18Jul 2011

Rental Issues: Checking in advice for Tenants.

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By Steve Roulstone

I always find it very interesting to visit other property blogs available and having done so over the weekend, there was one recurring theme that I kept on coming across, and by thinking through the situation one answer that cries out to protect Tenants from what is obviously a recurring problem. The focus of the questions was the state of property and the promised changes that were not made or belongings not removed prior to the agreement being signed.

You have to be there!

And in all seriousness, that is the answer short and simple. If you are promised by a Landlord, or Agent, that repairs will be undertaken or decoration carried out prior to the date you expect to move in, or not wanted furniture and belongings removed for the same timescale, then always without exception, do not sign the agreement until you have confirmed that the work or removals have been carried out or removed. Of course, more simple matters, such as cleaners who have failed to turn up, or a spare bed that is not required can be dealt with on the spot. No the situations I was reading about were matters that needed referring to Environmental Health, or rooms still full of somebody else’s furniture! The best way to achieve this aim? Arrange for the signing at the property on the day the agreement is due to commence.

That means you!

You must look on this as an important date and even if there are several people signing the agreement, they should treat it seriously enough to be present on the day. Then, everybody will be able to see that promises have been carried out and the agreement can be executed (signed) without any issues remaining. Even in the situation I studied the most, where one person was not moving in for a few weeks, either still be present on the day, or have arranged for a signature by proxy and stay in touch (This could be one of the other Tenants or better still your own representative.

Achieving completeness.

This is the name of the game, after all the Landlord or Agent is not going to release keys until all monies have been paid and accounted for (at least no Landlord or Agent I know would consider completing before being paid) so if the outstanding work is that important and I would say state and condition is a good marker for any new Tenancy (how will the Landlord react if and when further problems occur?) do not pay or complete!

Prior arrangements make for better action.

The other important issue here, is that as my own Agency would never consider starting a Tenancy without the Tenant present at the property by advising the people controlling any Tenancy that you as Tenant wish this to be part of the arrangements, it should, if those very same people have any intention of completing the work in the first place, focus their minds to the fact that they are walking in to a problem by not completing what they have promised, so by just confirming this practical and sensible routine, you could be ensuring the work is carried out. And if it has not, then do not sign and think very seriously about if you really want to under these circumstances!

15Jul 2011

Property Landlord advice: Accidental Landlords need to understand the difference!

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By Steve Roulstone

I have just read a report in the Daily Telegraph, about the rise in Accidental Landlords over the current year and the reasons why so many are looking at the Lettings Industry as a viable method of allowing them to ‘move on’ during this period of inactivity in the property sales market. The reason given for the lack of sales is the locked position of seller and buyer not wishing to negotiate on price, but fails to point out the reason why there is an impasse, which is the difficulty potential buyers have in either amassing the deposit or affording a mortgage. This points more to buyers being unable to negotiate any further and therefore the actual need is for sellers to lower their expectations, or indeed, turn to the rental market!

And why not!

Because this is a very viable alternative and one that is continuing to increase year on year (Let’s face it,  Estate Agents up and down the Country should be praising its growth, because without it, many more would have been in grave danger of closing their doors) and a market which offers many professional Letting Agents, who, because of the manner that Accidental Landlords come to the market place, never actually speak to Professional Letting Agents, rather sticking with the Estate Agent who has been unable to find a buyer, without the knowledge that (I would suggest) there is another layer of services available from our industry which when visited, would open the eyes of these new Landlords to what our market is about and how property can be looked after.

Registered by Law?

Now that does not mean that all Estate Agents do a bad job in the rental market, of course not. No more than all Letting Agents are perfect, far from it. But an interesting statement is made in the article about all Estate Agents needing to be registered by Law, because this does not apply when they all started to manage property in the rental market (if you read my pages often you know what is coming now!) because no registration is needed for a Letting Agent and it is something that we have been asking the Government to address for many years now. But I feel it is somewhat short of the mark to suggest in this statement that Estate Agents are better able because of registration, because if Letting Agents were asked to prove that they were professional, many of the Estate Agents who fell on our industry as a lifeline two years ago, would not be able to qualify.

