Tag Archives: Property Advice

10May 2011

Property Landlord advice: Renting with white goods and part furnished.

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By Steve Roulstone

One of the roles of my position as Franchisor is to hold regular update meetings with other Castle Estate Franchisees. At a meeting held this week with a relatively new Franchisee an issue was raised that every agent has to deal with at one time or another and no matter which way a landlord wishes to get round the problem, leaving white goods and some furniture at a property will always remain a Landlords responsibility and my advise has always been simple – don’t!

White goods.

Once left at the start of a Tenancy, there is no clever way to stop white goods being either the responsibility of the Landlord or the subject of a dispute if and when it breaks down! I have spoken to so many Landlords who believe that by leaving a fridge their property will be more attractive to any potential Tenant. The truth is it is not and in simplistic terms, why worry? If an incoming Tenant cannot afford a fridge themselves, then they are probably not the Tenant the Landlord would wish for their house in the first place (Not including a cooker of course, which should always be supplied!)Plus what happens to the fridge they already own? Better remove both the goods and the responsibility in the first place.

Fitted white goods.

Now we have a situation where there is no simple answer, as fitted goods need to be maintained (and that does include the Dishwasher!) and when removed the property becomes less attractive. We need to think what our own reaction would be to being told we need to find our own washing machine for that hole in the cupboard? Of course this will be white goods we would probably never be able to use again, as fitted white goods are either smaller in depth or may not look pretty when installed without the cupboard surrounding it! Now be honest, would we seriously purchase our own in these circumstances?

Part Furnished.

Now we come to the worst of all scenarios, as I can absolutely guarantee, that should we find a Tenant who does need a three piece suite and a double and single bed first time round (providing of course that it meets safety requirements) we will not second time. Eventually you will end up removing all furniture as Tenants come along with their own bed and three piece, so rather than reduce the market to whom the house is acceptable, my advice is always remove all furniture now, for unless it is fully furnished (which is still a very small percentage of the overall market ) the furniture you do wish to leave will end up being a problem earlier or later in the lifetime of the rented property.  

Simple solution

In the end the advice to the Franchisee has not changed since I carried out the role myself, where possible remove white goods and furniture. Where it is to the detriment of the property, leave them but accept responsibility for maintenance. As far as furniture is concerned, unless fully furnished, remove all furniture from day one and make the property more acceptable to more of the market. All said with one rider – where the Landlord insists, we carry out our customers wishes!

29Apr 2011

Property Landlord advice: 'Local Housing Allowance cuts' interpretation still in the grey!

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By Mike Edwards

Many Landlords aware of the proposed cuts in Local Housing Allowance (LHA) formerly Housing Benefit understand that the cuts only apply to new tenancies commencing from the 1st of April onwards. But we have become aware of a case where the tenancy commenced on the 16th of March on a 12 month tenancy. The rent was £2300 a month on a London 5 bed house which the local LHA office had agreed to pay when the claim commenced on the 16th March.

However in early April the tenant received notification that as from the 1st April, LHA of £1500 only would be paid. Can this significant shortfall be right?

If the LHA prove to be in error and will in fact pay the agreed figure of £2300 for the 12 month duration (because the tenancy was created before the 1st of April deadline when the changes were introduced in London), this raises another question. What of existing tenancies created before the deadline which have gone periodic? My guess would be that a periodic has the same new rules applied. After all it could stay periodic forever and never be subjected to the changes which rather defeats the object of them. 

The danger here is how the new rules are interpreted, and local variations are not unknown as with Council Tax where, for example, when discounts applied on unoccupied properties some CB offices said a property had to be uninhabitable as opposed to what the rules said – uninhabited!! Similarly when the under 25’s rules on the then Housing Benefit came in many years ago they were only supposed to apply to new claimants not existing ones and not even on their annual reassessments.

In fact many HB offices (wrongly) reduced the payment down to the new room allowance for all under 25 year old existing claimants though admittedly from their next annual reassessment.

