26Mar 2012

Avoiding Deposit Disputes: A Good Inventory is Key!

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By Craig Smith

When a tenancy comes to an end, there will often be some work needed to return the property to its original condition. Although it is not always needed, the most common costs from a deposit include cleaning, gardening and rent arrears.

Start the Tenancy Properly

It is not always necessary, best practice is to have a written tenancy agreement in place for any tenancy. Along with the tenancy agreement, to avoid any disputes at the end of the tenancy, should be an inventory. A written inventory should always state any fixtures and fittings but a good inventory will also state its condition.

You may think that an unfurnished property may not need an inventory, a term we hear quite often is ‘… but there’s nothing in there.’ Fair enough, there may be no furniture such as sofas, beds and tables but don’t forget that walls are still wallpapered/painted, carpets should be left clean and kitchens/bathrooms left in good condition.

Keep the Inventory up to Date

A number of changes can be made at a property, particularly during longer tenancies, so the inventory should be amended to reflect this. This is particularly important if a tenant has asked permission to redecorate or replace items in the property along with any documentation to support any permissions granted. For example, if the tenant wanted to repaint a room and the Landlord agreed subject to the property being returned to its original colour upon the tenant vacating.

A Good Move Out Report

Not only should an inventory be taken at the start of the tenancy and agreed by all parties, a good move out report should be taken in order for any comparisons to be made from start to end of tenancy. If an agreement cannot be reached regarding any costs, the dispute would either go to dispute resolution (if registered with a deposit scheme) or even go to court. This is where a good inventory and move out report will be crucial to any decision made by the adjudicating team.

Protect Yourselves

An inventory will not just protect the Landlord for any damages but also the tenant to prevent any unfair charges at the end of a tenancy. Don’t forget that the inventory should always state the condition of items at the property and should contain as much description as possible to be relied upon. 

21Mar 2012

WHY SHOULD A LANDLORD USE AN AGENT – Part 1

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By Mike Edwards

There are lots of them and here are just some the rest follow in Part 2.

OK so times is ’ard and Landlords think letting properties is like shelling peas and they can do just as well. Consider these reasons why if you are a Landlord you should  use an agent. And if you are an agent reading this, then make sure you push these benefits to win yourself some business!!

1.         Depending who you pick they are the professionals

Select the right agent i.e. not just on price, and you have a pro on your team. OK so 40% of agents are not even registered with the Property Ombudsman because it is a voluntary scheme unless your agent belongs to ARLA, RICS, NAEA or NALS in which case membership is compulsory for them. And choosing an agent that is a member of a regulatory body doesn’t guarantee all will be sweetness and light – but you’ll have a better chance that it is.

2.         Using an agent gives you someone to sue!!

May seem a mercenary reason but if you use someone claiming to be a professional, or that it was reasonable for you to consider they were professionals, if it all goes wrong you at least have someone else to blame – and sue. A Court will expect an allegedly professional agent to set and demonstrate higher standards – might be useful if you do end up with the tenant from hell.

3.         They know how best to present a property and the best market for it

Doubtless your property is the best in the street or the block, and doubtless you have high personal standards. But there is nothing like objectivity to really discover just how ready for letting your property is – a professional agent knows what your property is up against locally and the standards your property needs to meet to compete in that market, and will advise you what needs doing to maximise your rental and speed of letting.

4.         They can let your property quicker than you can

Or they almost certainly can and if any good they should do. At times of near insatiable demand such as we have now any property that is presented in a half decent location and condition, and at the right price, should let within at most a month of going on the market and really should be spoken for by a tenant being referenced within 2 weeks or so.

Agents have access to massive marketing power and will use property portals such as Rightmove, and will probably have their own website too. Some agents also advertise via social media such as twitter and facebook. Note to mention their shop front in the high street where people looking for accommodation can browse the professionally taken photographs.

The only way a Landlord lets privately themselves quicker than an agent is usually if they have simply taken the first prospective tenant that came along.

5.         They will make sure you stay on the right side of the Law

Your professional agent will know all the legal requirements and will be able to advise you on everything from the right tenancy agreement that you need to making sure you have a gas safety record before the tenancy starts.

Life is getting more complicated and in April there will be revised rules and regulations relating to Energy Performance Certificates (EPCs) and even more crucially, tenants deposits. If you are not an experienced landlord you will need professional help. 

