EXCLUSIVE: PRS faces growing safety assessment scandal, claims consultancy

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Unscrupulous managing agents are cutting corners on safety assessments to save money, putting landlords’ insurance claims in jeopardy and their tenants’ lives at risk.

Property compliance firm Tac Property Consultants warns that contractors are being used to carry out works which they’re not qualified or accredited to do, making any issued document non-compliant.

Director David Rogers has recently uncovered several dodgy contractors while carrying out due diligence checks and believes that nationwide, firms have issued a “frightening” number of non-compliant documents.

“It’s getting worse because there are more HMOs out there – and some agents don’t want to fork out for reputable companies, they just pull the wool over landlords’ eyes,” he tells LandlordZONE.

One landlord paid £150 for a fire risk assessment, only for Rogers to discover that it had been carried out by a rogue company which had even tried to forge training documents when challenged.

“If he hadn’t found that out and there’d been a problem at the property, he wouldn’t have been able to claim on the insurance, while it could also have put tenants at risk if the assessment hadn’t been done properly.”

A good fire risk assessment from a reliable company costs between £250 and £300, he says.

Rogers (pictured) has also taken issue with Safeagent and London Property Licensing who recently called for the government to pause routine electrical inspections for six months or risk increasing the spread of Covid.

“Delaying carrying out essential works on properties can endanger lives which will not be Covid-19 related,” he insists. “If they delay carrying out routine electrical inspections, what are they proposing to do about the gas servicing, fire alarm servicing and emergency lighting inspections all of which need to be regularly serviced and maintained to ensure that the property is compliant and safe for the tenants?”

He says managing agents just need to put thought into arranging these checks, by ensuring tenants stay in their rooms, or even accompanying the contractor to make sure they are wearing the right PPE.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – EXCLUSIVE: PRS faces growing safety assessment scandal, claims consultancy | LandlordZONE.

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Landlord calls for help after DWP blanks her over rogue tenant

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A landlord in London has contacted LandlordZONE to plead with DWP ministers to tackle the failings of the Universal Credit (UC) system as her tenant racks up rent arrears of over £19,000.

Michelle Dighton says her tenant, who in receipt of housing benefit via UC, stopped paying the rent 18 months ago well before Covid struck but is still in receipt of housing benefit.

But she says it’s not so much the defaulting tenant or the glacial eviction process she has beef with, but rather her frustrating dealings with the DWP to resolve the situation.

Dighton rented out her property to a woman in January 2019 after receiving references and payslips both of which she claims turned out to be false.

The tenant then moved her partner and daughter into the £1,050-a-month property in Thornton Heath, South London (pictured), without consulting Dighton and stopped paying the rent in October 2019 even though she is in receipt of housing benefit.

Universal Credit

But the biggest challenge is that the Universal Credit team refuses to communicate with her about the case or help her set up an Alternative Payment System (APA).

Her tenant claims to have moved out of the property despite clear evidence to the contrary, including a refusal to allow anyone into the property to do basic safety checks, and Dighton has now fallen between the ever widening cracks of the UC bureaucracy.

The landlord, who has started proceedings to regain possession of the house but which have been delayed by the Covid eviction ban, has a mortgage on the property and a second charge against her existing home.

Consequently, she says her family are very likely to lose their own home soon unless she can get the tenant out or sort out payments with UC.

“What I find frustrating is that the system ignores landlords while knowingly helping tenants like mine game the system and live in properties for free – my tenant’s non-payment has nothing to do with Covid,” she says.

“I am at my wits end over this but there is no one you can turn to – DWP won’t talk to me, the local council and Police won’t help and simply I don’t know where else to turn to.”

This case is a familiar story for UC specialist Bill Irvine, who recently told LandlordZONE that the usually helpful DWP landlord telephone helpline has stopped working, that emails to case managers with ‘meritorious’ APA requests are ignored or are taking weeks to be answered, and that overall the “system is not delivering landlords’ and Parliament’s expectations”.

