding costs and tenancy agreements, and I am curious about what other landlords do. I have just completed inspections on my portfolio and one of my tenants has just asked for new carpets on the hall

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Belvoir Rental Index Live; Your Questions Answered

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If you missed Belvoir’s Rental Index Live last month, hosted by Paul Shamplina and a panel of Belvoir franchisees from across the UK, don’t worry!

Below are the key questions asked by LandlordZone members during the webinar answered by the panel.

Belvoir has constantly watched the rental market over the past 11 years on a quarterly basis to produce a unique rental index, focusing on regional landlord and tenant trends across the country.

This resource is made freely available to landlords via the Belvoir website (www.belvoir.co.uk) and is well worth a read to see how rents are performing in your area.

Q: What is the best way to track a tenant who has left with arrears?

A: If you have utilised Money claim online or have a court order for the payment then you can seek an attachment of earnings (if they are still working) – Charlotte Baker, Belvoir Melton Mowbray & Bingham.

Q: What are the best ways to recover rent arrears after eviction?

A: Contact next of kin which you should have from when they applied for the property and politely ask where they might be?

Maybe you have post that you need to forward on. Once you have their new address you can use enforcement companies to recover the debt if you have a CCJ or court order instructing them to pay. We have used tracing agents in the past which has been successful.

They will try every six months or so to find the new address. If the person is not working and moved away though you may be unlikely to be successful in getting the money back but at least if you have secured a CCJ against them using money claim online a future landlord may not be caught out.

Rent Guarantee protection (good ones that have covered during the pandemic) have been so useful to our landlords when we have a non payer – they work with the tenant to get the payments back on track or if that’s not possible undertake the eviction process and costs while paying rent to the landlord – Charlotte Baker, Belvoir Melton Mowbray & Bingham.

Q: With rent arrears after the tenant has left, should the tenant, guarantor or both be pursued especially if you need to go to court?

A: You should be actively chasing both in writing and setting some deadlines.  Read the notes on the MCOL webpage for the next steps to recover your money – Davinder Gharial, Belvoir Hitchin, Welwyn & St Albans.

Q: I have a mixed portfolio with a few HMO’s. The HMO’s are rented to students in Hatfield. We have had several instances where students want to move out of one HMO into another because they did not know the others in the HMO at the start or because they want to go home, etc. The original AST was a Joint and Several with all 5 put together. Now when one moves out with only 5 months left to the end of the contract, basically at the start of the summer term, we find another student to move in. The question is … Does the new tenant have to have a minimum 6 month contract which now extends into the void maintenance period and possibly into the next student year, or is it possible to ASSIGN the remainder of one person’s term to a new tenant?

A: There are several solutions. The safest option will be to issue a new tenancy and treat the change of occupiers as a new tenancy with new gas safety, new EPC, new deposit protection etc.

Unfortunately, this does not always work with students where there is a strict annual turnover, and the new group would have a right to the minimum 6 month right of occupancy.

If this is an issue, the original group of tenants can remain as the tenants for the whole term and the new individual can essentially become their lodger.

The lodger has far less security of tenure and the minimum term does not apply. This does, however get over the short term issue, though the departing tenant needs to happy to agree to this and remain liable for rent when they are no longer in the property – Nathan Crombie, Belvoir Brighton & Hove.

Q: Are you finding the EPC software and general regime not fit for purpose? The software used by EPC assessors which they all have to use to carry out the check.

A: This is a technical question with respect to the software used by Domestic Energy Assessors (DEA) to calculate EPC ratings. 

As an estate agent, we subcontract out the commissioning of EPCs to suitably qualified 3^rd party contractors, so we have no direct experience of use of the software. 

But I am aware of the concerns that have been reported with respect to the accuracy of the assessments and that the software was recently updated to eliminate some potential flaws in the calculations which should have resulted in improvements to the ratings of some properties. 

I appreciate that any inaccuracy in an EPC rating can have significant consequences to a landlord it would be our standard approach to challenge any EPC rating that was just below MEES before suggesting to a landlord that they undertake potentially costly upgrade work. 

For example, there are several assumptions that a DEA will make in assessing the construction of a property which affect the rating as will the potential for them to take inaccurate floor measurements, so it is always worth challenging these so that the DEA discloses the assumptions and measurements that were used – Dave Roberts, Belvoir Wigan, Haydock & St Helen’s.

