Tag Archives: Property Rentals

14Jun 2013

Letting News: Rent Regulations Could be The Future

⋅ Leave a Comment

By Craig Smith

5 Higher Rents 140613

Members of the London Assembly are calling on Boris Johnson to introduce tougher regulations for Landlords in the private rented sector in London.

We’ve already said ourselves that further regulation of Landlords and agents would be a good thing. If every Landlord or agent had to be registered under a specific scheme it would mean that they would have to agree to certain rules. If these were to be breached they could end up out of pocket or struck off from the register, depending on exactly how the scheme would work. This might sound like harsh punishments but it would help to reduce the amount of improperly trained agents making a mess of things!

There is currently no statutory regulation of lettings agents, only voluntary schemes. This means that anyone could set up their own letting agency but might not have the proper training & know-how to run it properly. I believe that the scheme would need to be fair & properly thought through if introduced by the government. We’ve seen so many times the government has back-tracked on certain things but this needs to be fair, clear & concise in order for it to work effectively.

The assembly also calls for tougher rules on rentals to stop rent amounts from reaching unaffordable amounts. Their figures show that the average rent amount in Londonincreased by around 9% last year which is a large amount given the already higher costs in the capital. Of course, London is generally more expensive as it attracts higher earners and is a much busier environment than smaller towns and villages but if the reforms do come in it could have a knock-on effect for the rest of the country.

Schemes such as this are often trialled in certain areas, a bit like the congestion charges, then spread to other areas later on. It would be interesting to see how this would work and the effect it would have on Landlords.

The publication also states that more should be done to help homeless households. Many Landlords offer a 6 or 12 month tenancy to begin with so that if any issues should arise then neither party is tied in for a longer period of time. It suggests that homeless households should be given 24 month tenancies if they are placed in a privately rented home. This might sound like helping the needy but lets not forget that the Landlord could end up suffering here too! There is always a reason for a family being left homeless, it could be due to the loss of their current rental property or having their home repossessed but if they don’t look after their new property in the correct manner, the Landlord could be stuck with a bad tenant for 2 years.

There are still many items up for discussion surrounding all of this but it will be interesting to see how all of this unfolds. Could this prove to be just the thing that the industry needs or will it be endless red tape for all involved?

22Dec 2012

Letting News: Tenant Information Packs Becoming Compulsory in Scotland

⋅ Leave a Comment

By Craig Smith

As our office is based in the Midlands (England) it isn’t very often that we have the need to report on a change in Scottish legislation. The 2 countries may be very similar but they don’t share all of the same laws and regulations when it comes to lettings.

New TIP Packs

Under the Private Rented Housing (Scotland) Act 2011 any Landlord inScotlandwill soon have to provide each new tenant with a Tenant Information Pack (TIP). This may be new toScotlandbut may I just point out that Castle Estates have been producing these packs for almost 10 years! It has changed over the years to cover the ever changing legislation and changed layout once or twice but has remained generally the same.

Why So Long?

The Scottish equivalent could be up to 30 pages long with various information about the property and its necessary legal requirements but our fits neatly enough into 5 pages and covers, we feel, all of the general information a tenant might need. It is our general practice to go through this with every tenant at the check in to ensure that they understand their rights & responsibilities before they sign any tenancy agreement.

Don’t get me wrong, I’m all for making sure that everyone knows exactly what is expected of them but being perfectly honest, I don’t know how many people actually take the time to read it during their tenancy or remember most of what it means. Which only begs the question, what is the point in having a compulsory version that is 6 times as long?!

Waste of Effort?

If the government stopped and thought realistically for a moment, they might share the same viewpoint. Maybe this will just be yet another stack of paper wasted and extra money down the drain for no reason?

The same has happened in relation to deposit protection (uh oh, here we go again with deposits!). We now need to ensure that the terms & conditions for the relevant deposit scheme are provided to each tenant at the start of their tenancy. This is just over 10 pages of information which seems to end up in the bottom of a drawer or at the back of a cabinet.

Good Idea or Bad?

In general, I do think it is a good idea to have certain information for tenants although some of it may just be overkill and could be found with 2 minutes searching on the internet. I guess we’ll have to see if this becomes law in England and Wales too and how well it goes in Scotland!

03Dec 2012

TDS Survey Reveals Landlords Thoughts on Letting

⋅ Leave a Comment

By Craig Smith

We always find it interesting to hear a Landlords feedback, whether it relates solely to their own property or about lettings in general. This week, The Dispute Service have released the results of a survey asking Landlords how they feel about their tenancies.