20Mar 2012

Lettings News: Are Landlords Fully Aware of Their Responsibilities?

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By Craig Smith

There are many reasons why someone may want to let out their home. A lot of home owners at the moment are struggling to sell their property but still need to move on with their lives, perhaps a job offer in a different part of the country or moving abroad. Putting a tenant into the property can keep the mortgage paid and the house looked after whilst the Landlord is away.

Basic Health & Safety

A lot of these Landlords can come into this situation knowing nothing at all about renting a property and it is our job to keep them on the right path. The Landlord would be responsible for ensuring that the property is safe, for example ensuring that any gas appliances are tested annually and that anything that the tenants are left with a safe environment to live in. Don’t forget that Landlords can (and have been) jailed for failing to ensure that their rental property is safe!

Then there are the less well known items that can catch out unsuspecting homeowners, such as ensuring that stairways are safe. One property that we looked after for a Landlord had no banister rail along the stairway and although it did look great, something did need to be done before a tenant moved in to prevent any accidents occurring. A simple banister was fitted in order for the stairs to be deemed safer, the Landlord would much rather have a small expense at the start of the tenancy than a claim for damages from an injured tenant!

General Repairs

Repairs also need to be covered by the Landlord throughout the tenancy, not just to the building itself but also to any items that have been left for use by the tenant. Of course, if a property has been let furnished and a tenants pet has ripped the cover on a sofa then the tenant would be liable for the damage. But it is the Landlord who should cover any wear & tear such as a cooker breaking down or rotten window frames.

Who Can Carry Out the Repairs?

For general repairs such as gardening or decorating a lot of Landlords prefer to do this themselves which will help to reduce any costs but for more specialist items such as electrics, qualified contractors need to be used. Some of the most well known include using a GasSafe registered engineer for works to gas appliances and most electrical works that are carried out must now be certified under Part P building regulations. 

15Mar 2012

The Localism Act: Changes on the Horizon for Assured Shorthold Tenancies

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By Craig Smith

Oh no! Not another post about deposits! Around 12 months ago we posted the importance of dealing with deposits correctly. In December of last year we wrote about a court ruling regarding a deposit for an Assured Shorthold Tenancy that had not been protected by the Landlord. Since then a number of changes have been announced that change the way in which deposits should be dealt with and these changes come in to force on 6th April 2012.

Prescribed Information for AST’s

Under the ‘old rules’, Landlords would have 14 days in which to serve the Prescribed Information to the tenant. This is the document that gives the tenant certain information about where the deposit is held and what happens to it. With the changes that are due to come in to force in April, Landlords will now have 30 days to protect the deposit and issue the Prescribed Information.

But this doesn’t mean relaxed rules for Landlords as if the deposit has not been protected within those 30 days, the tenant can take the Landlord to court to claim this back. Neither can the Landlord wriggle out of any penalties by protecting the deposit at that time as this will now not be accepted as sufficient protection for the deposit. The fines for non protection of the deposit used to be a mandatory 3x the amount of the deposit, plus the original deposit to be paid back to the tenant. Now it can be any amount between that of the original deposit and a maximum of 3x the deposit amount.

Existing Tenancies to be Protected

The new rules also require deposits for any existing AST’s to be registered within 30 days from 6th April 2012. This is regardless of whether the tenancy began before or after the date that Tenancy Deposit Protection came into force (6th April 2007) but of course any AST’s that started, or renewed, from that date should already be registered!

The reason for this is that the new legislation states that any new tenancy should be registered and the wording in the Housing Act 1988 means that any tenancy that goes to a periodic status is classed as a new tenancy. 

Tenancies Not Under the Housing Act 1988

The legislation is still yet to reach other types of tenancy agreement, such as Company Let or Assured Tenancies. Of course, this may change in the future but we’ll cross that bridge if we come to it! Non-AST tenancy deposits may still be registered if all parties are in agreement but it is always best to check before registering. 

09Mar 2012

Current Rental News: Localism Act shakes up the paperwork for TDP Legislation.