How to do it better

Irvine says he wrote to the DWP last week setting out how the system could be improved to help landlords like Michelle Dighton. It says the system of setting up an Alternative Payment Arrangements (APA) to enable a tenant’s rent to be paid direct to the landlord would be much less likely to be abused by tenants if DWP staff would:

1. Acknowledge each application;
2. Suspend payment of the housing costs element (HCE), pending a decision on the merits of the landlord/agent’s application, especially where the application provides evidence of earlier misuse of funds;
3. Once a decision is made, provide a written outcome that allows the landlord applicant to discern what’s actually happened;
4. Provide PRS landlords with a dedicated email address and/or telephone number where they can chase outstanding APA requests and thus avoid having to make referrals to Complaints & Resolution Teams and District Management staff.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Landlord calls for help after DWP blanks her over rogue tenant | LandlordZONE.

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No Respite for Landlords

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The Debt Respite Scheme (Breathing Space) guidance was a shock to landlords when we heard about it this week. It is a truly atrocious bit of legislation, heaping even more worry and misery on landlords and also likely to have a very damaging effect on the prospects of any potential tenants looking for private accommodation who have any experience of mental health problems.

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Covid year – 2020 – has resulted in a boom in buy-to-let businesses

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The Covid pandemic did not dampen the enthusiasm for investing in buy-to-let properties, quite the contrary; according to figures released by Hamptons International, a leading estate agency, landlords created 41,700 buy-to-let firms last year. That represents a 23% increase over 2019.

Registering buy-to-let businesses through limited companies has grown considerably since the introduction of new regulations in the industry which changed the basis on which rental income is taxed for individual landlord, restricting a landlords’ ability to claim tax relief on mortgage interest payments.

The result has been a doubling of the number of buy-to-let rental companies since 2016, after the tax changes where introduced, preventing landlords from being able to claim relief on their mortgage interest payments, on a phased-in basis.

What some call a tax perk – though others have call it a right to interest relief, like on any other business loan – was reduced gradually and removed altogether in April.

However, if a buy-to-let business is operated under the umbrella of a limited company, landlord owners are still able to claim full tax relief on their mortgage interest payments – it’s the driving force behind the surge in the formation of these limited companies holding buy-to-let properties.

The table below shows how the tax changes impacted on a high-rate taxpaying landlord receiving £950 rent a month and paying £600 towards their mortgage, courtesy of consumer champion Which?

Three other spurs to the continued growth of investing in buy-to-let properties have been:

One, the intra-low interest rate environment where investors with cash are given few other opportunities to invest their money in alternatives which give anything near the modestly respectable, usually around 4 to 6%, return of a buy-to-let, at such low risk;

Secondly, the stamp duty holiday which currently, unless the Chancellor decides to extend the deadline, ends on the 31^st of March, means that on properties worth up to £500,000 gives landlords a potential £15,000 when buying. They still need to pay the 3 per cent buy-to-let SDLT surcharge, but £15,000 is not to be sniffed at;

Three, the opening up of mortgage offers to the buy-to-let market of around 728 limited company mortgages for landlords, that’s according to the data provided by Moneyfacts. These offers are said to make up about a third of all buy-to-let deals.

There are still quite a few high street lenders that don’t offer these types of company mortgages for buy-to-let as they don’t think there’s enough demand, or because they cautiously demand personal guarantees from landlords for their company loans.

However, by December 2020 there existed a record 228,743 buy-to-let companies and Hamptons have estimated that around 50% of all buy-to-let purchases are put into a limited company, compared to just 20% in 2016.

Limited company mortgages do tend to cost more, on average around 3.71% for a two-year fixed deal, which compared to around 2.91% for an individual taking out a buy-to-let mortgage.

Because of the specialist nature of lending to buy-to-let companies, mortgage lenders in this field will be more expensive in their fees and rates and this may off-set some of the benefits of the tax savings. Some accountants even doubt the overall benefits of incorporation for small-scale buy-to-let landlords owning just one or perhaps two properties.

For individual landlords wishing to move existing investments into a buy-to-let company the economics of the change can be debatable as it in-effect means a sale and buy-back into the company, which triggers both capital gains and stamp duty liabilities. This of course depends on the circumstances involved, the amount of any gain and the size of the translations.

Within a company structure the income is subject to corporation tax, capital gains tax when properties are sold, and the landlord is subject to income tax when earnings are drawn out as dividends. Generally, if a company structure is beneficial, it is best set this up from the outset.

Anyone considering investing in this way should seek financial advice first.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Covid year – 2020 – has resulted in a boom in buy-to-let businesses | LandlordZONE.

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Am I being unreasonable?

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As readers of Property 118 are professionals, what opinions and advice can you offer on whether I’m being unreasonable in holding a widow to the terms of the tenancy agreement.

