Monthly Archives: January 2011

You are browsing the site archives by month.

By Steve Roulstone

I am not one to look at matters with a doom and gloom outlook, but I do believe in being factual about the outcome of actions when there is a danger that there could be far reaching implications of a change to legislation, or changes carried out by any legislative body, as is the case with the decision by Oxford City Council in reference to ALL of the Houses of Multiple Occupation within the City.

 The decision.

What they have done, is to decide that every property that falls under the description of an HMO will, on a timetable spread across the next two years, need to be licensed by the owner with the Council, in order to improve the standard of the property and in order to receive approval from the Council to continue to operate as an HMO.

What is an HMO?

The HMO’s which fall under Mandatory Licensing are those under the three storey and five people rule, but any property where more than two unrelated people abide as their main residence, is an HMO as designated by the 2004 Housing Act. Not as so often been mistaken in the past, mandatory licensed property only. Indeed, the legislation confirms that all HMO’s are subject to exactly the same safety regulation inspection as the licensed properties. And this is the potential problem for every Landlord who operates Houses of Multiple Occupation.

The implications                   

This applies on two fronts, firstly the charges for licensing every property, as every license has to be paid for by the Landlord, are set by each local Council respectively, so charges can both vary and are entirely at the whim of the Council’s concerned. Reports for Oxford state that this number could be as many as 4000 properties in the City. Should they decide to charge the average cost as confirmed by a Communities and Local Government survey (Executive Summary) £387 per application (The range goes as high as £1500 per application) then Oxford City Council at a time of great austerity, would raise a total of £1.5 Million. Even allowing for the stated intent of the act that charges should reflect the cost, this kind of income has to be looked at seriously. (Although what should happen with a major increase in licenses to be issued is a reduction of the average cost) It does not take a huge leap of faith to see how much this could interest any Local Council at present as Local Councillors struggle to cope with achieving budget targets imposed by Government. (At a time when suggestions such as heating swimming pools with heat generated by crematoriums are being put forward and seriously looked at, all such methods of income are bound to be considered) Secondly, the result of any inspection by the local Council, may not result in lifts and fire escapes all round, but my experience is that minor recommendations, such as fire doors and walls when deemed necessary, could result in costs up to £1000 per property with ease.  

Who pays?

Well this is where the effects of any such move are always badly judged in my opinion, because whilst the bill will of course become the Landlords, the costs are almost bound to be passed on to the Tenants. Especially where there is knowledge that every rental property is being treated in the same way! So improved accommodation is the stated desire, increased rents is the effect, but unusually for me, I would finish by repeating the warning, Landlords beware, Licensing may be just around the corner for your HMO, even if it is a Bungalow or any other form of ground floor accommodation!

By Mike Edwards

Property Landlord advice: Frozen pipes, whose responsibility?

Doubtless we will suffer another bout of cold weather before this winter is finished, and indeed even as I write this the temperatures are dropping fast at night and hard frosts are a regular feature again.

So problems with frozen pipes and lack of water supply have in some areas created unprecedented calls for help (witness Northern Ireland’s woes in December) all of this has raised several important questions for Landlords.

Who arranges and pays for the Contractor?

Maintaining the supply of Water is the Landlord’s responsibility under section 11 of the Landlord and Tenant Act 1985, so he should shoulder it all, including arranging contractors. The only possible exception might be tenant negligence but there is a court case where it was held that a tenant is not required to insulate pipes, just live in the property reasonably. If there is a power cut or as was the case during December the conditions are simply exceptional, this will not be the tenant’s problem.

What happens if the tenant says “We have no running water at all” (as opposed to no heating) and tries to go for temporary absence at the Landlord’s expense or possibly early release from the agreement with no penalty. There are no easy answers and it all depends very much on circumstances.