Q: I have heard that Joint and Several contracts for HMOs will be banned. We will be required to provide individual lets for each room … Do you have any information on this? 

A: I have heard some comments in the past suggesting that this might be the case but so far, I have not seen firm proposals on this or timescales for it being implemented.

I tend to listen out for changes that impact Scotland and Northern Ireland so the situation might be different in England and Wales – Andrew Jack, Belvoir Edinburgh & Belfast.

Q: Is licensing the right way to go now that so many councils are looking at this possibility particularly for HMOs? 

A: HMO licencing has been in force in Scotland and Northern Ireland (and all other areas of the UK) for many years and it has had a significant impact on raising standards and improving tenant safety so in this regard it has been a very positive step for the private rented sector and the vast majority of HMO landlords have been happy to comply.

But we need to be careful that the HMO licence renewal process and the constantly changing requirements don’t become an easy source of additional revenue for the local authorities who are responsible for issuing licences.

Changes to licencing requirements need to be reasonable, proportionate and implemented for the right reasons. I understand some Council areas have moved or are considering moving towards a licencing system for all rented property (not just HMOs) and whilst for a small number of landlords this may be necessary to force them to comply our experience of dealing with private landlords over many years shows that most of them willingly comply with legislation aimed at improving standards and protecting tenant safety without the need for a formal licencing scheme. 

Private landlords are crucial for the UK to be able to meet its current and future housing requirements so introducing unnecessary additional cost and bureaucracy could potentially turn investors away from property and further reduce available supply of rental property at a time when demand from tenants has never been higher – Andrew Jack, Belvoir Edinburgh & Belfast.

More information

Relax with our full management service… and enjoy the first three months for free* as part of our special offer for Landlord Zone members. We’ll handle the day to day management of your tenants and properties, in conjunction with our trusted team of reliable contractors. Visit our website to find your local Belvoir Office- https://www.belvoir.co.uk/offices/ and arrange a free, no obligation appointment.

^*Terms and conditions apply, speak to a member of staff for more information.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Belvoir Rental Index Live; Your Questions Answered | LandlordZONE.

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REVEALED: HMRC’s double snooping trouble for landlords

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Landlords face two new schemes designed to help HMRC snoop on taxpayers’ financial activities following the launch of two recent government initiatives.

This includes an HMRC consultation on proposals to force Airbnb and other online short-let platforms to report individual property owner’s revenues from holiday lets.

This would include fines for the company’s involved for filing incomplete or inaccurate information or failing to collect such information at all but be more serious for landlords who not honest about their revenues within annual tax returns.

If HMRC adopts the key points of its proposals within the consultation, then landlords’ income from short lets would not only be more transparent, but available for up to five years after a booking has been made and a property owner has any received income.

Bank requests

The other is the Finance Bill 2021 which received Royal Assent in June. It allows, for the first time, HMRC officials to approach a taxpayers bank and make a request for financial details directly from their bank or building society without their permission.

Until now those being investigated have had to give permission for this information to be released on their behalf.

HMRC has been given these powers in to speed up requests by overseas tax authorities for information, saying the current system whereby these requests must go through a tribunal process takes too long and does not meet international standards.

“International obligations are no excuse for sweeping away established self-assessment safeguards and enabling HMRC to obtain information on taxpayers from financial institutions without prior approval, argues the accountancy industry trade body the ICAEW.

Read more: HMRC omits CGT from tax reforms but there’s a sting in the tail for holiday lets

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As the weather warms up, the risk of subsidence rises – are you covered?

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August got off to an unsettled and changeable start this year, with heavy rain and flooding in many parts of the UK. But the long-range weather forecast is now predicting warmer than usual conditions in late August, and potentially even a heat wave, with temperatures set to soar across some parts of the country.

Rising temperatures during the summer months can be problematic for some properties, increasing the risk of subsidence which can result in costly damage. With claims for subsidence increasing, it’s important that landlords make sure they have sufficient insurance cover in place and know when they may need to take action.

How common are claims for subsidence?