So the difference!

This is really what my point about this article is, it proves something that I have seen all over the Country, that sellers who turn to the Letting Industry and rent their property instead, should make sure they speak to an agent for advice and judge the difference for themselves. The Letting Agent they choose should be a member of a professional body and registered with Safe Agent, the Industries latest attempt at providing re-assurances for its customers. I believe that no matter what the local market charges (because not all of the country is able to charge 15% (London?)) they will not only have price competition, but knowledge, experience, training and service competition as well. vive la différence!!

 

 

 

13Jul 2011

Landlord Advice: Utility Bills under control

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By Craig Smith

A lot of Landlords may not realise that, even if a property is unoccupied, they could still be liable for utility bills at a rental property. Usually, unless a property has been let with bills included, the Tenant would be responsible for payments. But what happens during the periods that a property is empty?

Ensuring the Accounts are set up Correctly

During an empty period, the utility accounts need to be set up in the name of the Landlord. It is important to take meter readings at the start and end of a tenancy to ensure that Tenants and Landlords don’t pay for each others energy used. A lot of companies will automatically send an estimated bill so regular meter readings should help to keep costs down. Most utility companies will be happy to send billing to another address, such as the Landlords home or letting agent address, which helps to prevent any debt letters coming through the post.

Debt Chasing and Court Action

If a bill gets missed, the utility companies usually send reminders and letters threatening court action, regardless of whether or not they intend to take you to court. (Further information Blog)) The best action is to act quickly to resolve any issues, the majority of cases are where the companies haven’t taken note of meter readings or start/end dates of a tenancy.

Choose Your Suppliers Wisely!

Landlord cannot force a Tenant to take a particular supplier for gas & electricity, although there is usually no choice for water and Council Tax! However, different suppliers charge different amounts for energy used. If a property is going to be empty for a period of time, it is always worth looking into the prices charged by different suppliers. Some suppliers will charge a standing charge, so even if no energy is used at a property a daily charge could still be payable!

Whenever a Tenant leaves a property, the Landlord should always aim to obtain the gas and electricity providers. If the Tenants don’t give the information, the suppliers can be found by contacting National Grid for gas and MPAS for electricity.

Water Supply

Some water companies will also make a standing charge even if no water is used. This is to cover costs of drainage and maintenance to the pipe supply. If the stop cock is turned off in a property, inform the supplier! Usually, if the supplier has been informed that the stop cock is turned off then the standing charges are normally cancelled (from our experience with Severn Trent).

Council Tax

A property can have an exemption from council tax payments if it unoccupied & unfurnished, usually for up to 6 months in each financial year. After this, a 50% rate is applied and will become payable, although after 6 months you would certainly hope that the property has been relet!

13Jul 2011

Advertising a Rental Property: Where and How?

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By Craig Smith

Each advertising platform may try to tell you that they are the best to market your property, whether it be online or in your local newsagents. But which really is the best way of advertising a property?

Internet Property Advertising

Well, I guess there can’t really be a right or wrong answer to this as there are so many factors to take into account. Perhaps the most wide reaching method is the Internet with, according to the Office of National Statistics, more than 30 million adults having Internet. In turn, some of the more widely recognised property advertising sites advertise using television and radio campaigns, which then generate more users for the agents using the sites.

It is a fact that most enquiries we take are from Internet sources. The majority seem to be either from our own website, Zoopla or Rightmove just to name a few. Some of these sites are particularly useful to working professionals who might not always be at home to read the local newspapers or they can perhaps even look whilst they are at work or travelling with the aid of modern mobile phones or a laptop.

As an ARLA regulated agent, Castle Estates also display available properties on Property Live (refer to our previous blog on agent regulating).

Your Local Newspapers

If you are looking to stay in your local area, most local newspapers have sections for property for sale and to let. The disadvantage to this is that it will only reach a local audience and won’t appeal to the national audience. We see a large number of professionals who move from various places around the country and even abroad for work or to be closer to family. However, newspapers might only be published once or twice a week, whereas Internet advertising can be changed as and when properties come available.

