Tag Archives: Professional Management

19Oct 2010

Property Landlords advice: Resident Landlord agreements (Part 1)

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By Mike Edwards

Deciding if a Resident Landlord agreement is the correct solution to any situation can be a nightmare for Landlords to determine. What can on the face of it look straight forward may not be and vice versa. What happens if there is completely separate access for the tenant? Or what if their accommodation is like a granny annexe or a garage converted into a studio, or a building in the garden? The list goes on!

Popular practice

These situations are becoming more common as the credit crunch inspires some innovative use of spare accommodation by Landlords, but do we treat these scenarios as tenancies or licences? And above all if they are tenancies then should they be ASTs which means registering the deposit – or a fine if you don’t!

Some definitions

If the building as originally constructed is a purpose built block of flats no matter how small and the Landlord occupies a unit as their main residence it can never be a Resident Landlord case. But if you have a conversion to self contained flats and the landlord lives downstairs it is a Resident Landlord case but the tenant cannot have an AST because it is a Resident Landlord situation. In the conversion if the occupier has their own bedroom but shares facilities with the Landlord then only a license can be granted. This is because under the 1988 Act the tenant only needs exclusive possession of “any part of the dwelling” to have a tenancy so the exclusivity of the bedroom is enough to make them a tenant and an AST can be created if there is no Resident Landlord.

And more definitions

Rules on exclusive possession are different outside the 1988 Act as to be a tenant the occupier must have exclusive possession of all essential living accommodation. Therefore if the tenant cannot have an AST as the landlord is in the building, he must have exclusive possession of all essential living accommodation before he can be a tenant and therefore be granted a Common Law tenancy (as in the example above of the two self contained flats above).

Further legal implications

However all this throws up another key issue. In managing the situation, you must make sure it should not have been an AST for if it is then the deposit must be protected. So if you wrongly designate an occupier as a licensee and do not give them an AST when you should have done so then you will be open to a claim for mishandling their deposit.

Link to Res LL Part 2

14Oct 2010

Property Landlord Advice: Rent limit for AST Agreements increased to £100,000

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By Mike Edwards

From 1st October 2010 all tenancies where there is no legally stated reason why they cannot be ASTs  will be so deemed unless the annualised aggregate rent is in excess of £100,000 or basically £8,333 a month no matter how short the initial term might be.

The Change in Law

So if a tenant rents at £10K a month for 6 months it still cannot be an AST because annualised the rent would be £120K. The term stated in the agreement makes no difference just multiply the rent by 12 and if the result exceeds £100K then from the 1st of October it can no longer be an AST. Do not make the mistake of thinking the tenant actually has to pay £100,000 or more in a year, they do not. The same rules that applied when the limit was £25,000 now simply apply at £100,000 instead. In effect the figure for a tenancy to fall within the EXCLUDED CATEGORY and be incapable of being an AST has now been increased to £100,000

The Affect

This will mainly affect the London market (over £1924.00per week) or very high rental value properties elsewhere but it applies to all new tenancies granted from 1st October onwards and also to all tenancies granted on 6th April 2007 or later as and when they are formally renewed.

The problem

The issue here for Landlords and agents is because these previous non ASTs now become ASTs do existing deposits now need to be registered and protected for these higher value tenancies. However the provision that applied when deposit protection first came in that periodic tenancies were unaffected is thought not to apply. Unfortunately the Government Department responsible for the TDP provisions (Communities and Local Government) omitted the word “new” at a critical point when drafting these revised Regulations.

The result

In doing so they condemned all existing cases to potential uncertainty which can only be clarified by a test Court case. So the advice from CLG, ARLA and the TDP schemes is to register ALL deposits where, under the revised limit if an existing tenancy was actually a new one being granted now it would be covered by the new rules. A Prescribed Information Form must also be issued and interestingly so must any clauses that would be in any such new tenancy but were not of course in the original agreement.

12Oct 2010

Property Landlord advice: Letting Agencies or Letting Agents

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By Steve Roulstone

I have just spent two days telling people what I do at the NEC National Franchise Exhibition and have come to the conclusion as the result of what my answer was that I might be a bit of a snob!

Vive la Difference!!

You see, I discovered that I always answer the question ‘Who or what are you?’ with the answer that I am a Letting Agent. It was only when the question was put to me in a different context that I found myself explaining the reasons why I call myself a Letting Agent – so what is the difference?