But how common are claims for subsidence? Melissa Choules (pictured), Senior Claims Technician at LandlordZONE’s insurance partner, Hamilton Fraser Total Landlord Insurance, explains. 

“When it comes to claims, subsidence is often overlooked as it is not as common as claims relating to perils like escape of water or storm, accounting for only 6.5 per cent of all our claims in the period 2015-2020.

“But subsidence claims have been increasing since 2014, resulting in a 24 per cent increase year on year.

“And the damage caused by subsidence can be particularly costly, with our average payout in the 2015-2020 period being £3,567.18 and individual claims of up to £82,900 in that same time frame. In extreme cases like this, the damage is so extensive that houses are uninhabitable while repairs are being carried out.”

What is subsidence?

Subsidence is the downward movement of the ground supporting the building. Typically, claims for subsidence increase over the warmer months as the lack of rain causes shrinkage of clay soils which expand and contract with changes in their moisture content. As a result, the property becomes unstable and can begin to crack and sink.

Although we’ve had a particularly wet start to the month, the ground can dry out very quickly – as illustrated by what happened in 2017, when 65 per cent of subsidence claims to Hamilton Fraser Total Landlord Insurance were reported between May and October, despite having a wetter than average summer that year.

What are the causes of subsidence?

Subsidence can be caused by a range of things including clay shrinkage, trees growing close to the foundations, water washing away soil beneath the property, used or disused mines, the formation of underground caverns and poor foundations.

But warmer weather causing clay soil shrinkage is one of the most common causes of subsidence – in 2018 alone, subsidence claims increased by 20 per cent because of the heatwave in the UK that year.

Settlement and subsidence are often confused so it’s important to understand the difference between the two. Settlement is when the ground beneath a property is compacted by the weight of the building, which usually happens in the first 10 years after the building is built – it is quite common and cracks in the walls caused by settlement are usually harmless.

Some insurers, including Hamilton Fraser Total Landlord Insurance, will cover subsidence, but not normal settlement.

What are the signs of subsidence?

Since it’s not possible to see what is going on underground, you’ll need to be aware of the signs above ground, such as ripples in the wallpaper. doors and windows that no longer fit and cracks. Although most cracks in the walls are harmless, cracks caused by subsidence tend to have certain characteristics. For example:

• They are wider at the top than at the bottom
• They are wider at any point than a 10p coin (about 3mm)
• They can be seen from both inside and outside the property
• They are close to weak spots like doors, windows and where extensions join the house

What should you do if you suspect subsidence?

Steve Barnes, Associate Director at Hamilton Fraser Total Landlord Insurance, urges landlords not to ignore subsidence if they suspect they may have a problem with it. He advises, “The key thing with subsidence is to take action right away.

Because in most cases, subsidence happens slowly, it can be tempting to put off dealing with it. But the longer you leave it, the more expensive your repairs will probably be, creating bigger problems such as a loss in your property’s value, serious structural damage and higher insurance premiums in the long run.

Cracks that appear and continue to grow, should be investigated to make sure that the property is structurally sound.”

How can you reduce the likelihood of subsidence?

There are a number of steps you can take to reduce the likelihood of subsidence damage to your property. Assessing your level of risk is the first step you need to take. For example, is your property built on clay ground? Are there any large trees in close proximity to your property? Does the ground your property is built on become water-logged during heavy rain or extremely dry during droughts?

How do you fix subsidence?

If you think you have a subsidence problem, the first thing you should do is contact your insurer. They will be able to advise on what to do next and you can find out more information on some of the solutions to subsidence, along with answers to other questions, such as whether you should buy a property with subsidence, in Hamilton Fraser Total Landlord Insurance’s guide, Subsidence: What is it, how do you spot it, and what should you do if you have it?

Can you insure a property with a history of subsidence?

This varies from insurer to insurer, but Hamilton Fraser Total Landlord Insurance will cover properties with subsidence issues. 

If you would like more information on subsidence, you can download Hamilton Fraser Total Landlord Insurance’s free infographic on buying, selling and letting a property with a history of subsidence here.

If you have questions about subsidence, or want to discuss subsidence in your property, feel free to contact the Hamilton Fraser Total Landlord Insurance team. A comprehensive policy such as our Essential and Premier policies will cover all of the costs to repair damage caused by subsidence.