Of course, there are still a number of people who don’t have Internet access or prefer not to use it, which is where the local newspaper will reach more prospective clients. Most areas have a weekly free newspaper which will be distributed throughout the area and should reach a large number of people.

The Good Old Advertising Boards!

Some people will see boards displayed at a property as a nuisance, particularly if a number of properties are available in a small road. However, on busy roads and popular housing estates, these boards can generate a lot of interest in a property. A lot of people will see a board and then go onto the Internet to find out further information. They also come in very handy if your not sure whereabouts the property actually is!

So Then, Which is Best?

Unfortunately, there is no definitive conclusion on this. Each way of advertising has is benefits and disadvantages, which might suggest that the best way is to use all of them. The best would be whichever suits the clients that are being targeted, in our area there are rural villages where many people prefer a local paper than using the Internet, but also people relocating who find it easier to look at the up to the minute details on the web. 

08Jul 2011

Property Landlord advice: Periodic Tenancies – friend or foe?

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By Mike Edwards

Under the provisions of section 5 Housing Act 1988 when a fixed term tenancy reaches its last fixed date from the next day onwards it becomes a periodic tenancy. This is an automatic process, no-one has to do anything and it happens whether or not the landlord is happy about it, or would prefer a new fixed term agreement to be in place. Either party can state if they want another fixed term but if the other party doesn’t agree then they are going to end up at best with a periodic tenancy. Or if it is the landlord that is insisting on a fixed term then his only option is to give notice to the existing tenant and find a new one.

Landlords decision.

Few Landlords normally feel that strongly but occasionally if the initial agreement is ending at a date that could make the end of any replacement tenancy awkward – say between mid November and mid March, then it is not uncommon for that Landlord to seek a longer term in an attempt to avoid having to re-let at what is generally acknowledged to be the worst time of the year. It is very much horses for courses at the end of a fixed term as to what the parties would prefer, or indeed insist upon. There are advantages and disadvantages for both parties both in being committed to a fixed term or in having a periodic tenancy. The most obvious for the Landlord is he is at the mercy of a month’s notice from the tenant at any time.

It’s that last day rule again!

The notice must expire on the last day of a period of the tenancy, so if rent is due as per the agreement 1st monthly the notice and any obligations under it – such as rental payments – must continue until that date unless the parties mutually agree an earlier surrender of the tenancy. The Landlord must give two months notice if it is an AST or an AT with the same end of notice period dating requirements. These were clarified in Church Commissioners v Meya (2006) in the Appeal Court and thus the decision is binding on lower Courts.

Notice period.

The requirement of two months notice in a periodic tenancy sometimes causes Landlords real difficulties so the trick is to do a standard visit 10 – 12 weeks before the known end date of the tenancy and while looking around subtly sound out the tenant’s intentions. If there is any hint they might want to go periodic rather than sign up for another fixed term (if that is what the Landlord wants) then serve a s21(1)(b) during the fixed term as a belt and braces position to protect the landlord. The matured notice can then be used at any time during the periodic state. This was enshrined in Case Law many years ago as there is no time stipulation stated in the Statute for how long a matured s21 notice remains valid and can be used in Court. So you could serve a s21(1)(b) on day 2 of a 6 month AST if you like and use it to evict the tenant after he has been periodic for 5 years or any time.

Agreed solution.

Finally if the tenant does want to go periodic then on giving one month’s notice a 13(2) notice can be used if a rent increase is due. A fixed term does give the landlord more certainty – but like the tenant it does mean he is stuck with the other party if his plans change and he wants the house back, so the key to unlock any problems? Discussion! Talk to your Tenants and reach an agreement that satisfies everybody – ah the art of Management!

05Jul 2011

Property Rental Advice: Unregulated Agents May Not be Properly Trained

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By Craig Smith

There have been a number of news articles recently about the number of letting agents going out of business whilst still in possession of money that is owed to Tenants and Landlords. Sometimes the office may relocate to save costs but sometimes poor communication can lead to a lot of confusion and Landlords being out of pocket.