Individual Agent or Company Agency?

I see myself as a Letting Agent, because I am qualified through my professional body and having passed my exams it is something that I rightly feel proud of. As a Company we have always and still do look to have all of our agents qualified (There I go again!) because exams are a confirmation of knowledge and it is something tangible that our Landlords can rely upon. But that does not mean that our offices are not Letting Agencies, because they are.

Agency AND Agent.

The difference is that not all Letting Agencies are run by Letting Agents, if you believe as I do, that to call yourself an Agent, you should carry some qualification, through the Industry you serve, that is recognised by the people who work in it, that marks you as qualified to carry out the role. Those who have read my Blog in the past will recognise a theme here, because I firmly believe that as an Industry, it is only by Industry recognition and Legal registration that we will become truly professional and that has to be the goal for all agencies.

Landlord advice.

So I will continue to call myself an Agent first and my advice to all Landlords is check the professional qualifications of any Agency they wish to employ. As a Franchisor who is aware of the competitors in my sphere of operation, I know that the systems we employ mark us out as protective of our clients interests in all that we do, but why not go that extra mile and prove our knowledge through qualification, then, especially if legally registered, all Letting Agencies will be run by Letting Agents!

01Oct 2010

Franchise News: The Importance of Block Management.

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By Steve Roulstone

When considering a Franchise in any industry, there may be more than one way to generate income that may be available through the business to hand. The Lettings Industry is one of those industries and it is Block Management that is a natural outlet for any good Letting Agent.

A natural fit

What needs to be recognised at the start is whether the Franchisor is happy for additional industries to be part of the Franchisees business. At Castle Estates we not only allow but actively encourage entrepreneurs to get take advantage of any opportunities that come their way and will actually offer training as part of the Franchise.

Landlords want our help.

And that is the point, it is normally Landlords who ask for our assistance as many traditional Block Management Companies are somewhat distant from the communities they serve and by being the Local Agent who services the area concerned, Letting Agents can offer a better feel and better communications for the leaseholders involved. Now from where I look at this, if a Landlord approaches my Company and asks for help and I can offer that help, then I do not want to be the person who says no!

And we have the knowledge.

But because our main field of operation is the Lettings Industry, it does not mean that we cannot supply something extra, in fact, I would go as far as to say that Letting agents can make better Block Managing Agents, because in a market so heavily populated by Buy to Let properties, our knowledge can offer better solutions to situations simply because we do know what to do in such scenarios.  

Giving better advice.

Only this week, I was present at an Annual General meeting where a question was raised about HMO’s on site. Now this happens to be an area that I have a good depth of knowledge and I was quickly able to confirm the law relating to this situation, ensuring that safety was maintained for everybody living in this block. Now Block Managing Agents may already know the answer and some surely will, but my guess is there are as many as would not recognise this potential problem and would not be able to supply the correct answer.

Resulting in Additional Income.

So look at the possibilities, diversification is good in any business and I believe by encouraging involvement in this sector, allowing our Offices to earn additional income and spreading the earning potential in a field which sits so well with our industry, we are adding another worthy string to our bows.

21Sep 2010

Franchise News: Franchise Opportunities.

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By Steve Roulstone

 

It is that time of the year again and the National Franchise Exhibition at the NEC is due on Friday October the 1st and Saturday October the 2nd. There are other Franchise exhibitions at differing venues throughout the year, but you just know from the increased level of enquiry, that it is this exhibition which really gets the public thinking about the Franchise Opportunities on offer.

What to look for.

I visited the show in 1999 and went with a completely open mind about what I would find, but wanted to come away with ideas that I could then review and research. Not just about individual Companies but also about the different trades available through Franchising.

What not to do.

I now sell my own Company at the show, but represented Castle Estates as a franchisee through the years and along the way, I have had many conversations that differed in length and approach and spoken to dozens of people at the show. But what needs to be appreciated, is that nobody actually decides on that day and I believe that it is wrong to try to sell the actual Franchise, rather we should just be letting people know we exist and in what market.

So look for the Franchise Opportunity.