As a valued LandlordZONE reader you’re entitled to 20 per cent off Hamilton Fraser Total Landlord Insurance’s policies, call the team today on 0800 63 43 880 quoting code LZ2021 or get a quote online in under 4 minutes. 

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – As the weather warms up, the risk of subsidence rises – are you covered? | LandlordZONE.

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Ministers can’t say how successful Fitness for Habitation act has been

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The government says it is not tracking how many landlords have been prosecuted under the Homes (Fitness for Habitation) Act 2018 suggesting a lack of interest in its effectiveness as a regulatory tool at the top of government.

Given Royal Assent in December 2018 and sponsored by Labour MP Karen Buck with cross-party support, the act amends the Landlord and Tenant Act 1985 so that, where a landlord fails to let and maintain a property that is fit for human habitation, tenants have a right to take action in the courts.

The act enables tenants to seek court orders forcing their landlord to carry out repairs – and receive compensation for having to ensure sub-standard living conditions – and established much stricter rules on what constitutes a property that’s fit for habitation than the previous legislation.

But the Ministry of Justice (MoJ) has revealed that collating details of landlord prosecutions under the act would take more than three-and-a-half days to complete and therefore, the cost of complying would be too great.

This follows a Freedom of Information request made by businessman Ajay Jagota.

The 52-year-old, who recently founded online claims management firm Veriwise, says: “It’s startling how many renters don’t know that there is a law which can force their landlord to repair their homes and even pay them compensation – it’s alarming that the government doesn’t seem to know either.

“I have no idea why you would bring in a new law and then make no effort to see how many times it is actually being used, and the inconsistent nature of the government’s response leads me to speculate that they know a good deal more than they are letting on and are simply embarrassed about the ineffectiveness of this legislation.”

But the lack of data about prosecutions available does not mean legal action is not taking place. In June several lawyers told Inside Housing magazine that the social housing sector had seen a strong uptick in fitness for habitation claims largely due to no-win, no-fee solicitors targeting disgruntled tenants.

Read more about the Homes (Fitness for Habitation) Act 2018.

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31% of properties still selling over asking price

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Propertymark’s July housing report indicates nearly a third (31%) of properties sold for more than the original asking price. This is a significant decrease from June which reported 40% sold over asking price, but closer to May’s figure of 33%.

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It’s Bad News For First Time Buyers As Property Prices Soar, Apparently

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The Guardian is reporting that 1 in 16 companies are on the brink of bankruptcy and that today’s youth will never be able to buy a home due to soaring property prices.

But is it really THAT bad for first-time buyers?

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LATEST: Demand for rental property surges as Covid rules relax

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A surge in demand for rented homes with tenant enquiries reaching a five-year high has been reported by landlords.

So says the National Residential Landlords Association (NRLA) which polled its members in England and Wales on the housing markets.

Of these, 39% confirmed that demand for homes to rent had increased in the second quarter this year – an eight per cent increase on the first three months of the year.

This rise takes the rental market to its busiest since 2016, the NRLA says, saying the relaxation of COVID restrictions and a more buoyant economic outlook have been the key drivers.

But the figures mask a trend which is seeing a two-tier rental market developing across some regions.

In Yorkshire and the Humber, Wales, the South West and the South East over 60 per cent of landlords said that demand for homes to rent had increased.

Stark contrast

In stark contrast, just 15 per cent of landlords in Central London said demand had increased in the second quarter of the year, compared with 53 per cent who said it had fallen, explained by the large numbers of
tenants quitting the capital as home working has taken off.

But despite this boom, the NRLA says a significant percentage of landlords have been negatively impacted by the demands of the pandemic, with 20% looking to sell rental properties.

Chris Norris, Policy Director for the National Residential Landlords Association, says: “The evidence is clear that nationally whilst the demand for homes to rent is increasing, landlords are more reluctant to invest in new properties.

“The only losers will be tenants as they struggle to find the homes to rent that they need. The Chancellor needs to recognise the harm being done by tax hikes imposed on the sector.

“There is a significant flight of tenants from the capital in response to the COVID pandemic. With lockdown restrictions having ended, and offices beginning to reopen, the jury is out as to whether this trend will continue.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Demand for rental property surges as Covid rules relax | LandlordZONE.

