Tag Archives: Landlord Advice

10Jan 2012

Property Landlord advice: Utility Warehouse still getting it wrong.

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By Steve Roulstone

Last year I had cause to write a Blog about the manner in which Utility Warehouse try to invoice Landlords when they have closed their account and the Tenant has not sorted the new supply out to their satisfaction. Not because they had not been contacted, not even because they had no contact details for the Tenant, no, purely because they were not satisfied with the manner in which the new account had been opened.

12 Months on?

No change, even though at the time, I had several long involved conversations with them about the letters I was receiving, even though the Tenant was doing everything possible to pay for their own account, Utility Warehouse continued to write to me as if the outstanding invoice was my responsibility. I can assure you the resulting phone calls were many and heated, but it took something like six weeks to straightened matters out and confirm the new Tenant was in deed, responsible for their own costs!

Time for another letter.

It was not that they had written again or even the consequences of the content of the letter that has dismayed me this time, but the fact that they had failed to close my account, even though their operatives tried to tell me they had (strange because the letter had my name and the same old account number on it!) Well, I say my name; they had managed to change the spelling and actually written to my next door neighbour therefore having the wrong address.

Unbelievable arrogance.

The letter was a request to set up a Direct Debit because mine had just been closed and whilst I have to admit that when I first called, my temper was not at its best, I did not take kindly to the UW representative trying to tell me they must be correct and that I was wrong in my assumptions, even when I asked what dates they had on the account and she confirmed it had closed in August 2010, the penny did not drop. I left her to work out that if the account had been closed in 2010 there was no longer any need for a DD to be set up!

Human error or system.

I called again! The excuse for the error, for error it obviously was, was what really gets to me about such organisations, because they tried to tell me that the letter with the old account number on it, with the change of spelling of my name and my next door neighbours address, must have been a technical error. Now is it me? Or is it blindingly difficult for a computer to randomly contact me a year after our last contact, with the name spelt wrong and at the wrong address? No, to me this must be human error and it just raises huge questions about the manner in which they operate.

Do they care?

The reaction that you receive from UW confirms without doubt that the answer is no, they really don’t, I laughed sarcastically at their representative when he said it was computer error and he indignantly asked me why I was laughing. Well the actual answer is the frustration of dealing with them, what he got was me asking if he wanted to know the full story of my dealings with them because then he might just understand! No they do not care and I would love somebody to convince me differently, because as all Letting Agents are aware, the most difficult and unorganised companies we have to deal within our day to day dealings would be confirmed by everybody as Utility Companies!!

 

22Dec 2011

Current Property News: Housing stock stuck in the mud?

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By Mike Edwards

Mortgages could become harder to get, with one in ten borrowers currently eligible for a mortgage being turned down in future. The Financial Services Authority has now published its long-awaited Mortgage Market Review. Its own impact assessment says that the proposed reforms could strip £2.9bn out of the economy because it would mean fewer people buying and selling homes, and lead to a dramatic drop in mortgage lending, affecting one million borrowers. The FSA’s final consultation paper is designed to put a permanent end to the lending excesses that were prevalent pre-credit crunch. But the crackdown could have a severe impact on the already ailing housing market. Among its many recommendations is a new ‘affordability’ regime, which will include looking at a borrower’s household spending plus a ‘stress test’ for how a borrower would cope if interest rates went up.

The incomes of older people, those aged 50-plus and coming up for retirement, would be particularly put under the spotlight. In effect the responsibility for checking affordability passes from mortgage adviser to lender, and most mortgage sales will have to be advised rather than simply executed.
The FSA’s proposals also stipulate that borrowers will not be able to factor in the possibility of future house price rises, but must be able to show other, more robust ways of being able to pay back their mortgage. In an environment where lenders are already being extremely cautious with their lending criteria and indeed cherry picking there is a danger that by placing all affordability assessments at the doors of lenders’ risk teams, this could create an even stricter lending environment.
For mortgage prisoners in negative equity, there is a ray of hope in the proposals, which suggest that the usual affordability tests are waived for such home-movers provided they have a solid track record of repayments.