Pipes outside which are badly designed or poorly insulated (including roofs) have to be considered by the landlord. Be careful also with self condensing boilers where the small bore evaporation pipe is external to the property there have been a lot of problems with these freezing this winter. Yes they can be defrosted with a hair dryer in about five minutes but is it reasonable to expect the tenant to go out into a blizzard armed only with a hair dryer more than once in a winter?

Council viewpoint

But what happens if the Landlord has in effect done all they can and are as much a victim of extreme conditions as the tenant – except they are not living in the property of course!! Well courtesy of the current fitness standards as dictated by HHSRS a property with no water supply for whatever reason would be condemned as not fit for human habitation by almost any Council or Court.

If the tenant considers it necessary, they could speak to the local council who will then make a decision and if they consider them homeless, have the obligation to re-house them. Let the Council decide for you – but again beware as If faced with such an obligation and related costs the Council would almost certainly send in the Environmental Health inspectors to conduct an HHSRS examination of the entire property.

Who can claim and for what?

So the system is frozen and a leak expected, if a contractor is called in can any costs be claimed? Well not by the tenant as it would be under the buildings cover but not by the Landlord either as the only insurable peril is any subsequent leak and damage.

If there is subsequent damage, the word reasonable will keep cropping up. Did the landlord act reasonably and did the tenant act reasonably? If the answer to both is “yes” then in response to the original question it will be a landlord problem to solve

The other issue to be wary of especially with tenants trying to thaw out frozen pipes in an inappropriate manner is when pipes are known to be frozen making sure that the damage is strictly minimized. Otherwise in any subsequent damage claim the insurance may be able to wriggle if they say you did not take enough care to control damage during the defrosting of the pipes especially if a professional plumber was not involved.

To minimize the problem

The best advise has got to be take advise, especially from professionals who know the law and what would happen in these circumstances, bur remember, quick action and cooperation should always be looked for before freezing problems get out of hand!

By Steve Roulstone

If I have learnt anything in my first year as a Franchisor, it is that the best help and assistance I can give to any potential Franchisee is twofold; clarity of purpose and a clear route to achievement. I should not be surprised at all and really should have known from day one, as it was what I was looking for when I first approached Franchising as a way of achieving my objectives in life, back in 1999. But as it is something that happened in my case rather than something I knew I needed, it was something I accepted without questioning why or even realising it was what was being offered and subsequently was then delivered to me.

Franchise visits.

At the time that I was investigating the Franchising market, which luckily for me was in the autumn of that year, just at the time of the National Franchise Exhibition, I visited several organisations from differing trades and Industries, all of which in my mind could be an industry that I could operate in. In the end it did not take me long to choose the Company I now head, but looking back at why, is more revealing.

Why Castle Estates?

So why did I choose Castle Estates? I had decided that it was an Industry that I felt comfortable operating in (Requirement number one!) but they were not the only organisation that I looked at as I visited the possible partners in Franchising with my Wife (which is exactly what any prospective Franchisee should do, right from the start, as it is so important to ensure that all partners believe in the venture you are about to launch) so I asked her when I was thinking about the answer what she remembered of the day at the then Head Office in Milton Keynes and her answer was what formed the basis for this Blog.

A vision of how it worked!

Jenny’s words not mine, that was her answer and it is exactly what I have learnt in putting together the manner in which I present not only our Company, but also the Industry and most importantly, Franchising itself, to all who come to discuss the opportunity of becoming a Letting Agent with Castle Estates. It can be frustrating sometimes to realise why and how some things come together, what I have come to describe as ‘earth shatteringly obvious moments’! As a Franchisor, we need to offer a clear route to becoming a Franchisee, so that it is understood what is needed and how our goals are achieved, offered within a timetable which clearly states when all of this fits together as we work towards starting this all important and all encompassing venture for both parties. Added to clarity of vision, so that what we are trying to achieve is clear for all to understand and how it is achieved is understood as well as what is needed to continue to progress towards completion and the start of a new business. 

What to look for.

