Tag Archives: Renting Property

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!

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!

17Jun 2011

Rental Issues: Tenant Notice in periodic agreement.

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By Steve Roulstone

This is one of those subjects that always causes problems when Tenants wish to end a Tenancy but do not understand the manner in which the agreements have to be handled once an agreement has become periodic, so I would like to clarify, without giving to many ifs and buts, which is what you find whenever you research this issue, in simple terms.

Periodic agreement.

Firstly, let’s confirm what a periodic agreement is. This is when an Assured Shorthold Tenancy agreement has gone past its original fixed period and whilst the agreement still applies to both parties, it has not been superseded by another agreement and nobody has given Notice. This is a very common form of allowing Tenants to stay in the property, but without having to tie them down to another fixed period. As I have stated before, flexibility is usually the choice of the Tenant in reality and Landlords who wish to have fixed terms only, can cause Tenants to move on anyway, because they feel they no longer have the freedom to move when they wish.

Notice when they choose.

And this is why it is popular with so many Tenants, because the opportunity to move when they wish ensures they can make that move when it suits the Tenant. In reality, it is my experience, that just to have the flexibility does not mean that they will then leave. Rather being given a choice to make about committing to another period of time actually forces a decision as against moving when a Tenants agreements become periodic after the initial term, but it is when that notice is given, that problems can occur if the manner of notice is not followed correctly.

Correct Notice.

The correct way to give notice on a periodic agreement is firstly to do so in writing (some agents will accept e-mail, but always check rather than assume) and then if a problem occurs it is because of the timing of this notice. Any notice on a periodic agreement must be in line with the payment dates of the agreement. Therefore, if rent is paid from the first to the last day of the month, as the easiest example, whatever day notice is given, the Tenant will be responsible for the rent and property until the last day of the following month the notice was produced and handed over. To clarify further, no matter what date the notice is handed in, from the 1st to the last day, when the payment period is the 1st of the month to the last, the Tenant,’s notice will end on the last day of the following month, ensuring that the notice served covers a complete payment period from the 1st to the last day.

Varients.

The situation can alter if rent due date continues to be from the date the Tenancy started. In my case we always make the payment date the first, ensuring Tenants always leave on the last day of any calendar month. But if you moved in on the 10th, then your payment period is from that day until the 9th and your Tenancy will end on the 9th, and your notice will therefore always cover a full monthly payment period between the 10th and the 9th.

Knowledge.

Of course, knowledge is everything and hopefully your Agent/Landlord would have explained this at the start of the Tenancy, but because it is complicated and so many people believe that notice is just a four week period starting from the day notice is given, this so often becomes a confusing situation at the end of what has hopefully been an enjoyable stay. Again from personal experience, even when this is explained at the beginning of a Tenancy, if the Tenant has lived at the property for two to three years, then of course remembering becomes very difficult. So please bear with your Agent or Landlord when they explain this situation, they are after all, only explaining how the law works!

01Jun 2011

Current property News: 95% Mortgage starts to turn the key.

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By Steve Roulstone

We have seen several items in the press yesterday about the 95% mortgage starting to appear again and of course it has received mixed reviews. However the BBC report on Radio 2 during the lunchtime Jeremy Vine show hosted by Vanessa Feltz was nothing more than an attempt to get as many negative comments about the Banking world from the general public and lacked any real depth, however they did attract several sensible comments about how if housing sales are to start to improve again, a move to ease the deposit burden was bound to be the sensible solution.

Renting options.

The show focused on the options available to those who could not afford to purchase and it was nice to hear one commentator point out that renting is a perfectly viable and acceptable option now and certainly offers a plentiful and varied option of places to set up home (I say this as a Tenant myself) and indeed this same topic was discussed during the finance slot on BBC Breakfast show yesterday.  It is a fact that the rental market has shown consistent growth in demand over the last two years and I have commented many times through these pages that our market is very healthy at present.

Mortgage options.