However it is not just first time buyers who are suffering, next-time buyers are having it even tougher than first-time buyers, says a startling new report from Lloyds TSB.  It says that the housing market has become the most unaffordable for ‘second-steppers’ in 24 years. Many bought at the peak of the housing market in 2007 but are now unable to move on, having seen the value of their home fall by an average of 23%, leaving them £10,000 in negative equity. The second-steppers, typically aged between 25 and 34, also need to earn more than first-time buyers in order to make their move – and persuade someone to give them a mortgage. In the South-East, the average price of a second-time home means  a second-stepper would have to borrow nearly seven times average earnings – which of course the SA proposals above would not allow even if a lender was foolish enough to offer such a loan..   

Even in the Midlands – the most affordable region for second-time homes – someone trying to move up the property ladder would have to borrow four times their average salary. The home affordability ratio has risen to 5:2 for second-time buyers – the highest level since records began in 1987. The ratio for first-time buyers is 4:1. In 2007, the reverse was the case. The issue of second-stepper affordability is a key one in trying to get the housing market moving again, with the current difficulties in this segment of the market restricting the supply of starter properties for first-time buyers as well as preventing many of those who need to move from doing so.

16Dec 2011

Property Landlord advice: Block Management: Who does the LVT really serve?

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By Steve Roulstone

If a Leaseholder of a site managed by an RMC has a complaint about costs and services, the traditional route for that complaint, if the Leaseholder feels the Management Company has failed to address the issues concerned, is the Leasehold Valuation Tribunal (LVT) whose job, as stated in the title, is to ensure that Leaseholders are receiving value for money in both the charges levied, money spent and services provided.

On behalf of the Leaseholder.

Therefore, when a Management Company is the subject of a tribunal bought by a Leaseholder, you would assume that the process is there to protect Leaseholders and ensure they ARE getting value for money and that their interests are being taken care of. Especially for investment Landlords, who have of course utilised property as their chosen route of investment, probably of their pension or main asset to be realised upon retirement. But this has proven not to be the case for a tribunal that has just reached determination by the LVT for all of the leaseholders of the site concerned.

Initial problem.

When the paperwork arrived at our office the first thought that entered our heads was why this action was being bought against the RMC concerned (we received it as the Managing agent of the site in question) and upon investigation, realised that the case the Leaseholder had bought was not only wrong in our opinion, but that it was going to take a lot of time and effort and professional advice to fight it on behalf of the RMC. Indeed specialist knowledge was most important and must be required for nearly every Agent in our position, because such matters whilst not rare are not common occurrences and as the LVT Chairman stated in this instance, rarely reach such complicated levels as was produced by the Leaseholder concerned.

Long story short.

The case itself and the detail surrounding it are not central to my main point here, but midway through the process, having answered in a way that we felt was relevant and confirmed what we believed to be the truth behind the case, we were clearly instructed by the LVT to give more information against every point raised in this complicated claim and in much more detail. This we did, but the outcome was that the amount of time and therefore cost that we were generating to fight the case was rising by the week. Indeed, to put together the response requested by the LVT took a total of 65 hours in one week alone. Add the cost of the professional advice, which required two trips to London by three people on two occasions and the time spent writing, processing and gathering data prior to the week spent compiling the reply and the eventual bill would amount to several thousand pounds. On top of this, the three day tribunal, again for three people just kept the cost mounting up.

To fight or not to fight.

Of course, we could have left the case alone and allowed the tribunal to make a decision based upon what they managed to gather from the Leaseholder alone, but the risk, considering the claim was for over £150,000 was just too great. Then there is the position of the RMC Directors to be considered. I know why such people take up the role of Director and one requirement they should not expect to have is the kind of specialist knowledge needed to fight a case such as ours. An argument of mine during the case was that if all Directors were supposed to be as knowledgeable as the Leaseholder who bought the case against them obviously was, then 90% of the sites in this Country would never attract a Director at all!

To the outcome!

Now here is my point in all this. We won the tribunal on all counts and were given permission to claim full costs through the collection of fees from the whole site. Now the Directors are left having to explain why the Leaseholders will all face an increase of nearly 25% on next year’s Management fee and all because of the actions of one Leaseholder. But if the LVT is duty bound to listen to such cases, then the Management Company must have the ability to claim the cost of fighting the case and their only route is through Management fees as they have no other source of income. So the obvious point is in what way does this outcome protect the interest of the Leaseholders on this site? The answer unless somebody can tell me differently, is that it does not and I know full well, that the costs generated were very reasonable, having pulled in favours and attracted the support of specialists in Block Management for at least one full day for nothing (purely because of the subject matter itself)

Better way.