I own a modern retirement (over 55s) flat and for the last 5 years it has been rented to a lovely couple – model tenants in fact.

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Could your buy-to-let company share structure be better?

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99% of the 228,743 UK Property Investment Companies in existence at the end of 2020 had sub-optimal share structures.

Is yours one of them?

A sub-optimal share structure in your buy-to-let Limited Company could cost you a fortune in tax.

The post Could your buy-to-let company share structure be better? appeared first on Property118.

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Clooper and RentiD are latest renting apps to seek crowdfunding cash – would you use them?

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Two new online landlord platforms have announced a bid for investors to give them a foothold in a market already crowded with start-ups.

Newcomer Clooper has started crowdfunding, while one-year-old RentiD is about to announce a similar offer.

They’ve joined the dozens of similar proptech companies trying to sign landlords up with promises of an easier life online, away from high street lettings agencies.

Last year saw a raft of start-ups including Kiko, Herddle and Hammock all join the market, along with PlanetRent, which automatically monitors rent collection, tracks payments and expenses and provides live analytical reporting.

Many platforms have an uphill battle to get landlords to sign up and so far, only Arthur and Planet Rent – both property management platforms – have made the big breakthrough into the PRS. Arthur was recently bought up by Aareon Group, a social housing tech firm 70%-owned by a German bank of the same name.

Smart notifications

Clooper’s property management platform connects landlords, tenants, trade services and homeowners to facilitate easy transactions and also enables smart notifications and secure payments.

It aims to help with making move-ins quicker, repairs faster, communication and payments easier, and was inspired by his own struggle with paperwork as a landlord, explains founder Toks Adebiyi (pictured).

The start-up won investment from Paul Rothwell of Empire, a large residential landlord, who’s pledged £200,000, and is now after another £200,000 from private investors via Crowdcube.

RentiD out

Meanwhile, RentiD can market properties, manage money, invite tenants to store documents, helps landlords keep on top of their to-do list, and helps tenants resolve simple maintenance issues and report problems.

It promises that it’s more than an online letting agent, as landlords get preferential access to leading legal, financial, property management and lifestyle service providers.

Visit the Clooper Crowdcube page.
Visit the RentiD Seedrs page.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Clooper and RentiD are latest renting apps to seek crowdfunding cash – would you use them? | LandlordZONE.

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Six ways an agent can help landlords during lockdown….

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1. Saving you money!
   We may be in lockdown again, but the good news is that the Government is allowing the property market to continue operating, albeit with lots of new rules for everyone to comply with in order to keep people safe and avoid hefty fines. The situation is often so fast moving that DIY landlords can find the stress of trying to remain legally compliant extremely challenging. Handing over the management of a property to a professional agent could be a very shrewd and sensible move, particularly at this time. A good agent will be able to save landlords time, money, and stress, as well as helping to ensure that everyone concerned remains as safe as possible, and on the right side of the law

2. Limiting exposure
   During lockdown everyone has been advised to keep travel to a minimum and, where possible, to avoid mixing with people from other households. Landlords can minimise contact by arranging for an agent to market their property, and to allow them to arrange for socially distanced physical or virtual viewings. Since the first lockdown in March 2020 many agents have invested heavily in new technology, so that many of the procedures that are necessary to let a property are now able to be done remotely, but also very efficiently.

3. Free market appraisals
   If you are a landlord with a property to rent, make sure that you choose a reputable agent who has intimate local knowledge of properties in their area, and can also offer a broader perspective on the national market. This inside knowledge will help the agent to conduct a free professional market appraisal of your property and consequently ensure that your investment not only achieves the best, and most realistic rents, but also attracts good quality tenants who will be likely to remain in the property for long periods.

4. Trouble shooting
   During lockdown, tenants are inevitably at home for much longer periods than normal. This means that heating systems, white goods and other essential items within the property will be used much more than would otherwise be the case, and this can often result in a rise in the number of maintenance problems that tenants experience. Unfortunately, it is not always easy to find a contractor who is willing to come out to a property during lockdown, and it can potentially also be expensive. A property management agent will already have a list of trusted and reliable contractors that they can call on during an emergency, and who will charge a reasonable fee for any work that they do.