What happens when visitors get back home is far more important than what happens at the show. When the literature is read, or when somebody follows up on that brief introduction to ask about more information. Because it is these reactions and others like them, that will have more impact than anything that actually happens at the NEC. It is based on these reactions that people will see the opportunity and through them, have a realistic chance of actually becoming a Franchisee themselves.

Experienced advice.

This is not just my mantra as it has been part of the science of Franchising that I have learnt through the training I have undergone since becoming Franchisor. I think it was fortunate for me that it suited the way I went about the process, but it is worth remembering, that most visitors would actually prefer not to be hounded anyway. I call that a win win!

12Aug 2010

Property Landlord advice: Problem getting your rent?

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By Samantha Knight

It is often the case that when a tenant decides not to pay their rent, the creative side of their personality can go into overdrive and what they believe to be a valid unique excuse, is just a story we as agents and landlords have heard oh so many times before.

 And today’s excuse is!

 1)    Banking Error

2)    A death in the family

3)    An illness or accident resulting in hospital treatment

 My advice is not to be afraid to challenge the reason you are given or suggest ways of helping to resolve the situation, there will be occasions where the reason is genuine, but it is only by speaking with your Tenant and through your  experience, that you will be in a position to understand what the real reason for the non-payment is!

 Remember, your tenant has signed a contract which they must honour and excuses do not give them a reason for not making that payment, much the same way as there is no excuse for you as a landlord not to deliver on your repairing obligations.

 But be careful how you proceed.

 But whilst it is the correct procedure to take a tough line on arrears, you have to be careful that you do not cross that fine line between tough arrears action and harassment.  Be sure not to leave yourself open to any such claim, as the courts take a dim view on harassment claims which could be considered as refusing to leave the property when visiting, changing the locks when the tenant is not home, continually visiting or even watching the property and of course abusive communication and physical violence – this list is not exhaustive.

 So can we help you?

 So if you do think your Tenant is not being truthful in what you are being told, how do you proceed? This is of course where Professional Letting Agents can help.

 At what cost?

 I would venture to say that our methods which have been built over years of experience are probably going to produce a scenario which will save you money against having no rent for several months whilst the problem drags on unresolved. So the advice is proceed with strength or turn to that Professional agent, who will probably not only provide a solution but also be the answer for the longer term as well!

06Aug 2010

Property Landlord Advice: The need for an Inventory

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By Mike Edwards

Because of my day to day involvement with Rental issues, there are always reminders about advice that can be given to Landlords and problems on a recent tenant find case has highlighted the need for a detailed inventory attached to a tenancy and emphasised how critical this document is.

The case in hand.

In this case and despite our best efforts in advising the Landlord not to be so short sighted, he instructed one of our offices that an inventory was not required. The tenancy involved four sharers in one property. In such tenancies an inventory is even more critical. There are now extensive problems, the deposit is protected in one of the Tenancy Deposit Protection (TDP) schemes and the question is how to retain the deposit for the damage etc.

The inevitable result.

The answer in the short term is that it cannot be retained and the tenants are highly likely to raise a dispute via the Scheme Administrator. All three schemes have been at pains to constantly emphasise the need for a quality inventory if a dispute comes before them. In fact one has gone as far as to say that without the inventory the landlord has no chance of claiming anything in terms of dilapidations and damage at the end of the tenancy – even if the tenant has stolen all the furniture from a fully furnished property!!

The cost of hindsight.

Money is probably the reason this Landlord did not want an inventory and if so then in my opinion it is folly of the highest order. Many agents include the cost of an in-house inventory in their initial Landlord fee, and those that do not will do so at an extra cost which is normally a reasonable amount.

Best advice.

In simple terms no inventory means a Landlord will struggle to make any claim against a tenant when dilapidation is an issue. Damage or missing items can be impossible to prove without not only a list, but a proper accountable system of inventory that will stand to account when challenged. As Letting Agents, we are charged to give best advice to our Landlords at all times and at all times our best advice is to ensure a robust and well prepared inventory always accompanies your Tenancy paperwork.

03Aug 2010

Property Landlord Advice: The Best Letting Agent in the world.

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By Steve Roulstone

 Property Letting has come of age in the last ten years, certainly when you consider the amount of legislation which has been introduced, from the Commonhold and Leasehold reform act of 2002, through the Housing Act of 2004 and the implications on legislation for Houses of Multiple Occupation, Tenancy Deposit Scheme, Housing Health and Safety ratings system and The Home Information Pack to name a few.