Worried by Tenants

One of the questions asked in the survey was what concerned Landlords the most when it came to letting, giving a choice of answers. The most commonly chosen answer was the quality of the tenants who were on the agreement which isn’t too surprising given some of the scare stories going round. Certainly having the tenants referenced prior to them moving in can help to determine their credibility but won’t guarantee whether they will continue to be as good as their references suggest.

One instance we have had in the past is the guarantor of a prospective tenant giving a glowing reference, only to come back and tell the horrible truth when the tenants stopped paying the rent!

Rent Arrears

Following on quite nicely from the above, the second biggest concern in this question was rent arrears. The majority of Landlords have mortgages to cover and if not still have to insure the building and have to provide for the upkeep of their properties. Arrears can be distressing even for the biggest of Landlords as it can be a lengthy process to get any non-payers to leave, not to mention the additional costs!

New Regulations

The third most commonly chosen answer to what concerns Landlords the most was complying with regulations. Over the last 5 or 6 years or so the industry has seen a lot of changes in legislation including the registration of certain deposits (there I go talking about deposits again!) and new energy regulations.

There are certain things that a lot of Landlords forget or don’t know about such as ensuring there is a handrail on the stairs or ensuring that a chimney is swept & safe to use. This can highlight the importance of speaking with a local agent who can advise a Landlord of the necessary rules & regulations in order to prevent any damages or injury to tenants and their belongings.

Happy Landlords

The survey included just over 200 Landlords and just over 80% confirmed they were satisfied with the quality of their tenants. Surely this can only be good news?! There are always going to be some bad experiences with the sheer number of lettings properties out there at the moment but this shows that the majority of experiences are good.

This is again good news for those who are referred to as reluctant Landlords i.e. an inherited property. Hopefully this should keep a little confidence in the industry and keep people renting for the future years!

16Aug 2012

Current Property news: Rents catching up with property prices.

⋅ 1 Comment

By Steve Roulstone

A report by the RICS in to rents paid dated July 2012 show an increase of 4.3% for the past year in rent levels across the Country. This confirms that the Industry is still healthy and demand continues to be strong. At the same time, house prices are predicted to start to rise again as the Country comes out of recession. This is probably not too much of a surprise given the drop in prices seen over the last few years, but does point to the current trends being a good time to buy property and develop portfolios as with continuing demand and climbing rents the investment, currently forecast at producing over a 5% return, should continue to rise.

Last Ten Years.

However, before there is too much clamour about greedy Landlords and long suffering Tenants some facts behind the figures should be given, for what happens year on year should, I feel, be balanced over a longer period of time, so that a more realistic figure can be arrived at. If we look at data for the last ten years the picture between Rents and House prices show quite different results.

Playing catch up.

In 2000 at a time when the rental market was less than 10% of UK housing stock, rent for an average 3 bed property in Stafford was £400.00 This is now £575.00 An average house in the UK cost £101500 and at present that price is £161777. Compare the two sets of figures and a quite different picture appears.

Renting still good value.

Because house prices rose so heavily (Ironically largely on the back of a rush for Buy to Let mortgages!) that average rent in 2000 was just under 4% of the house value. Now it is just over 3.5% The gap is still some £60.00 per month less than is currently being achieved and just shows how far behind house prices when considered as a percentage return, rental prices had fallen.

Predictions correct.

What this also confirms is that it is in line with the market levelling out for rents to continue to increase, and they are predicted to do so at 2% higher than house prices will rise. It is also of note that the period before 2000 was very stable and rents were indeed calculated against the value of the property. This obviously reflected the local market rather than national averages, but the comparison still stands up and I am more than aware that the rent locally is far behind that achievable in other Towns and Cities.                                                                                                                             

Statistics and Statistics!                                                                                                                                                        

Once again what appears on the face to be unreasonable increases can be explained when looked at over a wider period of time or against something which gives a broader context. I am also fully aware that others may be able to give a differing picture using their own parameters. So I will just go back to the more reliable method mentioned above, common when I started Castle Estates.

£400 rent against a house valued at £100000 gave £4800 per year, a return of 4.8%

£570 rent now against the same house valued at £159500 gives £6840 per year, a return of 4.2%

Therefore rents still have some way to go to seek parity with prices in 2000.