In terms of what an LHA office will allow and what they will not they are bound by the terms of the Regulations and the rules are clearly laid out in the guidance manual at http://www.dwp.gov.uk/docs/lha-guidance-manual.pdf  and scroll down to

8.030.  

But there are a number of possibilities in this particular case. Firstly, this could simply be a misunderstanding. The rate for that property is capped to a 4 bed rate from 1 April, but any existing tenants would enjoy 9 months transitional protection. It is possible that the letter from the LHA office is simply informing of the new benefit level, ignoring the protection that exists for any current tenant. So maybe the LHA office will honour the existing rent for one month only before applying the cut?

14Apr 2011

Property Landlord advice: Property Investment still stacks up.

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By Steve Roulstone

As a Landlord with several houses purchased through my time as a Letting Agent it is nice to know that my investment in bricks and mortar has been well spent and even taking the current down turn in sales and property value, the investment stands up well against other investment opportunities.

Presentation figures.

As part of a process that I undertake with potential Franchisees, I have put together figures from several sources to confirm how property has performed against its rivals. I chose figures from the last ten years; indeed the last decade 2000 through to 2010 inclusive. It is not that as agents we have to convince people to buy property in the first place, far from it, we enter the scene when owners are deciding if either the market is what they want for their property, or if having made the decision, they wish the property to be managed by Agents rather than themselves. As I point out, it does no harm to be aware of how much better bricks and mortar have performed against what some would perceive as the normal route for investment.

Property v Stocks

 Over the whole eleven year period, property produced 64% growth (National House price statistics) whilst stocks only gave a 6% return (Stock exchange growth figures) Now I am fully aware that the whole point of Stocks and Shares is to buy and sell but this is of course not needed for property so I believe it fair to directly compare one with the other. I am also aware that S&S pay dividends and the average return over the same period was an additional 20%, but then rent also counts and on average, Landlords make 10% of the rent after mortgages have been paid. When both are taken in too account property still looks ahead of the game by some way!

Not forgetting inflation.

I added inflation in (3% gain and 3% inflation = 0% growth) and then looked at information from the Barclays Capital Guilt study 2010 which did the same for Shares, Bonds and Cash. The outcome for property allowing inflation at 28.2% and after paying Tax at 25% gave property at a return of 38% and the best that either Bonds or Cash could offer after inflation was less than 3%, with shares actually losing money! Quite a result I am sure you would agree, as property outperforms its rivals to the power of 10 which all points to Money well invested!

13Apr 2011

Lettings Update: Change in EPC Rules to be Implemented

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By Craig Smith

From 1st October 2008, most residential properties need to have an EPC (Energy Performance Certificate) in place before they are able to be marketed. However, this looks set to change from 1st July 2011 due to new government rulings which have been announced to the energy assessors.

Current Regulations

At the moment, an EPC graph should be provided to prospective Tenants at a viewing and most certainly before they take tenure of a property. An EPC will last for 10 years for a rental property unless there are significant changes made to a property, such as the fitting of a new heating system, insulation being put in or new double glazed windows fitted.

Are EPC’s Useful?

If you asked us how many times a prospective Tenant has asked to view an EPC at a viewing since October 2008, you could probably count them on just one hand! This seems to be the general feedback from many Landlords and Agents. So that must mean that not many people even bother to look at them!

The certificates do good information on how to reduce the amount of energy used and improve efficiency. But again, if no-one looks at them what use are they?

The New Rulings

A government memo has been seen by one of the industry’s biggest publications which suggests that from July 2011, a full EPC report should be provided with ANY written details for a property. At the moment, the first page of the report is sufficient as this shows the performance graphs. So lets just get this straight, we should have to provide a complete document, usually around 7 pages, for most people to throw away. Why?!

Full EPC’s are available on request anyway (not that we ever seem to have requests for them) and if anybody does happen to be interested in the energy usage, it is usually only a quick glance at the graphs. Being perfectly honest, we cant remember having a single viewer say no to a property because of the results of the EPC!

Your Opinion?