For me the Management Company should have a better route for recourse and if the LVT can demand such a high level of input from the respondent then they should have more powers in determining where the responsibility of the costs generated should lie. Perhaps if that were the case then those bringing such actions in the first place would take in to consideration the possible implication of their actions before bringing a case, which unless we find out otherwise, will have no more impact on them than the rest of the property owners on the same site!

06Dec 2011

Current Property News: George Clark campaign for Housing.

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By Steve Roulstone

I sat and watched George Clark last night in his new programme designed to get us all up in arms about the number of properties that have been boarded up and have been left standing unused during a period when we have without doubt a massive housing shortage, but affordable housing is what the market needs and Mr Clarkes programme is designed to embarrass the powers that be into working with him and allow his Company to make the properties habitable once again.

Non Political statement.

In the main Mr Clarke managed to put a programme together which did not have a political edge and in saying what I want to say about the programme, it is my intention to do the same, because my comments are purely factual and based upon both the law as it currently stands and what I believe to be the powers that are needed to assist in raising quality of housing in the UK.

DIY I really don’t think so!

The first issue barely given time in this programme was the ability that people will have to affect changes themselves as a method of keeping the cost of renovating these houses down. But in every property visited or discussed, Electrical issues mainly with re-wiring were highlighted.  This of course is a job which just cannot be carried out by anybody who is not qualified (currently to Edition 17 of the IEE regulations) under Part P covering electrical installations in the home. Please Mr Clark, let’s get the facts right,  and let’s also be honest, electrical, heating including Gas and window replacement are the major jobs required when renovating a house, so without consideration being given to any possible structural work, there are regulations protecting people for all such services and they cannot be ignored!

Poor quality housing.

He then went on to take us around a rented property in poor condition (Could not help but wonder if the problems were the result of a failed DIY attempt?) and a property owned by people who had left it empty because they could not afford to rent it out (despite pointing out that the major problem with both properties was bad wiring!!) Sorry but I did not understand the point of this, because both houses on the face of it appeared to be in poor condition, so other than an appeal for cheap funding any point missed me by.

Proper controls needed.

What did strike me was here was yet another issue surrounding poor quality housing which would be addressed if licensed Agents were in a position to approve the property for the market prior to anybody being allowed to either let or rent the property. You cannot disagree, again from what we were shown, that both of these houses needed work, Surely this is a role that letting Agents would both wish to adopt and are in a position to carry out with ease and professionalism.

Large concern.                                                

Now far be it from me to throw a dampener on what Mr Clarke is trying to achieve here (Castle Estates joined forces with an attempt made by Prince Charles some seven years ago to resolve the same issue, which unfortunately failed) even though his own feelings about the subject seem to be the driving force, rather than any co-ordinated practical financial plan. But from the look of his web page, his own Business will be heavily involved in any solution, but the real source of the problem, which the area he covered in the first programme was created by the drive to build better housing in communities where property was emptied and or demolished, is much deeper and needs to be addressed on a much bigger format than this amicable gent will achieve, in the meantime I wish him well, providing he is realistic about what can be done under the label of DIY!

02Dec 2011

Current Property News: TDP Changes in Localism Bill for next year.

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By Mike Edwards

From next year, agents and landlords will have 30 days in which to protect a tenant’s deposit, rather than the current 14.The change is part of ‘tweaks’ made to tenancy deposit protection in the new Localism Act 2011. These were made following court cases over the rights of a tenant to sue for a breach of the deposit protection legislation or when deposit money was not protected within 14 days, but by the time of a court hearing.   
 
The revised legislation also does away with mandatory penalties of three times the deposit if the deposit is not correctly registered and the ‘prescribed information’ not properly given.  Instead, courts will be allowed to use their discretion to hand out penalties worth between one and three times the value of an unprotected deposit. The current legislation has had a number of challenges within the courts, which have issued varying rulings – some in favour of tenants and others in favour of landlords.              