Now to me these two facts point clearly to the need for better mortgages for Landlords as a way of easing the market and supplying rental property for current demand at the same time. This is another subject that I have mentioned before and I do not apologise for doing so again! It was clear however from the comments made during the show that Mortgages are an emotive issue  with one (poorly advised) person thinking any easing of Mortgage availability was just a way for banks to ‘line their pockets again’. Of course the facts are that Mortgages need to be made easier to obtain before the market starts to move again, no matter what sector of the market is considered.

Differant options.

One area that I do not agree with however is the split option of shared ownership, which has been trialled before (as the problem for first time buyers is not a new one) The problem for me is that no matter how long you own the property, when you come to leave you are still only left with half of the collateral built up in the property during your time under shared ownership. Now most people who use this scheme as a starter home, need to move on having got married, started a family and as is normal need more space. This means that moving to a bigger house can present just as many problems as finding a house in the first place, because shared ownership is only encouraged for started homes. Therefore, assumptions are being made that everybody will be able to improve their circumstances (income) during the period the initial property is shared. Experience tells me this is not the case and guess what? Most co-owners will not allow renting as a method of financing the next move!

One option stands out.

It is a little ironic that the same scheme is being championed again when in the past the rental market was seen as the solution to the eventual problem most shared owners find themselves in! With the current trends which are not only financial but also lifestyle choices for the majority of Tenants the rental market yet again shows itself as the market that can trigger an increase in house sales, if the proper Landlord tool was made available. Surely this is where the Mortgage Companies should be looking alongside any easing of deposits required; after all, buy to let properties have the additional support of that income behind them!

18May 2011

Current Property News: Buy to Let market grows in strength.

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By Steve Roulstone

Recent reports indicate that the Buy To Let market is, as I have been reporting for some time, growing in strength and therefore returning despite all the gloom and doom reports that the Financial Crisis would see an end to Private Landlords investing in property using this specialist mortgage.

Misrepresentation of Landlords.

This report raises several issues for me, the most glaring being the overall suggestion that Landlords buy property to get rich quick and that they will not do so ‘Under current circumstances’. Well excuse me for pointing out that this is obvious and the error in the unstated indication that ‘Getting rich quickly’ is why Landlords purchased property in the past. Well as one of these Landlords and as somebody who speaks to and knows many others, can I point out that by far the majority of Landlords chose and indeed choose property as an investment, because it has traditionally given a conservative return, but never actually lost money!

Markets will always dictate.

I have pointed out on these pages recently, that it is the market itself which will dictate both the number of properties available and the need for Landlords to supply that demand. We have seen Tenant demand rise steadily over the last three years and the % of rented UK housing stock confirms both the need and the ability for Property owners to supply the demand. What has happened however is that droves of new Landlords are being created by the inability of the Sales market to provide purchasers and the realisation that by renting property instead, they have been able to move on with their lives and plans. I myself now rent and have rented my main home for the next five years for the same reasons.

Rising rents, really?                     

The main push of this article is to concentrate on the amount of income generated from the rent and I find the statement that Landlords are being enticed because of the possibility of rising rents to be a little thin! Firstly, this totally ignores the more down to earth reasoning given above that owners are renting simply because they can, when they are finding it very difficult to sell, allowing them to get on with their lives, but the assumption still ignores the main reason for Landlords to buy or invest in bricks and mortar, which is historical, because property in the long term always gains in value and this is very much linked with the conservative expectation, set against the risk of either Currency or Stocks and Shares.

Tarred with the same brush.

It seems to me that the writer has looked at Property Landlords in a ‘one view take all’ approach, where the reality is so much different and far less simplistic. Is it my view alone that people who invest in property are more conservative than those who invest in more traditional methods? Either way, the market is driving this increase in new Landlords and what is not my belief alone is that it is both sustainable and shows no sign of decline for the foreseeable future!

17May 2011

Rental Issues: Reserving a rented property whilst a Sale completes.