We would like to hear your opinions on the subject, whether you are a Landlord or a Tenant. Maybe you have found an EPC to be useful when refurbishing a property or when choosing a property to move in to, please feel free to add a comment using the button below! 

21Mar 2011

Property Landlord advice: Utility Warehouse charges unfair on Landlords.

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By Steve Roulstone

I had a very upsetting and disturbing situation develop last week on a house of mine that is occupied by Tenants and has been since I moved out last December. The disturbing matter, was that I received what can best be described as a mixture between a debt letter and a threatening letter advising that my account with Utility Warehouse was overdue by some £430.00 and that if I did not take IMMIEDIATE ACTION or worse still IGNORED THIS LETTER charges could rise to over £800.00

First reaction.

Now I do not know about you, but if somebody sends me a debt letter, for no reason what so ever, it does not make me very happy – what transpired when I phoned Utility Warehouse, for it appears to have been their debt collecting agency as I was internally transferred without any delay, made me even angrier!

The facts in this case.

What had actually happened was that we had advised UW that we were moving gave them our forwarding address and subsequently paid the final invoice and closed our account, something that was easy to confirm, as the account number on the stated debt letter was different than the one on our old invoices for this same address. The new Tenants had also been in touch, but they (UW) did not approve of the paperwork sent to confirm the Tenancy and instead of trying anything else they moved straight to debt recovery letter.

 Debt has to be recovered – does it not?

The problem with this debt letter was that they immediately opened another account in my name (as Landlord) and sent the debt letter to us! Now, I know that this could never stand up in court, but I just wonder how many people are not aware? It is a fact that no debt for services amassed by one person can be the responsibility of others, owners or not. No, what UW did here was take the easy way out and send a letter to somebody to get a reaction. Well I have news for you UW it worked!

My advice.

 What I am guessing they did not expect, was that the Landlord in this case would then put this absurd situation in writing and advise all Landlords NOT to have UW as their provider. It is a fact that the Tenant (A Company) as somebody that I have dealt with professionally for several years had no intention of staying with UW and had advised them of this fact, not that UW then made contact back with the Tenant to try and address the issue direct with the person responsible for the bills! Oh no, instead they opened an account in my name without even speaking with me. Now, let’s just look at that again.

Contradiction the name of the game.

 So because they were unhappy with paperwork sent by the people who were generating the invoices, UW would not accept them for a new account. Not that they did not open one in their name, rather that they changed the name when they decided the information was not complete. Now it is what they did next that is, in my opinion, a contradiction of what appear to be their own rules!  So rather than contact the Tenant and sort it out, they opened the account in my name, even though I had not asked for one and they had received no paperwork which they could approve or otherwise!! So it seems that what was not acceptable for the correct person did not matter for the wrong person!

Soft target!

And this is the rub for me, just because we made it known where we live and what we were doing with the property, UW decided to send us the invoice for no other reason than because we were there and available. This is treating Landlords with disrespect in my book and I get fed up of being treated as second class citizens where the rental market is concerned. (I did ask them to investigate and call me back, but their offices only receive incoming calls! Says it all really) We all know what our responsibilities are and we all know this would not happen if the property had been sold! UW would not have sent the invoice to the original owner and yet we are just as liable (as in not liable at all) as Landlords or as past owners. Think again UW treat us all with equal respect and put more effort in too sorting out problems rather than shooting at soft targets!

 

 

 

 

15Mar 2011

Current Property News: Rental mortgage barrier not excusable.

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By Steve Roulstone

It was my misfortune to come across this very situation myself at the end of last year, when I rented my home out, not because I could not sell, but because I had an opportunity which made very good sense to me as a house owner. It seems to be the house owner piece of that statement that the mortgage companies are ignoring, for one aspect of my situation did not make sense any way that I look at the circumstances.

Confirmation I am not alone.

A recent report in Property drum (An excellent monthly magazine which I wholeheartedly endorse) confirms that this practise is still happening and for the same reasons! It seems that some mortgage companies are just taking the opportunity to make more money and others are just downright rejecting the possibility without giving the circumstances any consideration at all. It is the situation where the amount of risk to the mortgagor is low that gives me the most concern. In my case, I only owed at a most conservative valuation no more than 20% of the property value. In the reported case this figure was 30%.