17Nov 2011

Tenant advice: Notice period and final days.

⋅ Leave a Comment

By Steve Roulstone

It is a real advantage to be able to comment on situations which arise through the daily activity in our office as letting Agents, because it means that the Blogs are always relevant. This week is no different. Once again a theme which crops up on a regular basis has been discussed and I felt would make a good subject to advice Tenants about what to expect at the end of a Tenancy.

A full month’s rent?

It is rare for a Tenant to pay a full month’s rent for both the first month or the last month of their Tenancy and this would only happen, if for example, the Tenancy started on the 1st day of the month and ended on the last day of the month! There are two ways of dealing with rent payments and at Castle Estates Stafford, we opted for the system of taking a payment for the first month for the days remaining in that month and from then on rent is due on the 1st of the month for each calendar month in full. The other is to always take a full month’s rent due on the date that the Tenant moves in and the due date remains as that day throughout the Tenancy.

Matter of choice.

The problems are present for both systems, for example having the date a Tenant moves in as a due date, causes problems for any move after the 28th, because of February and months that only have 30 days. With our system, it is explaining why they do not just pay for a full month on the day the Tenancy commences. But as it is our job to look after Landlords first and foremost, we find that arrears are easier to control if all rents are due on the same day, then all arrears are of the same length and letters are all sent at the same time.

Monies due at the end of Tenancy.

The issue that does arrive though is not when Tenants leave at the end of a month, in line with the required length of notice, but when they leave at any other day in the month and for some reason feel that for example, if they leave on the same date they move in, the rent paid at the beginning of the Tenancy covers the extra days – is does not!

Best solution.

Has got to be good communications! It is important that Agents make it clear to Tenants what is due when and why, and of course systems in place to cover this ensure all Tenancies are treated the same. With the Tenants Deposit Scheme ensuring both parties to a deposit are happy prior to any return, it is doubly important to get this right. Bad communication in my experience leads to people digging their heels in and unless we as Agents can show clear instruction and reasoning, our customers, our Landlords, may lose out.

Proper dues.

Of course it is only what is legally due that Agents will collect and the best solution when all else fails, is to add up in total the number of days associated with any part months (only ever the first and last months) and with a daily rate to hand, calculate the rent due for both periods. Of course the daily rate has to be in line with the manner in which the courts approve daily rates to be calculated which should be confirmed as well, hopefully then as is the case with most Tenants the calculation is both understood and accepted. Unlike the Tenancy that ended badly because the Tenant expected a full month’s rent to be returned as well as the deposit, because he paid his rent in advance, even though his last payment was at the start of the month and he left on the last day!

05Feb 2011

Current Property news: Property reports show opinion not facts!

⋅ Leave a Comment

By Steve Roulstone

I have stated on several occasions, and will continue to do so, that the reporting of issues relating to housing are constantly being reported as negative views rather than in the true light of what is actually happening. Nobody is denying that the property market is difficult at the moment (except of course for Letting agents as we have continued to show growth year on year as owners look to our market as the solution to their inability to find a buyer) but several reports all taken from one issue of a property magazine (who will remain nameless!) all have a different reflection of what I actually see happening ‘on the ground’ at the moment.

Firstly, A lifetime of renting.

The initial report states that young people do not want to rent for life, well surprise surprise! I doubt you will get many of the same people stating in a survey that they do not want to work either for the same employer or in the same industry all of their lives, but many will! I find this a report about nothing, the point of which misses me completely. The facts are that more and more people are renting and I can clearly state from my experience and in my opinion, that more and more of them are young professionals, who are just starting out in their first job. But that is all it is, my opinion and this report is nothing more than somebody else’s opinion derived from a survey, which in my opinion is worthless!

New home sells stalling, honestly?

One of the many roles carried out by our organisation is Block Management, looking after sites which nearly always nowadays, have a Management Company to address communal areas and facilities. One of these sites is in the Midlands, near Halesowen and as a new build development I can report is selling well. I had a meeting yesterday with a colleague from Milton Keynes. Because of a similar connection to local builders, we were discussing how well new build was selling in Milton Keynes. So the report looks as though it should be re-titled ‘New homes stall in London’ because clearly that is the content of the report and the Editor should remember that there is life outside of London! But some of the blame is placed on Mortgage supply

Mortgage approvals still falling.