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By Steve Roulstone

Well it would seem we have reached the ‘All of the votes are in’ stage of the Localism Act and the changes in Law and its effect on the Tenants Deposit Protection legislation . These changes are now imminent, I have written before about the impact as charges were first of all discussed and then debated for the work which this act now confirms need to be carried out for virtually all Assured Shorthold Tenancies in the UK. Yes that’s right, all agreements entered in to that have now passed the initial six months (or longer?) fixed term, now need to be checked.

Clarity.

To be fair, this change in the Law clarifies the initial legislation. It has also been described as a way of closing all the loopholes, but without doubt, you need to add the judgement in the Swrpere case of last summer to the effect on what now needs to be done.

1988 Housing Act.

All Assured Shorthold tenancies that have passed their initial fixed term become periodic tenancies.  The Act itself does state exactly this as Section 5 of the Housing Act 1988 reads ‘A new Tenancy arising at the end of the fixed term’. So although no new tenancy agreement is entered into, the Law states a periodic is a new tenancy and therefore the necessary steps under the TDP provisions – deposit protection and PIN service – must be completed. The deposit will already be protected of course, but action may still need to be taken in respect of the two insured schemes. But what really matters and especially in the light of the much focused comments in the Swrpere v Nice 2011 judgement, is the serving of another PIN form within 30 days of the tenancy going periodic from now on, or by 5th May for existing periodic tenancies. This has always been ignored before the Localism Act 2011 for two reasons. First it was overlooked simply because no new Agreement is signed.  Secondly under the original TDP legislation and Court decisions it was always possible to protect the deposit and serve the PIN late. But The Localism Act 2011 closes off all these escape routes – protect AND serve later than 30 days, either of them, and you have committed an offence with no escape.

Correct procedure.

The act becomes law on the 6th of April and allows all details to be corrected by the 5th of May. So action will need to be taken sooner rather than later. All of our Landlords and Tenants will be receiving letters confirming how we will deal with the corrected procedures next week, as we look to deal with the issue at the first possible opportunity. It is centred on the Prescribed Information that all Tenants complete at the commencement of an agreement (The PIN Form) and ensuring this, as well as the Terms and Conditions of the scheme the Deposit is registered with, are served again in the case of the PIN and have been served correctly in the case of the T&C’s.

Not stopped there!

For the first time, the legislation will also apply to ALL AST’s as it looks to ensure that ALL agreements even if they pre-date the TDP Legislation, will now have a protected deposit. This of course means ensuring Tenants who will have now occupied a property for at least five years will have to be considered, have the scheme explained and dealt with by May 5th this year. There is no doubt that should this not be done, then it will be an offence under the Localism Act punishable by fine. It also needs to be said, that I am aware of enquiries by the ‘No Win – No Fee’ Solicitors as to the implications and procedures – could this be the next wave of adverts?

Summary!

Not easy, but suffice to say a broad brush approach should be taken and all Tenancies should be reviewed without delay. The whole Industry will need to get this right, and that means many questions will be asked and an understanding of the new legislation and the procedural changes this introduces will be needed by all concerned. We are fortunate to be associated with Companies who evaluate and advise about the impact such matters bring with them, which I believe will not stop with this topic alone. A case of watch this space, as further parts of the Act are clarified over the next few days with what defines a deposit next on the agenda!    

 

06Mar 2012

Current Property News: ARLA give solid advice.

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By Steve Roulstone

It is good to see ARLA posting some advice for Landlords and Ian Potter in his latest release has done just that by providing his top ten list of’ what to do as a new Landlord’. It is a good article and reflects what we at Castle Estates have been stating for some time now, namely, take good advice!! Ian concentrates on several areas, most of which are similar to those I commented on as listed in my local paper, and as then, I would like to add a little more meat to the bone through this post, something that is of course difficult for Ian to do as a representative of our Professional body, rather than a ‘Letting Agent’ parse.

More property needed!

The background to the piece is again, the increasing opportunity that exists in the current market for the investment Landlord, with figures quoted of over half of those Agents questioned believing that demand is outstripping supply. I would have hoped the figure were more like three-quarters, but would concede that the market is rising after a quite Winter and that it should continue to do so until well after Easter, the traditional time to see the Market develop momentum for the year.

Research Research Research!