Where’s the risk?

I am unable to confirm in the reported case, but in mine the return was twice the mortgage that I was due to pay at that time and yet the answer I received confirmed that it was not a matter of any circumstances fitting the bill, rather that they were unprepared to consider any rental situation at all. In the reported case it was that the owner (Look up the meaning of the word!) was charged 1% for the privilege, or take out a new buy to let Mortgage, which would of course result in more fees being paid. I can at least understand that, but why just say no, especially when we still had to go through the application system?

No understanding of the market?

It could just be that they do not understand what is happening out in the real world, or just that decisions have been made with no consideration to the market that they operate in, but isn’t that no better than giving mortgages and therefore money with such ease that was the cause of the problems we are living through in the first place? It does not sound right does it? But I would love some other explanation that did make sense because at present, the rental market is growing year on year, we have a shortage of housing for the number of Tenants approaching the market and for the first time in history, the private rental sector should overtake the public, this year.

No excuses that make sense.

The reasons listed above are not alone, indeed other reasons are given and can be found through a little research, but none of the reasons make sense to what is actually happening on the high street and in housing estates up and down the Country. This includes the statement that mortgage companies are ensuring the mortgagee can afford the re-payments. Excuse me for stating the obvious, but how can generating more income from the property put the mortgage at risk? Surely all such matters can be assessed using the standard application methods?

Stand alone.

In my humble little way, I just ask that Companies make decisions because they make sense are considered and have the best interest of us all at the heart of the process. So please stop making mass decisions when it seems that they are not needed that do exactly the opposite and cause upset to people’s lives which are hard enough at the moment, especially using excuses that just do not hold water!

11Mar 2011

Property Landlords advice: Resident Landlord agreements (Part 2)

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By Mike Edwards

The starting point and the fundamental factors in determining whether you are dealing with a Resident Landlord (ResLan) or not is whether the building is largely as originally constructed or has been converted. Or a purpose build block of flats no matter how small. If the latter and the builder/Landlord reserves one of the units to themselves not a problem it can never be a ResLan case. Similarly if the Landlord does not use the property as their main residence then equally it will not be a Reslan case.

What is a RESLAN Tenancy?

For it to be a ResLan tenancy therefore one of two things must happen, but in either case the accommodation must be self-contained even if it is a shared communal access – such as the hallway of a converted house. The 1988 Act says quite specifically that if both Landlord and Tenant live in the same original building and it is not a block of purpose built flats, then the tenant cannot have a 1988 Act tenancy. Therefore if you have a self contained flat upstairs and one downstairs and the landlord lives upstairs and the tenant lives downstairs, the tenant can have a Common Law contractual tenancy, but not an AST because it is Resident Landlord, and that puts it in the excluded category.

Licensor and Licensee.

Next assume a simple house and the tenant has their own bedroom but shares the kitchen (even if meals are not provided). If the Landlord was not living there this would be a Hybrid AST situation like any other sharer. But if the sharer or one of them is the Landlord then this is a typical lodger agreement and only a license will be granted and the wording throughout will be Licensor and Licensee – though in construction it could look very much like a normal tenancy agreement. However that may look like overkill for what is a fairly informal arrangement compared to a full blown tenancy. If the occupier where the Landlord lives in the same building (as originally constructed though possibly converted) shares any of the essential living accommodation (bathroom, kitchen even a lounge) then that occupier does not have exclusivity over all the accommodation and is a licensee and can only be granted a licence and not a tenancy at all. For licences it is generally recommend to use weekly periodic agreements to make it easier to get rid of co-habitees who the Landlord ends up not rubbing along with. Basically if you grant the licence on an initial fixed term and payment period of a week then you are contractually bound and can have complications and longer notice periods.

Notice procedure.