Two points here, if the report above is blamed on mortgage approvals falling and the subject is worthy of a report in its own right, why is the BBC reporting that Mortgage restrictions are falling and secondly did anybody notice the weather last month? Again, in my opinion, this is reporting a negative because the press think bad news sells. It probably does; apparently, we are more liable to read something that scares us rather than something that will make us smile, so headlines reflect this fact. But it seems to me the report would have been more factual to have concluded that Mortgage requirements are easing because of a fall in approvals and that the future could be easier because of this, rather than just concentrating on negative views, after all, the only true reflection of these figures can be made once we see what has happened in January as the backlog that developed has worked its way through.

Assumptions.

For anybody, press or otherwise, to quote definitive statements as news, they should be able to back it up with facts and trends that stand up and only when the news that is reported is factual in this way, will we see a true picture of the subject of the report (for housing is not alone in Having facts taken out of context) and as I state in what I write, this is my opinion (that is what Blog writing is all about) and I do not deny that housing sales are still slow, but it is also my opinion that they will stay that way longer if the only way they are reported about is in a negative fashion.

24Nov 2010

Rental Issues: Tenants Protected against defaulting Borrowers

⋅ Leave a Comment

By Mike Edwards

Tenants will no longer be at the same risk of losing their home with little warning if their landlord defaults on their mortgage, because new rules have come into force giving judges the power to delay repossessions in order to give tenants time to find a new home.

Prior to the change           

People could previously be evicted from rental properties relatively quickly if their landlord defaulted on the mortgage and had failed to inform their lender that they were renting out the property. In most cases tenants were totally unaware of the situation until a Court Summons was received or bailiffs arrived to enforce the Court

New Legislation

Under new rules tenants with a valid tenancy will be able to attend Court possession hearings for the first time. Judges will be able to take their situation into account and delay repossession by up to two months though but even now if a lender is seeking possession under Ground 2 it is 2 months notice and only then can proceedings commence. However the tenant may be unaware that proceedings have commenced.       

Lenders must also ensure tenants know that their home is going to be repossessed by sending a letter to the property giving them notice of a court hearing date. Again however having said that lenders have been under such an obligation since the Civil Procedure Rules were changed many years ago requiring lenders to write to the property addressing the letter to The Occupier.

This letter should be sent at the earliest possible opportunity when it becomes apparent that a lender is likely to institute proceedings against a borrower but most lenders have consistently failed to do so only advising of the proceedings very shortly before they were listed or even after the event thus adding to the problems.

The end Result

Once a repossession order has been granted, the lender must without fail send a second letter to the property telling tenants they have a warrant for its possession.
The tenant can then request a delay of up to two months if they have not previously had the opportunity to do so and this is the big change introduced by the new rules.

10Nov 2010

Franchise News: Property Letting Agents set to boom.

⋅ Leave a Comment

By Steve Roulstone

And that is not just my opinion, indeed it is not just the evidence of my own Franchise office in Stafford, but more and more people are agreeing that the demand for rental property is growing quarter on quarter. From my standpoint as a Franchisor this is of course good news, especially for our network of offices, but also because of the large number of entrepreneurs looking to become Letting Agents, that we are currently interviewing as a result of the National Franchise Exhibition in October.

Buy to Let Mortgages.

But of course this is not the whole picture, because the large number of Tenants need a large number of houses to live in and at the moment, whilst I am confident there are a large number of Landlords looking for the opportunity to buy, the vehicle they require, is not yet readily available. Those who are closest to the situation, will be aware that some Building Societies appear to be ‘testing the water’ with offers that are only available for a short space of time. The reasons for this could be many, but I would surmise that two very good reasons are initially to see what interest such offers attract and secondly to see what reaction there is from the industry and regulatory bodies to any easing of cash availability in the mortgage market.

Market forces will dictate.

Certainly, one offer drew such interest, that it became impossible for the brokers to action all requests in time, before the offer was withdrawn. This of course confirms that where there is a demand, the market will provide. The natural outcome, as our offices confirm, is that Landlords are keen to buy, but only when the market shows confidence, the available deals are consistent (Nobody wants to buy when better offers are just around the corner!) and property prices become stable.

Reporting good news.

So hopefully and sometimes I have my doubts, the media will start to print, confirm or just talk about the positive things happening in the rental sector and stop making headlines out of property prices, especially  when historically they have always shown a decline at this time of year! In October, even when one agency confirmed an increase month on month, it did not achieve the status of the report from a differing agency the week before that house prices had fallen ‘Yet again’ as the report gleefully confirmed!