Professional Bodies

There are a number of professional bodies that agents can join, there is ARLA, RICS and NALS to name just a few, and Castle Estates Staffordshire is an ARLA regulated agent. By being members of a governing body, this can give Landlords and Tenants reassurance that their money is safe and protected as necessary.

Is Your Agent ‘In the Know’?

There is no current law that says a letting agent must be governed and near enough anybody could start their own letting agency. Some of these agents may be charging very low management fees which will no doubt attract some Landlords due to the lesser amount of money that they would have to pay out. But do some agents have the experience and the knowledge to manage a property correctly?

We are proud to have 4 fully ARLA trained staff in our office and 3 more staff members currently working their way through the training material and examinations. By having staff members completing this training, they show that they understand the current legislations and practices that dictate the world of lettings as well as receiving regular updates in lettings news.

Safety Risks

As mentioned earlier, some agents may not have the experience or the know-how when some matters arise. In turn, this could compromise Tenant safety during a tenancy, for example not having a Landlords Gas Safety Certificate completed each year. The safety check is perhaps the most commonly thought of but there are dozens of other examples, such as the Fire & Furnishing Regulations Act 1988 where furniture provided by a Landlord must meet certain safety criteria.

So Who Can We Trust?

There are a number of unregulated agents who are more than trustworthy and we do not aim to ‘tar everybody with the same brush’ where this is concerned. Likewise, there are still a few rogue agents who will be regulated but may still choose to deal in an inappropriate manner. Sometimes the best marketing tool is the simplest… recommendation! 

04Jul 2011

Current Property News: Increased Renting demands pays dividends for Landlords.

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By Steve Roulstone

I have looked at three pieces of news this morning, all surrounding the property market and I believe all good, proving yet again that the rental property market continues to be positive in a period of time even for the current downturn we are experiencing that has seen nothing but negative news on closures, redundancies and negative forecasts. Other items I read this morning even hinted that ‘savvy’ business people might continue to look to the property market as a better investment than the more traditional stock and finance markets.

Squatting made illegal.

The really interesting point about the news released by the Government recently, is the amount of reporting that defends both the action of squatting and the need for squatters making this bad news for the public in general, but I would like to pick on two points that the majority of commentators have missed. Firstly, it is totally inappropriate to say that Squatters in some way make use of empty property and are therefore unlocking living space for those without a home of their own. This is just a way of turning the eye from the reality of the fact that they have no legal standing in occupying any home they choose, empty or not! I am not in disagreement that empty property could be better used, but only with the acceptance, knowledge or permission of the owner. I do not need to point out the damage caused to owners who are unable to utilise their property because of somebody squatting.  Secondly, all this does, is continue to take pressure of local Councils. This is where any move to utilise property that is truly left unused, as the Government and therefore local Council need to be the vehicle given the power to unlock property that is left empty long term, and is genuinely available to ease our housing needs. One further point for the writer, it is at least Mr Cameron and the words Prime Minister are suffixed by a capital letter!

Gazumping on the increase.

There is no doubt that rents are on the increase, but we are not seeing any great evidence of Gazumping outside of major cities, but before anybody starts to jump up and down about Landlords making profit, two points again that need to be confirmed. It is not often that I comment that we are in a similar position to Estate Agents as letting Agents, but it needs to be confirmed, that we are duty bound to advise our Landlords if a better offer for a property is received, just as Estate Agents would do for their customers, even more so because our contract with our Landlords gives us a duty of responsibility to comply with and therefore we have no choice but to both advise and react to our customers wishes. But holdfast! These were the same Landlords who were faceing offers on property below the asking price only two years ago and this current trend is only really redressing the balance from that period of rent reduction.

Renting numbers still increasing.