If a weekly licence is granted then a simple letter stating all the necessary detail and dates and giving a week’s notice is all that is required and no Court Order is needed to evict either. If it is a Common Law tenancy (Landlord living in same property and tenant having exclusive accommodation again like the flat example above) then a normal Notice to Quit is used giving a month’s notice. As far as tenant or occupier protection and rights are concerned all occupiers who are licensees or tenants are covered by the Protection From Eviction Act 1977 (PFE) except those living with a resident landlord, where a Court Order is not needed. Hence the weekly licence.

Check PFE status.

If they do because they are a tenant then you will have acted illegally if you evicted them only with a letter giving them a week and then entered their room and put their belongings out on the street. You can do this if they are a licensee and don’t leave at the end of the week’s notice – but you cannot if their status gives them PFE protection meaning you should have given them longer notice (minimum one month) and obtained a Court Order

Link to Res LL Part 1

07Mar 2011

Rental issues: Avoiding Rental Voids can be a problem.

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By Steve Roulstone

The Tenant deposit scheme has on the whole been well received and there is no doubt that it has done exactly what it was meant to do when introduced. Namely, to ensure Tenants and Landlords communicate and negotiate with each other over dilapidations. It has however had other effects which were not foreseen and when Tenants do not act in a reasonable manner, causing a dispute and creating a situation which can add further problems when the next Tenant is due to move in for example, the next day.

New Tenants expect the best.

When any Tenant moves in, they do not expect to be faced with a situation where damage to the carpets, decoration or appliance for example, has to be left until such time as proper negotiations have been undertaken with the leaving Tenant over where responsibility for carrying out repairs should lie! It is not a new problem, but prior to the scheme, we could make an experienced judgement over who created and therefore who should pay for the issue to hand. Now we can no longer do this and according to the TDS procedure, must even take time to gather estimates before getting agreement and starting the work.

Why not avoid the situation.

Avoidance would be the easiest solution, always ensure a week between Tenants, but the reason so many Tenants follow hot on the heels of the last occupier is at the new Tenants request. Most Landlords can see the potential issue and rather than risk upsetting the new Tenant, will agree that a void period has to be accepted between Tenants. Of course as Agents, especially those carrying out the viewings, the ability to change Tenants without any void is difficult to avoid, after all, we are doing the best we can by our Landlords and when the new Tenant states they have to be in sooner rather than later it is difficult to risk them going elsewhere by saying no!

Best advice and best practise.

So our advice to avoid the complaint from the new Tenant, which is bound to happen no matter that it was they who HAD to be in the property without delay, when they move in to find the cooker door glass broken, has to be to always build that extra week to the availability date and even though void periods are created by this practise and it goes against our intentions as Letting Agents, it is better to avoid problems for new occupants and give their Tenancy the start we would all wish for.

04Mar 2011

Current Property News: Approved Agents would provide improved Housing.

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By Steve Roulstone

It’s time for me to bang on the same drum again, as another slice of news has appeared on my desk and the opportunity to improve a situation by ensuring that licensed or approved Agents and or Landlords looked after the Private rented sector through a Government sponsored (but in my opinion Industry monitored) system immediately suggested itself. Well it does to me and I would welcome commitment or debate about my thoughts!

33% of Private rented stock in poor condition.

 

This information is taken from the recent English Housing Survey, just released by the Department of Communities and Local Government. This figure is a surprise, especially as the same paper suggests that Social housing is in better condition (some 23%) The headline figures for the Social and Private rented sectors are now very similar, with 17% of stock forming the Social sector and 15.6% the Private sector, this translates in big round numbers to 850,000 Social houses and over 1 million Private houses. But my own experience would suggest that the majority of these lie in the self managed sector, for in my own Company (as I would expect from all professional agencies) we would recommend what was needed for property to be acceptable to offer to the rental market before accepting the property on our books. This of course means we will not manage property that was unfit and I have indeed wiped my feet on the way out of many houses in the past. Of course, most Landlords follow our advice and repair, renew and renovate as needed.

Professional Industry creates Professional standards.