 UK Letting Agents will prosper.

But the facts are that during all of this time of property uncertainty, the Rental sector has prospered and letting Agents in the UK are now set for another increase in business as the economy recovers and the increase in rental property continues across the UK. I believe that trading over the next decade could be as good as it was at the beginning of the last decade as we enter a period of sustained growth. This is of course, all good news for those looking to join our ranks as franchised Professional letting Agents!

24Aug 2010

Property Landlord advice: The art of Property Management for Landlords.

⋅ 3 Comments

By Steve Roulstone

Why manage yourself?

As a professional Letting agent, we are often asked to find Tenants for Landlords who are going to manage the property themselves. This is because they feel that once the initial service has been provided, which is requested because of our ability to both provide professional referencing as well as ensure that the process and agreements are correct in format and content, they will be capable of looking after the property after the Tenant has moved in.

What happens next?

What happens after we have completed our job and handed the Tenant contact details for the Landlord is the key to self Management, because if the Tenant is under a Full Management service, they will then continue to receive contact and information whilst they settle in, including more detailed information and utility confirmation and usually continued contact as the final details are completed for their tenure. At this stage the Tenant is getting to know how the Management works and getting to know the people involved. I actually firmly believe that the smaller agency is very good at this, because they offer the same contact no matter what the issue.

More contact = Happy Tenant

We know from experience that by ensuring the Tenants are settled in, knowledgeable about how the Tenancy is going to work and receiving assistance in dealing with utilities, keys, maintenance issues (which always seem to come at the start of most Tenancies) and the legal side of the Tenancy including setting up rental payments, they feel welcome and comfortable with the situation. Rather than the Agent becoming a nuisance to them, we prove that we are going to be able to make living at the property a more pleasurable time in their lives.

Less contact = Abandoned Tenant

But if they do not have anybody who is prepared to assist in sorting these issues out, the opposite happens. They will probably not let you know that the door to one of the kitchen cupboards has become loose, that post has arrived for the Landlord, that they have a new Mobile number etc etc! Instead, what happens is unless as a self Management Landlord you keep regular contact with your Tenant, they feel that you have abandoned them in the property.

The consequences.

And this is important, as many Landlords find to their cost when they either need to visit the property or even worse, at the end of the Tenancy. A Tenant who is left to feel that the Landlord is happy to take the rent, but not to ensure they are comfortable will possibly stop looking after the property and advising of any issues. I would state that it is a dangerous scenario and not wanted by any Landlord. If you are a Landlord who wants to manage the property yourself, always make sure that you keep regular contact and carry out regular visits to the property. If you do not want to do this, use your Letting Agent to manage the property on your behalf!

30Jun 2010

Property Landlord Advice: The argument for Insurance.

⋅ 7 Comments

By Steve Roulstone

Landlords Legal Expenses and Rent Guarantee (LERG)Insurance is a vehicle that has been available for many years to protect Landlords from loss of rent and the cost of taking action against Tenants not fulfilling their obligations. The knowledge their income is protected has to be a serious consideration for all Landlords.

Only one way do it – the right way.

As both a Landlord and a professional Letting Agent holding LERG cover is a position I always recommend. Almost all LERG policies as a prime benefit of full management carry professional referencing as a prerequisite to being able to take the insurance so further credence is given to the Tenant wishing to rent your property when a pass is achieved. In fact, it could be said Landlords without LERG are taking unnecessary risks if, when presented with the option, the Insurance is not taken out.

Security in the System.

Yet amazingly, I have this week been advised of a situation where an agent acting on behalf of a Landlord, instead of offering referencing services to their client, simply requested ‘Referees’ from the prospective Tenant and then asked for a Guarantor, presumably because they did not like the look of the Tenant!

Renting your House or Home

I wish here to give as much credence to the ‘Agent’ as possible, but as a Landlord, I would not be happy committing the security of my property to somebody who decided themselves if the person in front of them was a good Tenant or not. We all think we can take such decisions because we have the necessary experience and after the years I have spent in this industry I would consider myself to be a good judge, but I would never put myself in the position of taking a risk with somebody else’s investment! This is simply not a good idea where referencing is concerned.

Follow the professional recommendation

If industry bodies such as ARLA recommend referencing and or simple credit checks to ensure security through agents, then surely all agents should make such arrangements to protect their clients. Sounds like I’m beating the same old drum – you bet I am!!