This is of course good news and confirms that by the end of this year, the percentage of rented property in the Private sector in the UK will have increased to something close to 20% and overtaken the Public sector at the same time. The issue that jumped out of this report at me was the mention of avoiding rogue agents in the links. Sorry to be a bore, but how simple would that job be if the Government were to protect this now significant and continually increasing sector, by introducing licensed Agents! (Now where have I heard that before?) For me, as a Professional who spends most of his time pushing the message that qualified Letting Agents are both the Tenants and Landlords best way of managing and finding property, allow me to add one more reason to the case: One of the main reasons we have an increase at present is because the Sale market is unable to move property for owners who need to move on and the rental market provides the outlet owners need. But by default, the Estate Agents who now have a captive audience are the beneficiaries of this business. My comment to owners is that they should try at least one qualified specialist Letting Agent. By doing so, you should be amazed just how knowledgeable they are and therefore better protected and prepared you will be in the rental market! This is what being trained in our market means and only by speaking with a specialist office will you find out for yourself what that difference means.

30Jun 2011

Property Landlord advice: Block Management: The importance of local services.

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By Steve Roulstone

I have written before about why so many Block Management sites, when the existing site Managers are failing through the eyes of the site Directors, end up in the hands of local Letting Agents, who can quickly make the adjustments to carry out the role of Managers for a site rather than for a Landlord, especially where maintenance is concerned. This is one of the major advantages for local Agencies, because in the nature of their day to day business, they will have developed working relationships with the whole gambit of building craftsmen who can help cement the Agencies new Property Management work.

 Local services for Local people!

 It is also not just that by being a local Company it is highly probable that there will be some relationship either privately with the Leaseholders or just by the very fact that the people concerned live in the same location. In Stafford for example, one of my main ‘fix all’ contractors, lives looking over a site that we manage. The relationship that this has developed between the Directors, some of whom already knew the chap concerned and the Contractor is so strong that they now insist he carries out the annual balcony maintenance programme we organise for them. The trust in his work and the way in which he deals with both the problems that occur and the people living on site is the reason the relationship has developed in this way. I believe what helps make this kind of situation possible when dealing with local trades, is the fact that they are Neighbours. Everybody feels more comfortable than the unknown quantity of a visitor from out of town!

 Time is not a factor.

And then of course, there is the ability to react quickly to any emergency situation, and I have known many schemes that operate Nationally for Letting Agents to deal with those Emergency call outs (and I know at first hand, that the level of performance from Contractors attending through such schemes leaves a lot to be desired) All of whom do not react in the same manner as a Contractor who is not only going to start the job to hand, but probably visit again to complete it. Not to mention being the Contractor who will have visited before and will no doubt be needed to visit again! All of these things make the local chap the choice for me.

 Not just Contractors.

 Of course other services are needed through the offices of Block Management and white collar trades also benefit from knowing the area. I have witnessed myself how the local Solicitors have been able to give more appropriate advice when legal issues have arisen, even benefiting from staff living on the site, in this case being able to clear a very difficult recognition problem for us, simply because when typing correspondence, they were able to answer the issue through personal knowledge of the person we were trying to trace. A situation which ended up benefiting all of those concerned and avoided higher costs to boot!

 No comparison.

 So being looked after by a Local Company has many advantages and I cannot see how the largest of the many major City based specialist Block Managing Companies can compare, and even though they may not advertise such services initially, if I were looking in relation to any property owned on a Leasehold site, I would not hesitate to check the local options first. Of course, they must also have a clear understanding of how to run a site in the proper manner, both legally and financially, on behalf of the owners, but I still believe that most organisations in our trade, if they knew they could not do a good job, would say no from day one. But then we all have to start somewhere as did I when I took my first site on back in 2003. But then I had the advantage of being part of a National Company who could offer me both training and other Franchisees who were already undertaking the role themselves, as they say, you cannot beat knowledge!

28Jun 2011

Property Landlord advice: Property exclusions Part 2.

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By Mike Edwards.

A further significant issue in relation to excluded areas arises in relation to Council Tax (CT) and the definition of a House in Multiple Occupancy (HMO) for CT purposes as opposed to the other two HMO definitions in relation to Planning and then in The Housing Act 2004. Yes there really are three HMO definitions in existence and more importantly and as evidenced by this example below, in use.

Definitions.