Ian has stated rightly so, that a new investor will need to look at what gives any one property an advantage over another, but I believe we can be more specific here. The investor may not know at present which are the better schools, where catchment areas start and finish and such basic matters as what DOES make a difference to Tenants when looking at property? This is of course where experience of an area comes in to play and not just as a Letting agent, but how long in this market. I do not wish to turn this into an Estate Agent Vrs Letting agent piece, but suffice to say, most Estate Agents have only just started renting property and I would say look to the longer established specialist before deciding who to speak with.

Present well and Know the market.

Ian is correct to point our areas where a property can stand or fall and in some cases is ignored by Landlords, that is the appearance against what else is available for the Tenants to choice from and an understanding when doing the calculations, of what actually happens between Tenants during void periods. Both of these matters reflect on the financial and are well lined together. We always advise all Landlords, especially new to buying property as an investment, to look at the income based on ten months occupancy (but would normally be able to supply eleven as our track record confirms!) and even if the property is good enough to market without delay, work out how long before decoration should be planned! Cost implications of both need to be built in to every financial plan and if you are unsure about condition of decoration, then it probably proves the property would benefit from work being carried out now!

 Insurance and Inventory.

I link these together because everybody knows that Insurance protects, but not everybody gets that an Inventory does as well, because the Inventory has become one of the most important documents when renting a property. Landlords and agents have to be able to prove any dilapidations at the end of the Tenancy and without an Inventory I fail to see how this can be done. One simple challenge from a Tenant for the Landlord to prove what condition the property was in at the start of the Tenancy and without an Inventory, the Landlord cannot comply!

And for the rest?

It is all great! The more the subject is looked at the more you will realise that there is a process, not always the same,  but one that will make sure the first time Landlord does not slip up at the first hurdle. The other point is that there will never be a shortage of people willing to spread their knowledge and all that any new Landlord needs to do is ask! All the Landlord has to do is ask the right person. That is why I believe in professional qualifications and vote for experience every time!

02Mar 2012

Current Property News: Spring Market difficult to call.

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By Steve Roulstone

So we arrive at the time when we start to think of the spring, when Tesco sell more fabric conditioner than any other time of the year, when we all confirm our first sighting of a spring lamb and when the property market looks towards an increase in business as people look to make that move after the winter (said with the full knowledge that next week we are getting winter weather again, at least temperature wise!)

Normal Pattern.

It is normally the case that the spring is a busy market for the rental market and while we have seen more activity since the last cold snap, the question that remains unanswered and will go a long way to proving if confidence in the economy is rising again, is will we see the expected rise in activity or not. Apart from a return to normal temperatures next week, if we do get another bout of winter weather, it will definitely slow movement down, because after viewing property in the dark, nobody wants to spend a day looking at houses with snow on the ground!

Job confidence.

No weather aside, it is the job market which will provide the ammunition as apart from natural movement around Landlords selling or wanting to choose bigger or smaller accommodation, it is people moving with work, which in the main is new posts being filled, that feeds the market and provides a base for any busy period. So the link between a good market, sales or lettings, is clearly linked to confidence in the economy overall.

Nobody knows.

The problem at the moment is nobody knows and whilst we have just gone through a quieter winter than normal, London, which is usually the barometer that the rest of the country follows, has maintained its movement and after a slow period, we usually get a natural climb purely because people catch up on the move they were going to make, but waited to see how matters panned out? (Mainly financial of course) So all the signs are there and not just in trends:

Mortgage matters.

There has also been a rise in all matters surrounding the Mortgage market, with increases in numbers and availability of specialist mortgages, as the ‘Buy to Let’ market is also showing signs of increasing again, which adds fuel to the fire that house prices have stopped declining. In fact stories centred on the mortgage market abound at present and I wonder how many are reporter led and how many are industry fed?

Budget.

And of course with an impending budget and whatever impact the markets take on the content, will undoubtedly play a major part of any increase in activity. For me, it is not so much what is stated, unless the chancellor has some hidden move to stimulate housing, because nowadays most of the changes are heralded well in advance, it is how the financial report on the current state of play of United Kingdom PLC is received that will have the major effect.

Forecast.

Well this is something that I do not normally do, but for what it is worth, I think that we will see slow movement until after the Budget and depending upon those figures and any adjustments made by the chancellor to reflect the performance, it will be after the budget before we see any major change (a kind of Housing Equinox if you will) and this will reflect just how confident the markets are in that performance and the chancellors views going forward, so I am afraid I am sitting on the fence, good confidence, good growth, poor confidence and we will see a steady market for probably the next six months.