This is not something that has come easily and needs careful consideration in ensuring the plan (which in my case has taken the best part of six months to assemble, this with the assistance of professionals trainers to ensure nothing is left to chance) that every franchised organisation puts together is consistent and delivers ‘what it says on the tin’ (a saying I am using more and more) but I would recommend everybody looking at a Franchised Company considers this methodology above all others. Only when what you buy in too can be clear and decisive about what they deliver, can the end result be worthy of your investment.

By Steve Roulstone

Even as early as the second week in the New Year, agencies are reporting a big increase in Mortgage demand and the majority seems to be in the rental sector as Landlords continue to react to the need for an increased number of rental properties. Indeed, as a Country that normally follows what happens in the USA by way of financial trends, it could be argued that we are right on the heels of trends in America as they start to ease the availability of mortgages across the pond.

 Follow that lead!

I have stated before and would repeat with this very current news of increasing demand, that we are building up a head of steam which would when the market releases a product that would be acceptable to Landlords, result in an increase in sales for the coming year, which I believe will at the very least aid the recovery (if not start the recovery) of the housing market in the UK. There is no doubt that the Mortgage houses are looking at what demand would bring as they continue to sample the market place with short term offers, and this is producing strong demand, confirming my beliefs that the demand is high amongst Landlords, who are only delaying because they do not wish to be tied in too the wrong style of mortgage for their investment portfolio.

Strong Rental demand

There is no doubt that the demand is continuing to grow and this at what is normally a quiet time, even allowing for the spike of demand caused by the extended Bank Holiday blues! As Agents, at Castle Estates we are gearing ourselves to be ready for a year of high demand by ensuring we have the right technology to supply our Tenants demand for information and ensuring we remain competitive in an industry where Tenant charges can sometimes be difficult to justify. We have always maintained that the relationship with our Tenants is the key to the art of good Management and we wish to ensure we supply the service demanded by an ever increasing technically knowledgeable customer.

Producing higher rents.

For the result of the current shortage of rental property will result in higher rents for the Landlords, that is what market forces will dictate, even with the knowledge that affordability will be a large part of any increases in the current financial climate that we are living through, so giving Landlords even more reason to increase their portfolio of property. The market professionals and providers know this and will be looking for sustained signs before releasing the products that the industry requires. There is no doubt that this continued increase in demand will be playing a large part in providing that very proof!

By Steve Roulstone

It is strange how some matters come up on more than one occasion and this week, we have seen two occasions where absent property owners were at risk without even being aware and it is a situation that I now recommend everybody to be aware of, indeed check with your own Insurance Company to ensure the house insured is covered under your normal homeowners Buildings Insurance policy. The outcome may have a great effect on you becoming a reluctant Landlord.

Empty property.

The two occasions that have arisen this week, both concern owners, who in our case are Landlords both, who have found that their property is not insured under their existing Insurance policy, because the property is currently empty. In the first case, the property was empty whilst the Landlord had work carried out in preparation for renting the property, to ensure that the house was presented in the best possible condition. His policy only gave cover for sixty days and was discovered because of damage being claimed through a burst pipe during the recent cold weather. Needless to say he was not aware of the clause and I wonder just how many insured are?

Policy renewed.

The second case is even worse, in that because of what had happened to the first Landlord we asked the second, who had moved on over a year ago, only to find that he only had thirty days cover and the property had been empty for over a year. In fact, the Landlord had recently renewed and even with the address change, nobody at the Insurance Company asked the question about why, so it appears they gladly took the payment without even taking the opportunity to check if the house was covered! When you consider the questions we have to answer to ensure our position (property) is insurable, it seems strange that the reverse does not happen, i.e. we are not asked if a situation exists, even with evidence to support that it does (the different address) that means any claim would be rejected!

Now the implications

The advice has got to be that any owner looking to move on and leave a property empty, advises the Insurance Company from day one and of course checks how long the house is covered in their absence. But the implication for owners wishing to achieve a sale before deciding to consider their options (our experience suggests this can be anything up to six months) is that they are liable to find that their Insurance policy will not allow them the grace of time and a decision may well be forced.

