Why are more DIY landlords looking to use agents on full management?

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These are turbulent times for both landlords and agents: Covid-19 has thrown an unprecedented curve-ball into what was already an increasingly complex environment in the UK lettings market, making more landlords consider full management.

The ever increasing workload and legal complexity of letting out property as a DIY landlord, along with a narrowing of profit margins, is encouraging landlords to either think about selling up, or else off-load the pressure of managing onto someone else – a professional letting management service.

Looking at the positives; tenant demand continues apace, with most lettings being achieved very quickly. With some landlords taking the decision to sell-up, this will only serve to exacerbate the shortage of rental accommodation and it will therefore sustain continued tenant demand and increase market rents. In fact from a contrarian investment viewpoint, when things a looking their most gloomy, and investors are selling-up, now could be the optimum time to be thinking about investing in property rentals bargains for a long-term result.

Most of the new legislation, in my view, such as the suggested abolition of section 21, will make little difference to the way the market works, or to the average tenant’s experience, if anything it could make it worse; it will simply create more work and expertise to make it work. For example landlords and agents will be far more stringent with their selection processes. At the end of the day, rental accommodation is still desperately needed, landlords are still needed to supply it, and there’s still a great opportunity for buy-to-let.

Choosing a letting agent

Engaging an experienced and competent letting agency can make the landlord’s life much easier, but the opposite applies if you engage a bad agent. Once you’ve signed a full management contract with an agent (as opposed to a let-only contract) you could be stuck with them for the duration of the tenant’s stay, so a lot of care is needed when selecting your agent.

You should do careful research before choosing an agency that is well-established and with a track-record of successfully managing private rented accommodation. Ask around locally, request to speak to existing long-term clients to make sure they are happy with the service, check online reviews and make sure they are members of at lease one of the main professional associations.

These associations should be preferably ARLA Propertymark, the National Approved Lettings Scheme’ (NALS), the ‘Ombudsman Services’ scheme, the UK Association of Letting Agents (UKALA) and the National Residential Landlords Association (NRLA). The must by also have in place client money protection (CMP) insurance and a Property Redress Scheme. Look for evidence of these on the company paperwork and websites and its a good idea to check current membership with the scheme providers.

Make sure you are happy with the terms of their contract before signing, check for dubious clauses and if necessary have a solicitor look over it; don’t be afraid to negotiate on management fees, though driving down the fees too low could be counter productive – you get what you pay for.

What are the advantage of using a good agent?

A good letting agent should market your property proactively, they often already have enqiurers on their books, and they will quickly find you the right tenants for the property. They will make sure your property meets all the current letting and safety regulations, and they will handle all the necessary checks and letting documentation to make sure you are covered, should things go wrong with the tenancy.

For a standard full management fee of around 15% of the rental income, which could be lower depending on your negotiations and the number of properties you sign up with, and your importance to the agency, rent will be collected on your behalf, and all communications with the tenant/s taken care of – in fact as a landlord you may never meet the tenants if you don’t want to.

The agent will be geared up to deal with the day-to-day management issues, you will have a set spending limit so they don’t have to bother you with minor emergency repair issues, and they will have a regular programme of inspections in the calendar.

This type of arrangement with 24/7 cover is going to be particularly useful if you live a long distance from your properties, if you work away from home a lot of if you go on holiday – invariably problems with tenancies always occur at the least opportune times, so in this way you are covered for every eventuality.

As from June last year letting agents are unable to charge admin fees to tenants, so things like credit checks and referencing and inventory checks must either be absorbed into the standard fee they charge their landlord clients, or an additional fee on top. It’s a good idea to make sure how the agent is going to deal with this and perhaps compare their charging structure with other competing agents, bearing in mind cheapest is not always best.

You want an agent that’s proactive in the way they market their properties, so a quick anonymous test using a telephone equity might be a prudent move before making a decision on an agent, and make sure they are using a range of strategies to proactively market, particularly their on-line presence. You might check their property listings on a property portal like Rightmove or Zoopla to see how they present properties to market, and how successfully they rented out many properties in your area recently.

There are many benefits to using a full management agency and the trade-off between paying the fees and getting your life back can be more than worth it. However, there are some pretty poor agents out there as well as the really professional ones, so you do need to exercise great care; carry out through due diligence before signing a contract.

And remember, it’s not always the big national chains that give the best service, though most of them are very professional, the small local independent with a good reputation can often give you the personal attention and professionalism you desire.