28Feb 2012

Property Landlord advice: Who knows about Buy to Let?

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By Steve Roulstone

 

Buy to Let seems to be making a comeback, certainly as far as the press are concerned anyway, with several articles being published both at National level and at regional level. One such article in the local paper we advertise in,  The Newsletter in Stafford caught my eye this week and whilst in principal it is a good article, i gleaming issue did come to mind!

Ten Top Tips!

The article was giving what the writer called, his ten top tips when considering But to Let and I would have to agree with most of what was written, what I would take issue with is what was NOTR written. On two occasions in the article, it mentioned speaking to people who had experience in the field, such as others that the reader may already know who had invested in the property.

Who Knows Best?

It even stated that you can use Managing agents to look after your property although we would raise a charge for doing so! Excuse the Sinicism here, but I am yet to find an Estate Agent who would do this for free, or a Solicitor that would provide an agreement at no charge! Of course we would charge and in relation to both of the professions I have just highlighted, could assist in ensuring the purchase was done correctly, especially with so many properties being linked to on site Management Companies now and the agreement we would provide would be certainly as good as any solicitor, but nowhere near as expensive! Sounds different put like that doesn’t it!

Blindingly obvious who to speak to!

No what the article never suggested was the blindingly obvious place to get good experienced advise is from your Professional Letting agent. It is disappointing not to be recognised for the service we can provide and the knowledge we can pass on! I know from the people who have come to us and just how many we have assisted in buying property, that we do a good job here. Yes we do turn such contacts in to business and we do charge! But we have never forced anybody to hand over there keys or their money! Rather that as professionals in the field, the advice has been such that our Landlords have CHOSEN to use our services and the many happy Landlords we have are living proof, that the professional Agent should be top of the tree when considering top tips.

Professional.

Now regular readers of my blogs will know that I take every opportunity to blow the trumpet of professionalism. Well there is no difference on this occasion. The whole point here is to ensure it is the right Agent and that the advice is good advice. Whilst we continue to wait for the Government to bring in the legislation to make professionalism in our industry the norm, all you have to do to ensure you are dealing with a Company that conforms, is look for the (or ask for the) evidence of the professional bodies they belong to.

Check it out

At Castle Estates in Stafford, we are members of ARLA, (NFOPP) and belong to the ‘Safe Agent’ scheme, as well as being members of The Property Ombudsman. By checking and reviewing the organisations (and all this can be done before you even speak to anybody, because the logos, will all be clearly shown on an Agents web site) you can be sure you are speaking to a professional Agent  and therefore receiving good advice, now isn’t that what we all want? 

24Feb 2012

Duty of Care liabilities incurred when instructing a contractor

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By Mike Edwards

Late last year a letting agent was hit with £4,000 of fines and costs after a self-employed handyman was exposed to asbestos while carrying out work on a client’s property. The case highlighted health and safety legislation responsibilities for agents and indeed Landlords instructing self-employed contractors, in particular preparing risk assessments of properties and checking the competence of those who carry out maintenance jobs. All too often the concern is that the contractor is qualified and won’t blow up the property – but there is a Duty of Care at Common Law on those instructing contractors in terms of their safety.       
 

This would apply to obvious issues like asbestos and other suspect materials, but could also involve working at heights or even, as in a case only last month, safety  and appropriate equipment for working across car port and conservatory etc rooves. An elderly handyman fell through a carport roof and the agent was prosecuted by H&S Executive and were fined £76,000 because the incident involved a fatality.              

In last year’s case the handyman, who does not wish to be named, regularly carried out work on properties managed by agents in Cardiff.  In October 2011, the handyman was sent to a domestic property to fix a leaking porch roof. 
As he was removing a sheet of material from the underside panel of the damaged roof, he realised the insulation board contained asbestos. The sheet was broken during removal and the surrounding area was contaminated with asbestos debris. The Health and Safety Executive, prosecuting, told the Magistrates’ Court the removal of the panel and the sweeping up and bagging of the debris would have resulted in a significant release of asbestos fibres into the air. The handyman wore two dust masks while removing the board, but did not undergo any decontamination procedures and was not wearing a protective, disposable suit. The court heard the fibres could have contaminated his hair, skin and clothing and may also have been inhaled.        
 