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By Steve Roulstone

Rental Issues: Reserving a rented property whilst a Sale completes.

This is one of those issues that whilst rare does occur now and then and always causes confusion. I think clarity would help so that potential Tenants understand where Letting Agents are positioned and why we have to do what we do. It has happened at our office in Stafford again recently and it is the matter of how long we are prepared to hold a property before Tenants accept responsibility (sign a Tenancy agreement) that is nearly always at question. Under normal circumstances and with so many Tenants in the market at present, this problem does not and need not occur.

Legal position.

Tenants are only legally bound to pay for a property from the day they actually sign the agreement and of course Tenants do not wish to do so if they are subject to a sale which has not completed or could indeed collapse which seems to happen more often in recent years. Nobody would want to accept a minimum of six months liability for a property that should the sale collapse, you could neither afford or equally wish to use as your home. This is why Agents will quite often ask for payment from a date in time without signing the agreement as a payment in good faith but without committing the Tenant to legal documents which have far more lengthy implications.

Holding a property.

What needs to be realised is that Letting Agents have a legal responsibility to provide the best service and advise to the Landlord because of our legal position (as Agent of the Landlord) What also needs to be considered is that the Landlord will need to earn income from the property for as many days possible. Agents will do whatever they can to avoid void periods for Landlords, it is easy to see why anybody who owns a property as an investment, which is of course exactly what rental property is wants to earn rental income for every week possible. This is why once we have found a Tenant we will (in most cases?) confirm that we allow a four week period under normal circumstances for the move to be completed.

No similarity with sales.

This of course is the rub, there is nothing in the two processes which are alike, indeed the only comparison would be to expect Building Societies to allow payments to be suspended during the same period, so you can see how one sided the effect of waiting for a sale to complete now sits! Therefore we have to proceed in the best way possible for our Landlords and during a period where the rental market continues to improve, people who are renting after selling are not necessarily so attractive as prospective Tenants. I have known situations where sales collapsed after a seven week wait and resulted in the Landlord having a three month void period. Position this with our legal responsibility to give best service and advice to our Landlords and perhaps the situation becomes more understandable!

Co-operation required.

It is of course an emotive subject as anybody who has gone through a house sale nowadays would know. So we have to ask for co-operation from prospective Tenants under these circumstances and interim payments to reserve the property without asking for a legal commitment by signing the Tenancy agreement are a half way house which I believe offers both parties the ability to proceed and still deal with whatever the legal process of house selling throws at us, what we ask is that Tenants understand our liabilities and can co-operate in the same way.

12May 2011

Current Property News: Shelter Campaign launched supporting Licensed Landlords.

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By Steve Roulstone.

Shelter have produced a video in support of their call for action for the licensing of Landlords. It is an over the top production in the picture that it purveys, but there is no doubt that it does get the message across very well.

Dodgy practises.

It manages to cover several dodgy practises in a very short time, including illegal eviction, lack of proper procedure, unfit housing to name but a few, I would recommend all to watch it not just because of the content, but because as an industry we should think how Shelter feel they need to promote this issue to highlight the trend they report to have witnessed in recent times. Please note carefully, that during the video, Agents are added to the situation as being part of the problem!

Several messages.

At times it feels like those of us who are constantly calling for legislation to support us in our professional aims are knocking against closed doors, so I am grateful of any action that highlights the need for Registration of both Landlords and Agents. But it is a pity that it is not our own Industry professional bodies that are not the ones shouting the loudest! We need to recognise that many would see this video as a true representation of our Industry and not that farfetched. Agents, Landlords and bodies that truly care should be joining the call for the Government to take up the recommendations of the Rugg review of 2009. Otherwise, whilst rogue Landlords still exist and the evidence is still present for all to see, this tardy image will never go away.

Hard Times.