5. Skilled negotiating
   If a tenant is experiencing difficulties in paying their rent, an agent can negotiate with them on behalf of the landlord and communicate any problems that may arise. An agent can negotiate in such a way that they remove the emotion from the conversation and look at all possible solutions. Some landlords are in a position to be able to offer a slightly discounted rent during lockdown, whilst others are willing to carry over arrears until their tenant is in a position to pay, but the agent will always do their best to ensure that rents eventually get paid in full. At the time of writing, Housing Secretary Robert Jenrick has announced that the current ban on bailiff evictions has been extended for six weeks until February 21st 2021. Belvoir is among many agents who are calling on the government to support tenants with loans to help ensure that rents can be paid, and arrears can be avoided.

6. Rental index
   Each quarter Belvoir commissions property expert Kate Faulkner to analyse advertised rents, as well as landlord and tenant trends across the UK. This information is an invaluable free resource for all property professionals as you can find out what types of property are most in demand, what rents are in your region, and what market predictions Belvoir franchisees are making for the following quarter. If any landlords are thinking of extending their portfolio, or reviewing their investments to ensure that they are receiving maximum returns, the Belvoir rental index can make very interesting reading that may help to influence any decisions. To access this information and receive more tips from industry experts simply subscribe via the LandlordZONE website.

SUBSCRIBE HERE

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Six ways an agent can help landlords during lockdown…. | LandlordZONE.

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LATEST: Investors turn to warehouses in record numbers as residential struggles during Covid

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Savvy buy-to-let investors faced with dwindling returns in the residential sector are turning to warehouses as this year’s big business opportunity.

Rightmove has reported a record number of calls about the industrial and warehouse property sector in 2021, with total enquiries on freehold properties up 108% in the first three weeks of January compared to the same period in 2020 and total enquiries on leasehold properties up 38%.

Encouraged by the boom in online retail sales, in December the number of enquiries about warehouses outperformed all other sectors, reports Rightmove; the number of people enquiring about buying a premises was up 56% last month on December 2019, while the number enquiring about a lease was up 43%.

The majority of freehold enquiries were in the South East (+85%), London (+84%) and the East Midlands (+77%).

Alex Solomon, director of Rightmove’s commercial real estate portal (pictured), says there’s been a greater need for warehouses of all sizes to respond to the increased demand from people shopping online, which has led to demand in the industrial and warehousing sector going into overdrive.

He explains: “Agents are reporting an extremely high conversion rate from businesses enquiring for warehouse space, with new leases being agreed quickly.

“While enquiries for retail outlets are still higher than before the pandemic, the rate of conversion is slower, suggesting people are considering a relocation to another outlet or starting up a new business, but until there is more certainty around when non-essential retailers can open again this pace is likely to remain much slower than that of industrial spaces.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Investors turn to warehouses in record numbers as residential struggles during Covid | LandlordZONE.

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Cladding scandal: Why leaseholder landlords still face huge problems

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Thousands of landlords could be stuck with unsellable flats or forced to take a big hit on the sale price if the government goes ahead with plans to impose loans on leaseholders to pay for cladding remediation.

Caught up in the cladding and build safety scandal following the Grenfell Tower disaster, they already face rising insurance premiums and have to prove their building is free of dangerous cladding before they sell.

The government has just announced a £2bn levy on housebuilders to help fund improvements, but it’s feared this won’t be enough to cover all the costs, and it’s still considering – and will very likely adopt – forced loans on the affected leaseholders.

Flat owners would have to take on 30-year loans like second mortgages to fix fire safety defects under the new proposals and campaigners fear they could be left in negative equity while freeholders escape the burden.

The Leasehold Knowledge Partnership (LKP) says the move will further blight the market.

Discounted sale price

A spokesman tells LandlordZONE: “Any putative buyer is going to immediately demand this loan is discounted from the sales price, and very likely a bit more, too.”

Instead the LKP has proposed a levy on housebuilders, cladding manufacturers and a tax on ground rents to establish a fund to remediate these buildings without a pay-out from taxpayers. He adds: “This is being seriously considered.”

MP for Portsmouth South, Stephen Morgan (pictured), had been due to introduce a debate on the subject yesterday in parliament, which was halted due to technical problems, and has vowed to continue fighting for leaseholders’ rights.

He says: “Through no fault of their own, leaseholders find themselves in unsafe homes, unable to sell and liable for huge costs due to cladding. Leaseholders need help. I hope to secure the debate again very soon.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Cladding scandal: Why leaseholder landlords still face huge problems | LandlordZONE.

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