The Housing Minister Grant Shapps managed to find the parliamentary time to get these amendments to the legislation through deemed necessary because recent Court decisions were causing confusion about tenancy deposit protection regulations. Some of these decisions drove a cart and horses through the provisions especially in respect of the three month mandatory fine provisions and effectively made the provisions toothless and ineffective as a Landlord could delay protecting the deposit right up until the moment the tenant instituted Court proceedings.

However these amendments make it very clear that tenancy deposit protection is here to stay. Full details of the changes are available in new guidance notes issued by the Tenancy Deposit Scheme which can be seen on this link.  Commencement Order has yet to be published and the start date for these new rules is not yet known, but it will probably be April 2012 at the latest and possibly much sooner.

29Nov 2011

Current Property News: BBC report House prices Falling and Rising – Honest!

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By Steve Roulstone

I am not a lover of the way the BBC report most issues, far too much political bias for my liking, but yet again this week one of my old chestnuts has risen its weary little head again, as the BBC news stated that house prices have dropped this year in total 2.6% according to the Land Registry and that the average price for a house is now around £162,347. I heard this report on the news as well as being able to read about it on the BBC web site.

House prices in dramatic rise.

The BBC have reported that average house prices are now at an average of £241, 461! Wow that’s good, when you consider the first report was dated September 2011 and the second November 2011, that’s a rise of just under 50% which gets even better when you see that the period reported upon was also September 2011!! But wait, what is this I hear?

House prices rise by 1.6%!

According to the BBC in a report dated today! House Prices have risen by 1.6% in the last year, now I know that these reports are all from differing institutions and organisations, but please somebody explain what is the truth? Are prices falling? Is the average price rising? When will we ever know? What are we supposed to believe?

When will the BBC explain?

This to me is exactly the style of reporting which the BBC (this organisation that was once trusted to be the eyes and ears of the nation) now use in all areas of news reporting, in trying to compete in TV world, that proves just how far they have dumbed down to the extent that they are only interested in sound bites with no depth what so ever. No doubt other markets are treated with the same scant regard. Proof for me for our industry, is that whenever they have an ‘In house representative’( to discuss this important issue in less than 30 seconds) it is never the same person, proving that they do not have an ‘in House’ expert when it comes to housing issues!

There to report the news.

I know this is not all their fault, because they did not publish the figures in the first place, but it is a fact they like bad news (which is why I probably only heard about the average price drop) and they never give an argued or reasoned debate about what the figures represent and why such figures differ. To me this is the crux of the matter, because if Mr and Mrs Average are ever to understand what the BBC is telling us, then if they quote so many figures, they should explain so many figures and why they use them all, because they SHOULD be the organisation we rely upon to explain matters to us! That surely is what we pay our license for, is it not?

24Nov 2011

Property Landlord advice: Government Housing Policy energy standards picking at the wrong sector!

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By Steve Roulstone

The new Housing Policy released earlier this week, makes specific reference to two areas that I feel are linked, in the standards being set in one and the Government requirements for the other. I am referring to Decent Home Standards and Energy Performance levels.

Walking away from business.

This week alone, as a Letting Agent, we have walked away from two properties where the standard of accommodation that the Landlord was offering, we felt, dropped below what should be offered in our market place. As I pointed out in my Blog earlier this week, self policing, because we are professional Agents. The fact that other Agents (Estate Agents) were prepared to market the properties, in one instance without basic instruction which could result in the Landlord being the result of a financial claim against him, is both alarming and a subject that I repeatedly Blog about until blue in the face, if you do not legislate for fitter and proper Agents, the market will continue to suffer from bad Management!!

Market protection.

So with the knowledge that professional Agents will advise Landlords what should be done before they will market property, let’s just confirm, we now have a situation where we are raising standards automatically – just what the Government are asking for!! But wait, what do we have here? A comment in the same release, stating that Rented properties that do NOT reach certain energy standards will, by 2016, NOT be allowed to be offered to the market!

Is it the financial link?