We should all be aware that during harder financial times for us all, the temptation to cut costs and corners is high, so whilst I feel Cambell Robb’s (Shelter CE) comment that ‘Landlords are cashing in’ a bit too simplistic and an easy jibe to make, we cannot hide from the fact that Shelter’s Campaign casts a very poor shadow across the whole of the rental market and it’s effect will touch us all one way or another. Follow the link above and you will not find one shred of comfort in the headlines, comment or follow up added to the page.

Join the call.

So yet again I find myself singing the same song, but this time my comments are directed towards the bodies that govern our Industry, the very same bodies that should such legislation be introduced, would want to be the people who oversaw its introduction, have a large say in how it was put together, would probably wish to police it and most importantly want to set the standard by which Landlords and Agents could be approved! I feel that the fact that organisations such as Shelter should be the party to start a Campaign and petition to promote professional standards reflects badly on your own efforts, efforts which we fund through our fees. Think and reflect on why your thunder has been well and truly stolen – this should be an Initiative that we should control within our own walls!

18Apr 2011

Rental Issues: Tenant Referencing disclosure eases the way

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By Steve Roulstone

One of the advantages of being part of a Company that both sells the Franchise and runs a Franchise is the close access and conversations that I hold with my Staff. For example, Suzie who has worked at our Stafford office for the last two years was telling me this week how difficult it was to get people through their referencing at present, something which in the current financial environment we could all probably understand.

The requirement is justified.

What has to be remembered here is that Landlords must have a successful reference to be able to obtain a Rent and Legal expenses policy, something which I have confirmed on many occasions, is a must in the present climate. So as agent of the Landlord, we must do what is best for our Landlords at all times, the problem can occur when the Tenant who wants to live in the Landlords house, feels that our requirements to get such a pass are either becoming expensive in the Tenants eyes (which is a problem that has been reported for years and I fully expect it to be in the news again this year) or that the requirements to achieve the pass (Self employed parents usually the problem, or Guarantors who are retired) are far too onerous for the circumstances.

Information is everything.

Of course, what every agent should do is provide the prospective Tenants with as comprehensive a pack of information explaining the process they are entering in to as clearly as possible, as well as costs associated with the process and options available as the process develops. But it is our experience that Tenants do quite often sign without reading, or pay scant regard to the content. It is only when, again in doing our job, having already assessed the situation prior to taking any costs from the Tenant, initial applications fail and we try our best to find an acceptable solution to enable the Tenants to move ahead, that the process can suddenly come under scrutiny when full attention at the commencement could have avoided this common scenario.

Openness and Honesty.

The worst case scenario for us is when the Referencing Agency come across something in the Tenants background that has been omitted from the initial information requested. Now we have a problem for all parties having advised the Landlord we have a Tenant being processed and a Tenant having to find somebody to stand in their shoes (Guarantor) to enable them to proceed. This can be the time, depending upon what has been discovered, to take the Landlords opinion, with our recommendation and bring a stop to the process. But if a decision is made to continue Tenants must understand that for both the re-application to the Referencing Agency and the additional time and effort put in by our staff additional costs will be generated and therefore paid for.

Producing effort and savings.

So at a time when Referencing Agencies are correctly taking a sterner view on Tenant applications, complications are just not needed, because Tenants must remember that the property is effectively off the market whilst we go through the process with them and other Tenants more suitable could have come and gone during the Referencing period, so our recommendations has to be to give full disclosure from day one. Honesty really is the best policy and you will either get the full effort of the Agent to guide you through the process because of this or at least be given an experienced opinion which could save you your money in the first place.

11Apr 2011

Property Landlord advice: Lettings Sector set to grow on back of stamp duty reforms in buy-to-let market.

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by Nick Strong, MD www.SelectYourFranchise.com

Lettings agent franchise networks are understandably excited about the potential for market growth in the buy to let market sector in 2011.  In the recent budget George Osborne made it easier for large investors to enter the buy-to-let market. 

 The coalition government has identified buy-to-let as a way of solving the housing crises that has been exacerbated by the difficulty of first time buyers accessing funding over the past two years of recession.