Renting options

What we normally see is a request for information before owners move on, so that if they do decide to rent they will have already decided who to appoint as Managing Agents and do not have to return to the area to make an appointment. Far be it from me to suggest otherwise and of course we are accustomed to gathering everything we need at that first appointment to enable us to do our job without the then landlords having to return. But under these circumstances, owners are going to have to make that decision at an earlier date and I for one would not argue! but we must always give best advice and as was proven this week, it will be the property owner who will benefit in the long run!

By Steve Roulstone

It is that time of year again when as all Letting Agencies know, rent arrears are at their worst. The Christmas credit card bills start to arrive, if the bank account has not already been left dry because of too much celebrating during the Christmas Holiday, especially with the current financial climate So we must be extra vigilant and ensure that our systems are up to date and no time is lost in dealing with the issue.

Proper methods

The key to dealing with arrears is communication and a system that is tried and tested. At Castle Estates we use a system that has been built over the last twenty years and is based on regular communications that whilst leaving the Tenant in no doubt as to what the problem is, also ensures that they know we are always available to discuss the matter to hand.

Lets talk!                  

It is dealing with matters in this way that leads to resolution in most cases and even if the Tenant is unable to pay the rent, because of the loss of a job for example, it is communication and relationships that are going to give the best solution in the long term. I am not saying that legal action can be avoided just because we are on speaking terms with the Tenant, but the ability to have reasoned conversation does mean in most cases, that you will get a reasoned response!

Not forgetting protection           

Of course policies are available for Landlords to ensure they are covered for any loss and of course as I have stated before, we highly recommend Landlords take such a policy and that they also investigate which policy suits their needs of course to be sure that we are in line with FSA regulations, as a Company we do not recommend any particular Policy or provider, but we must ENSURE Landlords know that Rent and Legal Insurance policies exist.

Range of coverage.

But what I will comment on is the range of policies and differing levels of cover that they give and in some cases not always for the best. Letting Agencies can now link themselves to services which will take over the Management of the debt and serve the appropriate notice for them. Well forgive me, but that is like saying we are a Letting agent – to a point! These are intrinsic parts of a Letting Agents role to me and once again give clear demonstration of the difference between a Letting Agent and Letting Agencies. I for one would not wish to ‘offload’ what is a vital part of the service we offer our Landlords.

Be aware!

Every Landlord should of course not only expect their agent to be able to offer the service themselves but also ensure good communication to keep them fully aware of not only missed payments but what is being done and the responses received to deal with the problem. This will also ensure that progress towards the possible appointment of a solicitor if insurance is not in place will be known and not come as a shock. So be aware, act at the appropriate time and keep all informed. That way we can hopefully reduce the problems rather than increase them during difficult times.

 

By Steve Roulstone

It may seem that I am paranoid about the BBC. My wife would probably agree, far from it, I always start with the BBC before any other channel whenever I turn the TV on. But there are times when I do despair about the way in which they report matters and it is not just the Housing market or in particular the Letting Industry that grabs my attention, just listen to the bad news angle taken within the weather forecasts and you will know what I mean!

Popular news reports.

One of the automatic results of being the BBC is whatever they write, especially within the news, they always get ‘Star billing’ within Google. Well done to them, after all we are all looking for better placement, but over the last couple of weeks, a report by the BBC from back in June 2010 has kept appearing within the criteria of my Google search. It is entitled ‘Letting Agents let off the hook by Government’ so this morning, when it appeared again, I read it.

Principals .

One of the important principals about writing anything for publication on the web, if you wish for people to find your scribbling, is to make sure that your article explains the title, so it falls in the ‘what it says on the tin’ principal, or at least that is what I have always been taught.  However, having read the article I would have to describe this as a tenuous link at the very least. The comment within the article that the title refers to is about agents who I assume are not part of any professional body, as either the ARLA spokesman did not confirm this in what he said, or only part of his comment was printed.