The HSE investigation found the handyman had not been given any indication that asbestos was present in the property. Nor had he attended, as all contractors would be well advised to, a regionally based asbestos awareness training day. No risk assessment was carried out, and the agents were unable to demonstrate they had made any attempt to ensure he was competent to identify or work with asbestos. A licensed asbestos contractor was later called in to decontaminate the area. Meanwhile the agent  was found guilty of breaching Section 3(1) of the Health and Safety at Work Act 1974 and fined £1,500 with £2,500 costs.

 
HSE said: “There are specific rules and laws regarding hazardous substances like asbestos. If we do not enforce these laws, people’s health can be put at serious risk. Asbestos is a known carcinogen and should be treated with extreme caution. “Those in charge of maintenance and repair of buildings must ensure work is carried out by competent tradesmen, and that consideration is given to the presence of hazards such as asbestos.”

Agents should be aware of these risks, and act accordingly. You don’t need to be a building surveyor to understand that asbestos was widely used in old properties, and that it is extremely hazardous if disturbed. If you’re taking on a property that potentially has asbestos in the construction then you should carry out a risk assessment either when listing it, or at least prior to any work being carried out on it. Making yourself aware of the legislation and risks involved surrounding asbestos is a small price to pay for the sake of a contractor’s life.

22Feb 2012

Current Property News: New PIN documents for new Tenancy – the corrected story.

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By Steve Roulstone

Last week I posted a Blog about the changes to the way in which any Tenancy is viewed once it becomes a periodic agreement in relation to the Tenant Deposit Scheme and the various protection schemes that exist. I made a very simple mistake, because I did not take into account the initial legislation, which stipulated that the Tenant could not be charged for the procedures required to register the deposit in any way. My post, which has since been removed, suggested they could, so it is now time to correct that statement.

The changes.

The changes as brought about by the Localism act 2011 and a court case (Suupere v Nice) from July last year. They are clarification of what has always been the case, as far as what needs to be done with paperwork once an agreement becomes periodic. (Passes the fixed term without signing a new agreement) As far as the legislation is concerned, it now makes it clear that the best advice and therefore the only way to deal with the matter to hand, is that a new PIN form will need to be issued and signed, confirming that as far as TDS legislation is concerned, a periodic agreement becomes a new agreement the moment it passes the last day of the fixed term.

Cover all matters.

It therefore also makes sense to issue a new set of Terms and Conditions at the same time, to ensure there are no errors in relation to any changes that have been made to Terms and Conditions during the initial Tenancy. This is of course dependent upon the scheme with which the deposit is protected and can change from scheme to scheme.

Timing.

The one area which is still under consideration is from when it is best to issue new PIN and T&C’s from? The court case was heard last July, the legislation becomes law in April, but was entered on to the statute books last November. The jury is still out on this one, but it seems a date of the turn of the year would be a good date to start from. This means retrospectively issuing new documentation and ensuring all new agreements are dealt with from now onwards as they become Periodic. It also means ensuring that Tenants are made aware of what they will be required to do within our information packs (given to Tenants at the beginning of their Tenancy) from now on as well.

Landlords to pay.

Now to correct my mistake from last week, of course Landlords will have to pay for this service, because the initial legislation, which this interpretation of requirements is based upon, does not allow Tenants to be charged for the service. In retrospect (how easy that is!) we do of course understand why, but I have a feeling many of our Landlords will need to be convinced of why. Not the physical why, but why once again they are being asked to bear more costs!

Effect in the market.

We will now discuss how this will proceed and will be writing to Landlords whether they be Full Management or Tenant Find, to explain what they must do and what our costs will be for carrying out the role. No doubt Landlords will wish to push longer fixed term agreements on Tenants now which some could argue is not in the Tenants interest, but that is a small matter when considered against what may happen to self managed properties should Landlords ignore the requirements. So overall, another gentle nudge towards Full Management may well be the outcome, a situation we are not going to complain about! Oh and the costs, as far as we are concerned will not change whether paid by a Landlord or Tenant, so we can clearly state that we had no intentions of charging the Tenants any more than we will now have to charge our Landlords!