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BREAKING: Court of Appeal backs landlord in key Gas Safety certificate and Section 21 evictions case

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The Court of Appeal has handed down judgement on the contentious Trecarrell House vs Patricia Rouncefield case which seeks to clarify if landlords can serve a Section 21 eviction notice on a tenant when a Gas Safety Certificate has been served after a tenancy has begun, and has backed landlords.

A valid certificate is one of several pieces of paperwork landlords must give tenants before they move into a property in order to enable a later valid Section 21 eviction.

Tenant Patricia Rouncefield has sought to clarify this important point of law after her landlord Trecarrell House attempted to serve a S21 notice on her despite having provided a Gas Safety Certificate after her tenancy began

Three judges, Lord Justices Patten, King and Moylan, have this morning passed judgement in this case following the hearing in January during which evidence was presented from both sides.

Gas safety certificate

Rouncefield’s property had a valid gas certificate both before and during her tenancy but she was not given a copy prior to or when she moved in During February 2017. She was served with a Section 21 notice on 1^st May 2018.

The judges each gave their own commentary on the case but agreed that ’as long as the [Gas Safety certificate] is provided to the tenant prior to service of the section 21, the notice will be valid’.

In the commentary on the decision, the lead judge said: “It is difficult to reconcile this interpretation of the law with legislation which would appear to be aimed at ensuring the safety of tenants.

“Similarly, I find it hard to balance this interpretation with the actual wording of regulation 36(6)(b) of the 1998 Regulations which states that the GSR needs to be given to any new tenant “before that tenant occupies those premises.

“I would agree with Moylan LJ’s characterisation of the majority finding: late service of the GSR for the purposes of 36(6)(b) becomes a mere “procedural requirement” rather than a “substantive sanction”.

Fantastic news

Tim Frome, Head of Legal at Landlord Action, says: “We’ve been waiting with baited breath for this decision from the Court of Appeal and on the face of it the news is fantastic for landlords such that, due to an admin error, they can’t be prevented from serving a Section 21 notice.

“This judgement may be further appealed, but as long as a certificate is served before a S21 notice then that will be sufficient.

“At Landlord Action we have a small percentage of cases where this problem has arisen and our clients will be heaving a huge sigh of relief.”

Read the judgement in full.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – BREAKING: Court of Appeal backs landlord in key Gas Safety certificate and Section 21 evictions case | LandlordZONE.

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EXCLUSIVE: Injunctions are not the answer to anti-social tenants during evictions ban, industry tells minister

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Housing minister Christopher Pincher (pictured, above) has claimed in Parliament that landlords are able to deal with tenants who are behaving anti-socially during the evictions ban with a range of alternative regulatory tools other than evictions.

His comments were in response to MP Clive Betts, Chair of the Housing, Communities and Local Government Committee, who asked what powers landlords ‘have at their disposal to tackle tenants who breach their tenancy agreement as a result of anti-social behaviour’.

Pincher replied that landlords, faced with such problem tenants, should consider using injunctions, closure orders and community protection notices to deal with them.

This raised eyebrows among the landlord community, who are well aware that such measures are expensive, protracted and time-consuming options even when compared to the UK’s evictions processes.

“Whilst the police and councils do have powers to tackle anti-social behaviour, the feedback we are getting from tenants and landlords alike is that this is often too slow and ineffective,” says Chris Norris, Policy Director for the National Residential Landlords Association.

“Such behaviour causes misery for those affected including fellow tenants and neighbours and it is vital that it is not allowed to fester.

“By far the quickest way to deal with it is to evict those who are responsible. We call therefore for the restoration of powers to enable this to happen as a matter of urgency.”

Not practical

Paul Shamplina of Landlord Action says Pincher’s suggestions are ‘not really practical’.

“When the police are called about a breach of the peace within a rented property they will arrest someone if a crime has been involved, but otherwise they will just ‘have words’,” he says.

“The police don’t want to get involved in evicting tenants.”

Shamplina says injunctions are extremely costly and can run into thousands of pounds and that even if landlords get their day in court, they’ve got to persuade the judge that the tenant is a multiple offender.

“Most landlords have small portfolios and don’t want to fork out that kind of money. It’s why the blanket evictions ban needs changing – it protects tenants who are behaving anti-socially and who know they can’t be evicted.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – EXCLUSIVE: Injunctions are not the answer to anti-social tenants during evictions ban, industry tells minister | LandlordZONE.