Actual intent.

What is confirmed by ARLA and indeed the CAB is that the legislation was both welcome and good in its intent. That some will take advantage of the decision is a matter of conjecture, as professionals, we believe the legislation would have stopped that happening.  So the actual meaning of professional agents (and in my opinion letting agents are qualified individuals, letting agencies are offices!) is not differentiated in the article headline.

Now for the rub!

And the reason I list this as Franchise news, because the result of the visibility such articles get through Google, is that hundreds of people will read the title and without even reading the article, my Industry will be tarred with a brush, that when you read and understand the article, we do not deserve! It is difficult enough to prove that my industry is not suffering in the same way that House selling has suffered over the last few years and indeed that we have benefitted in so many ways. I do not ask that we have good news just to suit my Industry and I would not state or write anything that I cannot support, but it is time that the BBC went back to the agency that reports the news in a factual manner and stopped looking for elements of bad news so often in its reporting.

The reality is different.

Because they are who they are, the BBC have far more influence that such practises deserve, in the meantime how many people have written off a Property Management Franchise on the back of articles and reports like this that give what in my opinion is a negative approach, when in actual fact, as an Industry we would welcome such legislation and the article says just that. Pity the title the BBC chose disagrees!  

 

By Mike Edwards

I would not normally copy information from elsewhere for my own writings, but as this is very good and timely advice from the Police on the prevention of Cannabis Factories, I will make an exception and copy in full a circular I received from Thames Valley Police sent to me because of my position advising our franchised offices within Castle Estates:

Dear Landlord/Estate Agency,

 Cannabis Cultivation

Commercial cannabis cultivation is a growing industry in the UK. In the past two years, Thames Valley Police has uncovered more than 300 cannabis factories, with an estimated yield of £4.4 million.

Cannabis factories range from small enterprises in a bedroom, to barns and industrial premises adapted for large-scale production. Because properties are often sub let from existing tenants, it can be difficult to trace those responsible.

The damage to property caused by this kind of activity can be substantial. Landlords face severe penalties for failing to report illegal drug production, and could be sentenced to a maximum of 14 years in prison.

Information for Landlords, giving advice on how to spot if drug production might be taking place at one of your properties and what to watch out for with regard to a new tenant is available on our force website by following the link below.

http://www.thamesvalley.police.uk/crprev/crprev-home/crprev-home-canprod/crprev-home-canprod-adv.htm

Use this number, 08458 505505, to report a non-emergency crime or to give information to Thames Valley Police. You can contact Crimestoppers anonymously by calling 0800 555 111.  Always call 999 in an emergency.

 If I can be of any further assistance please don’t hesitate to contact me.

 Kind Regards,

 Wendy Walker, Community Information Manager, Force Intelligence Bureau, Thames Valley Police. Tel: 701 3967 (External 01865 293967) Mobile 07837 496532. Email:  wendy.walker@thamesvalley.pnn.police.uk

 The area is of course not significant, but the advice is paramount.

Good advice

Any advice of this nature should of course be well received and what matters most is the ability to put steps in place to stop such a disaster happening to any Landlord and of course, when fully managed by an agent, who would carry out regular property visits, it should not! Only when Landlords leave a Tenant in the property without visiting between Tenancies do such opportunities arise and when you consider the possible actions taken against the Landlord, surely this is reason enough to ensure all properties are visited on a regular basis!

By Steve Roulstone

Once again I have cause to comment on the way that news concerning property is reported in a negative manner. During December according to most organisations reporting on prices, we saw an increase of the average price. In fact Nationwide reported that during 2010 prices increased at the same rate of 0.4% overall. Guess what was reported as a forecast for 2010 a year ago?

BBC looking for bad news

The commentator in this report states that forecasts for 2010 were between a slight increase and a decrease of up to 20% The guest from the RICS states that they forecast a slight increase and the commentator goes on to ask what changes would signal a decrease. Well Mr Leaf, well done you got it right and yet again the BBC reporter shows just how much they love taking a negative view of housing!