 

My own point being, that improving the state and condition of property in this Country is rightfully a main target for Government (no matter what colour) by ensuring those responsible for the care and standard of rented property were approved and this approval relies on the correct standards, then the improvement in property would be dealt with, I would suggest, very efficiently and rather quicker than any Government targets are currently achieving.

Same old same old.


It is not the first time I have championed professional membership or approval schemes and it will not be the last. What we need to do and what I do at every given opportunity as a Professional Letting Agent, is to open this debate with and actually put our conclusions in front of those who make the decisions at every given chance. What I hope is that the bodies that represent our Industry are continuing to do the same. I would think it would be difficult to argue against my conclusion in this case and only those who could not afford to renovate properties currently rented would find a reason for doing so, but is this not the objective? Because then the alarming figure of over 1 million properties rented in poor condition would be removed from the market, allowing better quality property to replace it. This of course is providing Landlords can get the right Mortgage to allow renovation or buy new housing stock – but that is another topic for debate.

10Feb 2011

Rental Issues: Do tenants need home insurance?

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By Felicity Hannah, deputy editor at moneysupermarket.com

If you’re a tenant, do you still need home insurance or will your landlords’ cover protect your belongings? We take a look… Renting can be a trouble-free way of putting a roof over your head. No maintenance costs to meet and no housing market worries. In fact, with many rooms let on a bills-included basis, some tenants don’t even have to worry about paying anything except their rent. This can make it all too easy to forget about Home Insurance cover or to assume that the landlord’s policy will protect your possessions if disaster strikes. But in actual fact, the vast majority of tenants will need to buy their own insurance policies. So what do you need to know?

 Home insurance cover for tenants

 When people refer to ‘home insurance’, they are lumping together two different kinds of protection – contents and buildings cover. Roughly speaking, if you picture your house or flat being turned upside down and shaken, then everything that falls out would be covered by contents insurance and everything that’s attached would be protected by building insurance. Anyone with a mortgage needs to have buildings insurance as part of their agreement, so your landlord’s policy would pay out if a tree toppled into the roof, for example, or if flood waters destroyed the wiring. However, without contents insurance, your personal possessions aren’t protected from fires, floods, thieves, accidents and other disasters. 

Do I need contents insurance?

 Unlike buildings insurance, there’s no requirement for anyone to take out contents cover – but it’s essential for peace of mind. Although some cover exists that is specifically designed for tenants, for most people, a standard contents insurance policy will be perfectly suitable. Make sure you shop around for the best price but remember that different policies vary and the cheapest isn’t always the best. Be confident you can afford the excess and consider paying a bit extra for new-for-old replacement cover. That means the policy would pay to replace items with equivalent new versions at today’s prices. You can add out-of-home cover, meaning your belongings are insured when you carry them out of the house – that’s especially good for technology and jewellery. Don’t skimp on the cover you need, you don’t want to be left out of pocket in the event you have to claim. You’ll have enough on your mind if that happens without worrying about whether your policy will pay out enough.

 How much cover should I have?

 When you apply for a policy, you’ll be asked to estimate the value of your stuff. Be as thorough as you can about this, don’t leave yourself underinsured. Go from room to room and assess the worth of what’s in each. Underinsuring yourself can cause serious issues if you need to claim. If your home’s contents are worth £20,000 collectively but you only insure them for £10,000 then your insurer may only agree to pay for half your claim – even if that’s for less than £10,000.  

Will my contents insurance protect my landlord’s furniture?

 Most contents insurance policies will only protect the possessions of the policyholder and their family. However, you may want your accidental damage cover to protect any furniture that belongs to your landlord, so you can avoid losing your deposit. Check with your home insurance provider if it can provide this additional cover. Some tenant-specific policies may well be able to do so.

 What if I live with my landlord?

 A large number of tenants actually live with their landlord, renting a room in their home rather than a whole property. If you’re in that position then you may find it hard to insure just your own possessions, especially if you don’t have a lock on your door. Ask your landlord to check with their home insurer if the policy can be extended to cover you as well. If not, look at a specialist policy for tenants.