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BREAKING: Poole landlord is second ever to receive banning order

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A rogue landlord in Poole has become the second person in England to be banned from renting out residential properties.

Mahmut Gilgil, of Blandford Road, was convicted in May 2019 of 12 offences relating to his rented HMO above a kebab shop in the town.

He was found to have breached fire regulations and had also failed to maintain common areas or repair property defects, which affected his tenants’ safety and welfare. He was fined £3,000 and ordered to pay £3,425 in costs.

The offences were so severe that inspectors from Bournemouth, Christchurch and Poole Council decided to file for a banning order.

This took effect on 3^rd June and prevents Gilgil from letting or managing houses in the UK for five years. If he breaks the ban, he could be jailed or fined up to £30,000.

Councillor Kieron Wilson, portfolio holder for housing, says: “The safety of tenants who privately rent should always be paramount and they are entitled to live in accommodation that is well managed, safe and habitable. Landlords have a duty to manage their properties well and in accordance with the necessary regulations.

“The scale of the offences committed by this landlord meant that this action was considered absolutely necessary and proportionate and I hope it sends out a clear message that rogue landlords who are putting residents’ health and safety at risk and poorly managing their properties will be dealt with.”

The first landlord to be banned from letting a property in England was David Beattie after he was prosecuted by Telford & Wrekin Council.

He admitted managing an HMO in Dudmaston without a licence and was found to have deliberately misled tenants over their rights by telling them they could be evicted within 48 hours. 

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Exclusive: the cities where government is piloting harsher EPC ‘policing’

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LandlordZONE can reveal the cities where the government is piloting harsher enforcement of its Minimum Energy Efficiency Standards (MEES) which from April 2018 required all properties with a new or renewed tenancy to attain a minimum EPC ‘E’ rating prior to being rented out.

From April 1^st 2020 this was expanded to include all rented properties. Landlords had asked for the regulations to be postponed following the Coronavirus pandemic, but – with the exception of Scotland – this fell on deaf ears within the corridors of power.

The local authorities involved in the pilots are Eden District Council along with Newcastle, Liverpool, Cambridge and Peterborough (as a join pilot), Bristol, Cornwall and Oxford.

As LandlordZONE reported in February, the first to begin its pilot was Oxford City Council.

It, like many local authorities, faced significant non-compliance among landlords and in Oxford 40% of rented homes do not have an EPC. Oxford, like the other seven cities within the scheme, was given £150,000 from the Department of Business, Industry, Energy and Strategy (BEIS) to police the MEES regulations through inspections of private rented housing and HMO licensing schemes.

Councils have also been given extra powers as well as funds. For example, Oxford City is issuing £200 fines to landlords who do not have an EPC for a privately rented property.

A report by consultant RSM into MEES and EPC enforcement published before the pilots began concluded that to be effective, a national landlord register should be adopted alongside urging tenants to report non-compliant landlords, increased local property licensing and increased funding for councils and trading standards.

The co-ordination of the eight pilots is being managed by the Centre for Sustainable Energy.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Exclusive: the cities where government is piloting harsher EPC ‘policing’ | LandlordZONE.

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B2L mortgage on house we will end up living in?

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We have a property on the market for £385,000, mortgaged at £120,000 on an expensive 4% RBS One account. We want to unlock the potential from the house & downsize

We found a house that we really want

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CBILS for developer?

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Has anyone else heard of the Government’s CBILS scheme paying out to developers?

I spoke to a broker last week who was waiting for an announcement that CBILS was being widened out to cover developers too, but I haven’t heard of any developers getting one yet.

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Increase rent – Increase Bond?

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If I raise the rent to match (or be slightly under) the LHA rate, what about the Bond secured as a deposit?

The Bond at the time was for the 5 weeks max rent, so do I ask for an increase to match the rent increase?

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Want a truly passive investment where you can sleep soundly at night, given these testing times?

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Landlords wanting to remove some of the hassle connected with the do-it-yourself letting process, or even using a letting agent, could consider “guaranteed rent”, renting their property to the local authority to rent out on their behalf. But exercise caution.

This is known in the industry as rent-to-rent or guaranteed rent: the property is let to the council, or sometimes to a private managing agent, who may rent to tenants or in turn to a local authority, for them to rent out.