Now for 2011

What changes can we see for 2011 then, well it looks as if we will not see any! Even when figures confirm the slight increase, the BBC still manages to find a negative slant on the news and even more depressingly, a report from my own professional body, stated the same increase and then within the article commented that some (unconfirmed) bodies are forecasting a decrease of up to 20% next year, but goes on at the end of the article to confirm who is saying what and the maximum forecast is only shown as -5%!  

Past performance

Is really what we need to look at here and if we consider the two reports mentioned above, then it seems that forecasting poor performance attracts the eyes of those who want bad news. The BBC 2010 forecast report stated figures between increases of a few % through to a decrease of up to 20%. Well and overall increase of .4% is so far from a 20% drop, this indicates that from this year’s forecasts (confirmed sources) in the NFOPP Newsletter article that we are liable to achieve a small decline at worst as the market continues to settle

Factors that affect the result

 We are all aware that there are several factors that will affect this result, how the Nationalised Banks will perform now that the Government have removed mortgage targets. But what we do not know is how the Building Societies will react now that the market is again a level playing field. Or indeed whether the need for Rental property will provide a lift as Landlords seek to supply property and market forces in the rental market take effect.

In conclusion

The statement about ‘forecasting being for fools’ is I feel the main point about house prices and that market forces will determine what happens over year to come, so let’s stop making bad news out of forecasts which are so wide of the mark. Negative comments ONLY have a negative effect. I for one will continue to comment on what happens and when asked for my opinion, will give it with honest confidence, not negative guesswork!

By Steve Roulstone

I have used these pages before to give my opinion that all Landlords should consider specialist rent guarantee Insurance to ensure that they protect their rent at a time when the best intentioned of Tenants may find themselves unable to pay because of losing their income. At the start of the New Year it has once again come to my attention (a Landlord of our office in Stafford found there Tenant in a similar position) at a time when arrears are always at their worst because of overspending at Christmas and let’s be honest who can say they have never been guilty of doing exactly the same!

Good advice!

Is exactly what every agent should give to their Landlords and unless the agent concerned is registered with the FSA as somebody qualified to give specific policy advise, then it is very much our role to make Landlords aware of what type of insurance policies are available, rather than sell any specific policy. Like it or not, current financial legislation, set up to protect our customers, only allows the majority of agents, through best advice practises, to inform our customers, our Landlords, what type of policy they should be taking usually by way of an introduction and there after leave the selling of the policies to those who are qualified and more specifically registered with the FSA.

Rental Insurance policies

So what type of policy can or should be taken by either Landlord or Tenant? so to clarify, and again only with regard to the type of policy rather than any specific product, Landlords should of course continue to insure the building and discuss with their provider what minimum contents are included, as they should still consider carpets, curtains, bathroom and kitchen fitted furniture for example. Then of course, rent and legal expenses insurance, to cover referenced Tenants who find themselves unable to pay and to cover the cost of legal action taken by Industry specialists to evict if required.

Tenant policies

And finally the policy that most forget, Tenants! All agents should have some system to try to ensure Tenants DO take a policy to cover their own contents and with the knowledge that policies exist that will cover the Landlords contents for accidental damage, a specialist policy that unless advised about, most Tenants would not know existed, it is especially important that in giving best service to our Landlords, we ensure that Tenants are indeed introduced to such a policy at all times.

Basic cover

There are of course other policies, and other considerations and items covered within differing policies, but to cover them all would need more time and space than this media provides and would endanger me of discussing specific policies rather than in general (something the FSA regulations did not intent to include but never the less does, where have we heard that before? Sorry, I meant how many times have we heard that before!) but it is our duty to ensure knowledge is available to both Landlords and Tenants at all stages of the process, so we must make sure we foster the knowledge so that we can continue to give good advice and current advice, whenever the need arises.