In simple terms the CT definition of an HMO is that if a tenant renting with others does not rent the whole of a dwelling with those other tenants then it is an HMO for CT purposes. This is extremely significant and important as it means that if you let a two bed house to two different people each with a tenancy of their own bedroom and with a licence to occupy the common parts (hall, stairs, landing, bathroom and kitchen), you would create a ‘Council Tax HMO’

Many agents and Landlords use what is called a hybrid sharer’s AST in multiple occupier tenancies, granting a separate agreement to each occupier. The alternative is of course to have all the sharers on a single agreement, and there are pros and cons in both approaches.

The point is if the sharers are not sharers in the true sense of the word – friends needing to find accommodation (typically second year onwards students, for example) – and prepared to rely on each other in a joint tenancy scenario, then the landlord may have little choice if the sharing tenant or their Guarantors are not prepared to sign a single agreement.

This is usually not a problem in such situations because there can be only one CT bill and so the Landlord retains that in their name and reflects the costs in the rent. But what if the tenants are all on one single agreement – true sharers – but are excluded for some reason from some part of the property. They would not have access to the whole of the dwelling and thus the Council Tax office would deem it an HMO and turn to the Landlord for the Council Tax – including back payments if the tenants have not paid it.

And as the CT liability had not been reflected in increased rent the Landlord could not recover the costs against the tenants.

Case History.

This was the case in Goremsandu v Harrow LBC where three individuals were named on one furnished tenancy agreement but didn’t want some of the furniture so asked if it could be stored in the conservatory, the loss of use of which the tenants were not worried about.  But when Harrow LBC learned of this arrangement they claimed as the tenants did not have use of the conservatory and in effect were excluded from using it because the Landlord was using it to store his furniture they decided the Landlord was liable for the Council Tax.  

A silly proposition by Harrow but at the first hearing the Landlord lost and had to appeal and eventually won.

So please beware!

But as evidenced in the last article on this subject it is not uncommon for a Landlord to retain part of a property for their own use – garage, basement, attic – and clearly this creates the same danger and as in this case the landlord could be held liable for the Council Tax. Not a problem if the potential liability is recognised and reflected in the tenancy agreement from the outset.

However if as in this case the liability occurs after commencement of the agreement it could result in a significant bill and no opportunity to recover the costs from the tenant.

28Jun 2011

Cost Cutting Leads to More Disputes Between Landlords and Tenants

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By Craig Smith

In recent years, the country has been through a recession (some people would argue that we a still in the recession) and the cost of living seems to be ever increasing. Not only the cost of food and necessities but the cost of fuel has risen dramatically in just the last few months. This has had a knock on effect in the way that some properties are presented at the end of some tenancies.

Increasing Disagreements Between Landlords & Tenants

We have seen an increasing number of disagreements between Landlords and Tenants over some items which may be considered insignificant in the scheme of things. For example, a shower curtain may be left in a well used condition at the end of a tenancy by a Tenant who doesn’t think they should spend £10-20 replacing it. However, the Landlord may also be less willing to replace it as they may see this as an unnecessary expense. This then leads to a dispute between them and can sometimes turn what was a perfect tenancy into a feud.

Deposit Disputes

Thankfully, we don’t have a great deal of deposits that go through the DPS adjudication process (please refer back to our blog relating to best practice for deposits) although it is increasingly difficult to reach an agreement between both parties. We act as agents on behalf of our Landlords which means that some Tenants see us as ‘taking sides’ This isn’t the case and whilst we do work for Landlords primarily, we always try to reach a fair decision. For example, a Landlord who may be trying to charge £100 for that shower curtain probably wont get his money if the case went to dispute.

Issues at the Start of a Tenancy

Not all disagreements occur at the end of a tenancy. Some Landlords may not see the need to clean a property before tenants move in or have those little jobs finished. This then comes back round in a circle at the end of a tenancy when the Tenant may feel that they should leave it in the same condition.

What to Do?

Best practice dictates that a property should always be presented clean and in good condition at the start of a tenancy. By doing this, there is a benchmark for how the property should be returned when a Tenant vacates. Although wear and tear can only be expected, properties should always be presented as you would like to find it!