So why are the Government targeting the rental market and not the sales market? There appears to be reference to review Building Regulations, which ensures new properties reach these energy standards, but nothing to address property sales, so why not? To me it is purely because they can and for no other reason. I would guess that the reason given would be that if Landlords are to make profit from renting property, then the profit must be gauged against the standard of the property. A good argument and I am not saying I disagree, but if that is the case, why not apply the same regulations to Mortgage Companies who profit from providing a Mortgage to the ‘House buyer’?

Too radical?

This to me is not a level playing field and we as an industry have five years to address it. The facts are quite clear in both statements included in the Government release on the rental market, the best standards of properties can be found in the rental market and the best energy efficient housing can be found in the rental sector. And yet in this report they further target (an easy target?) our sector for improvement. My point has to be, that under a heading of a thriving market sector, rules are being introduced which will place further unbalanced costs on the Landlord, when set against any decision against selling.

 

Action Needed.

We have plenty of time between now and 2016 to ensure this is not the case, so I ask our Industry representatives to ensure that our market will not be given a disadvantage at such a critical time in its popularity and development. If I am right and if this is left unattended we could be left with a problem, the time to act is now!

21Nov 2011

Current Property News: A housing strategy for England. But is it for the rental Industry?

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By Steve Roulstone

Today the Government have released their Housing Strategy for England, which is designed to give a kick start to housing sales across the UK, which most would agree is something that is badly needed and a view point that I totally agree with and have commented so in these pages on many occasions over the last eighteen months. But Housing Sales are not the only consideration nowadays and for once the Government have acknowledged this, with a section and strategy purely designed to encourage Landlords to start buying more property for the rental market.

Rounding a square peg.

I recognise that one problem the Government had to address was how to encourage growth in an area that had come under such criticism (Profit from rising property prices) for the perceived effect profit on Property values had had on the current financial situation and current property price de-valuation. What I did not expect but can perfectly understand is the decision to encourage growth through Business organisations rather than individuals. This very comfortably  delivers possibility of growth, which according to conversations I have recently had with Management at one of the larger National Property houses, whose clients include the organisations targeted by this policy, who are actively buying property in numbers at the moment, will be well received.

Using Council powers.

What I still cannot understand and accept, is that Local Government will be the answer to what is described as the ‘rouge Landlords’ who still flaunt such legislation as the Tenants Deposit Scheme and Houses of Multiple Occupation standards or as mentioned, the Decent Housing standards, for certainly where we are based in the Midlands, all Councils that I have come in too contact with have confirmed that they do not have either the man power or time (ability) to pursue Landlords and therefore deliver a local deterrent.

Working with the Industry.

It is very encouraging to see a whole section giving information about what the Industry can deliver and I am sure the ringing endorsement of the ‘Safe Agent scheme’ has been well received by the Industry in general, but I cannot make comment about this situation without pointing out that if the Government really wanted to get rid of rouge Landlords at the same time as increasing standards, then the Industry is here with open arms! Surely the fact behind the figures quoted that more property in the rented sector is of better quality than in the hands of owner occupiers says it all. I know that all of the properties in our Management would pass with flying colours, because we would not manage property that failed these standards.

Where does the problem lie?

I am also well aware that the figures state that some of the worst quality housing is in the private rental sector as well. Now with the information that we do not manage them and with the firm belief that neither do other professional Letting Agencies, it does not take such a massive leap of imagination to realise where these properties do actually lie! So what is the answer? Simple, involve us in managing or looking at these properties, so that all Landlords have to be connected with some professional licensed Agent. There are further issues raised for the rental sector by this statement especially surrounding Green policies, which I will address through these pages later this week.

19Nov 2011

Current Property News: Rents rise in September.

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By Mike Edwards

There is no relief for tenants as rents rise in all regions for the first time on record, according to the latest buy-to-let index from LSL Property Services plc. September figures show the average monthly rent in England and Wales rose by 0.7% to £718, surpassing the previous record high of £713 in August. With annual rental inflation at 4.3%, the average rent is now £29 per month higher than September 2010.

Rents rose in all regions of England and Wales for the first time on record and as a result rents hit record highs in six regions. Not surprisingly rents increased the fastest in the South East and the East Midlands, where they rose by 1.8% and 1.1% respectively compared to August. The smallest increases were in the West Midlands (0.2%) and the North East (0.3%). However, over the course of last year, London’s rents have risen at a faster rate than any other region, increasing by 5.8%. However the appetite for UK property investment outside of the capital also remains subdued, with 12.5% of investors looking to acquire over the coming year.