This is done on a fixed term, usually 3 to 5 years, the monthly rent is guaranteed for that period whether the council has a tenant in the property or not, and the council is obliged to make sure the property meets all the necessary letting standards. It then returns the property in its original tenantable state at the end of the term.

Sounds a little too good to be true doesn’t it! Well, it can work out really well but from the landlord’s point of view there can be some pluses and some decidedly nasty minuses.

Yes, for the landlord the process gives peace of mind, its a let-it-and-forget it process where the landlord does not need to think about it for 5 years or so, and simply watches the rent pop into their bank account every month.

The first slight negative is that the rent will be slightly less than they would get on the open market, simply because of the trade off between having no hassle, no letting fees, and none of the expense of re-letting when tenants come and go – often this a very acceptable trade-off.

The second negative is that the whole process can become a legal minefield if things go wrong; even with a council this can happen, but more so with a private company or individual.

There have been some real horror stories with rent-to-rent when unsavoury characters or inexperienced individuals – talked into this by so called property gurus – rent properties from unsuspecting landlords and play fast a loose with their property: properties divided into multi-housing units (HMOs), overcrowding, letting without a licence, non-payment of rent and either handing the property back with expensive damage or refusing to hand it back at all.

Of course, renting to a council or a reputable agency reduces this risk to a minimum, but even so there can be problems. The legalities of this are complicated: it’s a lot more complicated legally that simply renting between a landlord and tenant because another legal entity is sandwiched between the two: ( The Landlord – > The Renter – Agency or Council) < – The Occupier (The Tenant)

Some agents will rent from you or act as an agent between you and the council, who in turn will let to their own tenants, usually low income/welfare individuals or families.

It is therefore vital for your own sanity that in this case you choose an agency that is well-established and with a track-record of successfully managing private rented accommodation. They should be members of at lease one of the main professional associations, preferably ARLA Propertymark, the National Approved Lettings Scheme’ (NALS), the ‘Ombudsman Services’ scheme, the UK Association of Letting Agents (UKALA) and the National Residential Landlords Association (NRLA).

I suggest you do your due diligence thoroughly by checking out the agency, and requesting to speak with other landlords who have used their services long-term. With councils this is less important but still worth doing. We’ve come across many landlords who have had problems when they let directly to councils.

You need to do checks with your mortgage lender, your landlord policy insurers and the freeholder of your rental property if it is leasehold. Get permission in writing in each case, otherwise your guaranteed rent arrangement may breach the terms of one of these. The last thing you need is for your insurer to refuse a claim because of this, or your mortgage lender demands immediate re-payment.

Having a valid contract between you and the council (or the agency) is key to a trouble-free and a pleasant experience. This is a commercial arrangement and therefore a million miles away from the Housing Act Assured shorthold tenancy – you leave that side to the agent. You need a commercial (business) (Landlord & Tenant Act 1954) tenancy between yourself and the council or the agent. You also need a detailed schedule of condition / inventory, ideally from an independent surveyor or inventory clerk.

These rental bodies will often provide their own contracts for you to sign, but you should resist doing this, at least until you have had expert legal advice, and when I say expert I don’t mean your family solicitor, I mean an experienced property lawyer familiar with this type of arrangement.

You would expect a council or a reputable agency to honour their contract and return the property back on time and in its original or better condition, but unfortunately that’s not always the case. Number one because the Housing Laws are such that the council or the agency will not necessarily be in a position to gain vacant possession just when it’s needed. Secondly, agreeing what is original condition is open to interpretation, hence the importance of a good schedule of condition.

Landlords are often drawn into the trap of thinking that renting to the local authority or a good agent is going to be trouble free and there will be no arguments as to what’s right and wrong: not always to case.

Don’t get me wrong when I’m pointing out all what can go wrong. Don’t let this put you off using guaranteed rent arrangements; it has many advantages not least of which should be a nice passive investment return. What I am saying is that preparation is the key to a successful outcome, so bear in mind the points I’ve mentioned above.

Coronavirus could wipe out the UK’s smaller Guaranteed Rent operators

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Want a truly passive investment where you can sleep soundly at night, given these testing times? | LandlordZONE.

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Rent and Legal Guarantee now available for existing tenancies

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Debt is a reality in every type of business, but unlike almost any other service provider, landlords are unable to terminate a contract with their client if payment is not received.

Only a court may end a tenancy agreement on the basis of non-payment.

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