 Buy-to-let opportunities have therefore been opened by stamp duty reform.  So much so that Aviva, which has been lobbying for reform for some time is seeking to put together a £1billion fund which could be enough to purchase 5000 buy-to-let properties. This is because stamp duty on the purchase of more than one property will now be calculated by the average value of the properties, not the bulk value, which the industry has campaigned for.

 It is understood that other institutions and pension funds who have eyed the sector are Aegon, Terrace Hill, Legal & General, and LaSalle Investment Management. Property agent CBRE has estimated that institutional investors have allocated £7.5bn for residential property.

 It is thought unlikely that these initiations will want to manage their own property portfolios given the difficulties that the likes of Countrywide experienced when they entered the property market.

 There is clearly the opportunity potential for Letting franchise sector business to grow if large investing corporate decide to distribute their buy-to-let portfolio via agents with significant access to market across the UK.

 Steve Roulstone, MD of Castle Estates said ‘I have been lobbying for changes such as this especially through the pages of this site, for some time now, as I firmly believe that by easing the way for Landlords to start investing again we will start to build confidence in the property market again. Nobody is asking for financial restraints to be removed completely, as nobody sensibly wishes to go through a period of unrestrained growth that could then result, but sensible steps such as easing tax burdens imposed on Landlords can only help’.

25Mar 2011

Current Property News: Landlord specialist Insurance must be given strong consideration.

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By Steve Roulstone

It is time once again to stress the importance of Landlords Insurance in the rental market, as we approach another year of difficulties in the workplace. This at a time when record numbers of properties are coming to our market sector and in many cases the demand for rental property is outstripping the supply, the risks MUST be understood by Landlords and the added security of such Insurance Policies as far as I am concerned are the minimum requirement for Landlords, especially those who are renting property for the first time.

Nobody can be secure.

I am not alone in promoting the values of such Insurance and the common sense reasoning is there for all to see. With a policy that protects both the rent and covers the costs of evicting a Tenant, at a time when redundancies are growing (This BBC News link will confirm) Letting Agents should be suggesting that all Landlords take such a policy as a matter of course as no Letting Agent can confirm that the Tenant that they source for the property will not be one of those who may suffer this fate themselves.

Solutions do exist.

 

Of course, any professional Agency will have their tried and tested systems to show how arrears are dealt with and dependent upon the situation surrounding the Tenant (who will always be professionally referenced) could negotiate the surrender of the property on the Landlords behalf and of course with the Landlords approval. But with the best will in the world, and with the best of intentions, no Agent can either stop problems occurring or be able to foresee the manner in which Tenants may react to bad news.

Cost is not prohibitive.

 

With six month’s rent and legal expenses covered for as little as £100.00 in some cases, and as a Landlord myself, I can see no reason why this peace of mind policy should not be taken, but it is not just new Landlords that should take advantage of the policy, I believe all Landlords should consider doing so no matter how long they have rented their property. This cost when considered against the risk, whilst proving that the risk being covered is not a common problem (No insurance that covers a cost risk of several thousand pounds if claimed upon on a regular basis could still be available at such a low premium) is at such a low cost that it really should be taken against every property let, because when a Tenant neither pays or moves on it is not only the fact that it is such a costly process to the individual Landlord against the property concerned, I have also witnessed just how upsetting and time consuming it can be to the owner.   

Peace of mind.

 

It is the comfort factor alone, that income and legal expenses are covered that gives Landlords this feeling that at least they do not need to worry as professionals deal with the situation on their behalf. Instead of having to find a solicitor who not only understands property law (Not as common as you would think in the High Street) but have to be involved at every stage of the process themselves in the decision making, the policy ensures that professionals take all of these decisions on your behalf, as they ensure the matter is dealt with as swiftly as possible, simply because they are the ones paying if the matter is not dealt with in this manner, so yes I advice taking out this peace of mind insurance, perhaps the question should not be why, but rather why not?