LSL also report that annual returns on rental property dropped back in September after property prices fell annually. The average total annual return in September was 1.8%, the equivalent of £2,995 being £7,661 in rent, with a capital loss of £4,666. However, property prices in the last quarter have held up better than in the previous twelve months, and if this is maintained, a property investor could expect to make a total annual return of 8% over the next year.

Rising rents may prove to be a headache for tenants, but they are improving the outlook for investors – which may in turn encourage further investment in the private rented sector. Despite capital losses after house prices fell annually, growing rental incomes means returns are still in the black. The average yield rose from 5.2% to 5.3% in September, the highest level since the housing downturn, and outstripping many investments. So with house prices yet to resume their upwards climb, there are opportunities for prospective investors to secure profitable bargains.

Figures this week from Hamptons show that investors in the shape of cash buyers are being enticed back to the market. They have reported a yearly increase in cash buyer applicants (from 11.86% in September 2010 to 12.46% in September 2011) emphasizing the perceived strength of residential property as an investment asset. Marc Goldberg, head of sales at Hamptons International says: “Due to the long-term nature of property as investment class, many of our buyers prefer to invest their cash in bricks and mortar rather than more uncertain assets such as stocks and shares. Although the current economic downturn may have caused uncertainty, vendors can take heart that we’re seeing an encouraging increase in cash buyers ready to complete quickly.”

However, this picture of positivity jars with the appetite for investment seen in the latest Young Index figures, which appear to more accurately reflect the wider sentiment of continuing economic uncertainty. This quarter’s figures show a fall in the proportion of investors seeking to acquire property in London over the coming 12 months to 33.3% (from 46.3% in the previous quarter and 59.3% in Q4 2009).

07Nov 2011

Property Landlord advice: Landlords visiting property can cause problems.

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By Steve Roulstone

Once again I have a subject that is very relevant to our own office, as it is based upon something that has caused some consternation this week. It seems that the only way it could have been avoided was to keep a Landlord away from his own property even though the reason for his visit was perfectly reasonable!

Managed should mean Managed.

Of course, when we are appointed by Landlords as their Managing Agent, it is not with the thought that the Landlord is then going to be visiting the property with Tenant ensconced on a regular basis. Far from it, I am a firm believer in encouraging Landlords to stay away from the property, even when they live next door, which happens more often than you would envisage! If we are appointed to be the Landlords representative, then we need to be allowed to do our job and because we have systems which ensure all actions carried out are done so correctly and that all conversations, comments and requests are noted, when this happens outside of our control it can leave us with problems, either then or later.

Coming back to bite you.

The instance that happened this week was of a Landlord unable to recall exactly what was said during a visit made (with permission of course!) to carry our maintenance (another blog all in its own right!) but it was the subject of the conversation which was the problem, because the Tenant having left the property, is being asked to decorate a bedroom back from purple walls to magnolia and yet they are stating they sought and gained the Landlords approval when they spoke.

Correct procedures at all times.

The main point here is that every member of our staff knows that as soon as any Tenant asks about decoration, we have a set procedure which includes confirmation in writing of both the request and response as well as submitting sample colours for approval. The same applies to any conversation which may have implications, we record the content, but what it is difficult to do is point out to the Landlord that they have gone about matters the wrong way by not informing us of the request when the initial approach was first made.   

Implications.

In this case, it is going to be difficult to prove the Tenant wrong, especially as we have nothing in writing to back up our case should the matter go to arbitration through the TDS scheme, which it probably will, so we may see the Landlord having to both paint the bedroom himself and pay for the privilege as a result of what started out as an innocent property visit carried out by the Landlord.

Recommendations.

So it is for cases such as this that we try wherever possible to encourage Landlords to stay away from their own property, or at the very least, to always ask the Tenants to contact us about any issue they raise, no matter how small, rather than get involved themselves, no matter how innocent the subject appears. Only then can we ensure that we remain in control of the situation and able to ‘Manage’ the position on behalf of the Landlord, after all I am yet to find any Landlord who approved purple paint for any room in their house!