 Landlords first and foremost.

But none of this has changed what we set out to do as Letting Agents. Namely, Rent a property! But not just that, as agent of the Landlord, we look at renting property with our duty of responsibility to the Landlord, correctly, uppermost in our actions.

 Agreement from Castle Estates

Residential Lettings now requires a level of professionalism never before seen in a property agent and at Castle Estates we believe that it is right and proper that the bar has been lifted and we all seek to give increased levels of service to match what Landlords rightly seek in today’s competitive market.

 Our aim is the same.

Whether a stand alone Lettings Agent, or part of a group of National Letting Agencies Landlords expect us to both be aware, and able to advice not only on legislative changes, but also on issues surrounding rulings made as the legislation finds it way in to the courts and ‘Test Cases’ reach completion.

 Make the move together.

So at Castle Estates we promote the notion that when Letting Agency is referred to as an industry, that people see more and more that we are both professional in knowledge and outlook. So I look forward to the day that all Property Agents are striving for the title of the Best Letting Agent in the world.

30Jul 2010

Property Landlord Advice: Off Plan Purchasing – Is now the right time?

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 By Samantha Knight

A bit of a dilemma?

As somebody who now runs a Company offering both Property Management and Consultancy services, I have been heavily involved in discussions with Landlords about the manner and timing for making a purchase and in todAys climate the question of when rather than if is becoming more relevent. Timing is never an easy to decision, but in a market whereby prices are gradually creeping back up, if you select the right area, buying ‘off plan’ right now could well be the best choice you ever made.

Lets keep it simple. 

Choose your property from the site plan with the added benefit in most cases of having input in the finish of tiles, flooring, kitchen units and layouts.  Secure your price now and pay only that fixed price when the property is built and ready for hand over.  Get in early enough on a development and you may well find yourself buying a property that upon completion has £1000’s of equity already in it.  Who could ask for a better deal than that?!

A long term property investment

 The risk will always be will the market rise or wont it?, but inevitably it will whether you make your £1000’s on completion now or in the years to come.  Finding new build sites may be the hard part, but with reports from the construction industry that development is back on the rise – it’s got to be worth a look.

 Seek advise from your letting agent on where best to buy to meet the current demand of the rental market- a national agent will always be able to offer the best unbias advice on the current hot spot locations across the UK.

 

 

30Jul 2010

Landlord Rights: The Power of Ground 1 in an Assured Tenancy

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By Mike Edwards

The Problem

There is a serious misunderstanding in some local authority/housing association housing departments when tenants approach them for advice if have been served a section 8 notice not for arrears possession under Ground 1.

This would usually happen on full Assured which are of course less common than Assured Shorthold but which carry the same mandatory possession rights for Landlords. Provided of course the legal paperwork is correct!!

The Misunderstanding

The problem understandably is that the section 21 notice used to terminate an Assured Shorthold on mandatory grounds is far more commonly used and recognised. But a section 8 notice using mandatory Ground 1 (previous or future occupancy by Landlord or spouse) is equally as powerful and also compels a Judge to grant a Possession Order.

This misinformation and confusion is happening a little more frequently as more Landlords quite legitimately use ATs to avoid the rigours of the TDP regime and the uncertain outcome of dispute resolution by scheme adjudicators. If difficulty is encountered take the following steps:-

The Solution

1.         If a section 8 notice is issued to a tenant draw their attention to the two sets of bullet point
             notes. The first in the group foot of page 1 make it clear that if ground 1 is quoted in section 3
            of the notice then it is a mandatory ground and the Judge must grant an order.

2.         The first bullet point then on page 2 immediately under the date in section 5 states how much
            notice is needed – again for ground 1 it is 2 months (as with a section 21 notice)

3.         In reality there is no difference between a s8 ground 1 notice and a s21 notice. Both are
            mandatory and provided the legal paperwork is in order the Judge MUST grant an Order (as
            stated in the notices)

Many local authorities, housing associations and even some solicitors who are not Landlord and Tenant law specialist misunderstand the mandatory power of a Ground 1 section 8 notice. So it is always good advice to use a solicitor who is either recommended or advertises as a specialist in this field. One would hope this would avoid the problem, or of course you could always use Professional Management!