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Demand increases but landlords more reluctant to invest

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The demand for private rented housing has reached a five-year high according to new research released by the National Residential Landlords Association following the easing of COVID restrictions.

The wide-ranging survey of private landlords across England and Wales

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Investment funds reduce exposure to high street property

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Bricks and mortar on the high street has seen a massive shift by UK property funds as they drastically cut their exposure when the Covid-19 pandemic took hold. Lock-down closures and the shift to on-line sales and deliveries have taken their toll on retail rental incomes and rapidly falling asset values.

Property fund managers with direct investments in retail stores have had to renegotiate rents downwards to help tenants survive, while at the same time accelerating their divestment strategy, moving away from the sector, which was already facing long-term decline, even before Covid hit.

According to the FT, there is an estimated £6.4bn of rent arrears in the UK retail sector, and with a ban on commercial property evictions now in place until March next year, much of the arrears is unlikely to be recovered.

According to investment consultants and fund managers FE fundinfo, UK Direct Property has reduced their exposure to retail property during 2021, with average allocation now at 5.9%, down from almost 9% in January 2021.

The £1.2bn AUM M&G Property Portfolio has reduced its exposure from from 38.4% to 29.1% as fund manager Justin Upton explains:

“With retail sales exchanged and currently in solicitors’ hands this is due to reduce even further to around 21% in line with the fund’s strategy.

“We have made strategic sales, which have focused on asset risk such as age/location/sustainability and where we had tenant concerns such as covenant strength, lease length or vacancy.

“These sales have subsequently resulted in our vacancy levels falling to 7.7% as of June 2021 – well below the peer average of 12.9%. Our average lease length has also extended to 7.7 years.”

Similarly, head of UK property at Canada Life Asset Management (CLAM) Michael White said the firm’s retail exposure has fallen through “valuation reduction”, and it has “accelerated the strategy to reduce high street exposure where we are able to do so”.

Arrangements for paying off rental debts have largely been left to tenants and landlords, and in some cases has led to bitter legal disputes.

White explained CLAM has been active in this respect by “negotiating lease re-gears, rent concessions and deferrals on a case-by-case basis”.

He added that while this “has proven to be successful”, there remain “certain parties who still refuse to discuss arrears”.

M&G’s Upton also reported “constant dialogue” with tenants over the last 18 months, negotiating “a variety of payment plans” ranging from deferment packages to rent free packages in exchange for longer terms and lease extensions.

The result of this has been M&G Property Portfolio collecting “more than 90%” of both rental income and service charges for 2020, according to Upton, with the fund delivering an income distribution of 4.7%.

Coronavirus has caused significant disruption for bricks and mortar retail, but the sector also faces the longer-term existential threat posed by the boom in online retail.

As a result, property funds managers have been actively reallocating capital away from bricks and mortar retail to online competitors, with assets like warehouses becoming an increasingly attractive investment.

Fund manager and co-head of institutional UK real estate at Columbia Threadneedle James Coke explained in March: “Within the MSCI UK Property Monthly index, net disinvestment from retail has totalled £3.6bn over the past five years, averaging £60m a month.

“As sales proceeds are redeployed into the industrial sector, its market share – and hence performance contribution – has increased, to the extent it now accounts for 37.3% of the index.”

He said “the migration of retail online”, which been accelerated by the pandemic, has “dramatically impacted many town centres but left a nationwide shortage of logistics space, leading to sustained increases in industrial rents and corresponding compression of yields in that sector as investors have piled-in to an asset class considered a safe haven”.

White said CLAM still favours “the out of town retail format”, but that “essential retail”, such as food and DIY, “remains a viable sector” for the fund.

He goes on: “the migration of retail online”, which been accelerated by the pandemic, has “dramatically impacted many town centres but left a nationwide shortage of logistics space, leading to sustained increases in industrial rents and corresponding compression of yields in that sector as investors have piled-in to an asset class considered a safe haven”.

While high street fashion continues to suffer, with the challenge of of online shopping and a current consumer spend aimed at experiences, such as restaurants and entertainment, fund managers are not giving up on the “out of town retail format” and they still favour “essential retail”, such as food and DIY, which remain “a viable sector” for these funds.

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